If you file for bankruptcy to try to get over on a creditor or otherwise abuse the bankruptcy system, the court could dismiss your case with prejudice. Depending on the judge’s order, a dismissal with prejudice can:
When you file for bankruptcy, you must satisfy filing requirements before receiving a discharge—the order that wipes out qualifying debt. The court typically will dismiss a case because of the debtor’s failure to:
These filing and attendance issues don’t show an intent to abuse the bankruptcy system. In such cases, the court will dismiss the case “without prejudice,” which will allow the debtor to file immediately and fix the problem.
You’ll want to keep in mind that repeated filings can result in a loss of the automatic stay—the order that stops collections. You’ll likely need to file a bankruptcy motion to extend or put in place the automatic stay.
A dismissal with prejudice will restrict your ability to file another bankruptcy for a period. It could also prohibit you from discharging any debts that could have been wiped out in the dismissed case.
For instance, a debtor cannot file another bankruptcy within 180 days of a prior case if:
Dismissing a case after a creditor asks the court to lift the automatic stay suggests that you didn’t intend to discharge debt but instead filed to stop a foreclosure or repossession. The dismissal in that instance is an abuse of the bankruptcy process.
The court can also dismiss your bankruptcy for other egregious reasons like:
Bankruptcy judges have broad discretion to dismiss a bankruptcy with prejudice for any valid reason (or “for cause”). For instance, if you file for bankruptcy intending to hide assets, delay creditors, or otherwise abuse the bankruptcy system, the judge can preclude you from filing another bankruptcy for longer than 180 days. The judge can also forever bar you from discharging any debts that were dischargeable in the dismissed case. The harshness will depend on the egregiousness of the acts.
If the court dismissed your case with prejudice for a short period, such as 180 days, you could file again after the deadline passes. If the judge ordered a more extended bar or prohibited you from discharging debts that could have been wiped out, you can appeal the decision to a higher court. But keep in mind that appeals can be costly and to succeed, you must prove that the judge made a legal error.
A dismissal with prejudice is a serious matter, and filing a motion to extend or put in place an automatic stay can be complicated. It’s a good idea to consult with a bankruptcy lawyer before submitting the case again.