How a dismissed bankruptcy may affect a credit report
A dismissed bankruptcy may happen for several reasons. It may simply be a procedural error. For example, a Florida debtor might fail to fill out a form correctly. This will be considered a dismissed bankruptcy without prejudice. A person who makes an error can reapply, and it is also possible to file a motion that carries the automatic stay over into the new bankruptcy.
A bankruptcy that is dismissed with prejudice may be more serious. This might happen because of an attempt to hide assets, untruths in paperwork, because of filing multiple bankruptcies to avoid creditors or for not following court orders among other reasons.
Unfortunately, when a dismissed bankruptcy appears on a credit report, it makes little difference to creditors whether the dismissal was with or without prejudice. For example, if a person is trying to get a car loan, a creditor may look at the dismissal and assume that if a person could not make payments on time for a Chapter 13 bankruptcy, that same person will also not make timely loan repayments. Therefore, if a person is having is difficulty making on-time payments in this type of bankruptcy, it is important to contact the trustee.
A Chapter 13 bankruptcy is a type of bankruptcy that allows a person to restructure debt and pay off creditors over a period of three or five years. This generally allows debtors to keep their assets. Filing for bankruptcy can be a complex process, and a person might want to work with a lawyer so that a paperwork error does not result in a dismissed bankruptcy. Many people may not realize that they can also begin rebuilding credit after a bankruptcy.