Why Bankruptcy Cases Get Dismissed

Every year, hundreds of thousands of bankruptcy cases are dismissed before the debtor receives a discharge. In Chapter 13 cases, the national dismissal rate ranges from 40% to over 60% depending on the district. Understanding why cases get dismissed can help you avoid the same fate if you need to refile, or help you identify whether your attorney bears responsibility for the outcome.

1. Failure to File Required Documents

This is the single most common reason for dismissal, especially in the early stages of a case. When you file for bankruptcy, the court requires a set of documents within strict deadlines:

• Schedules A through J -- detailed lists of your assets, debts, income, and expenses
• Statement of Financial Affairs -- questions about your financial history
• Chapter 13 plan -- your proposed repayment plan (Chapter 13 only)
• Tax returns -- typically the most recent two years
• Pay stubs -- usually the last six months
• Credit counseling certificate -- proof you completed the required pre-filing course

If your attorney filed a "bare petition" -- just the initial petition without the schedules -- the court typically gives 14 days to file the remaining documents. Miss that deadline, and the court will dismiss your case, often without a hearing.

Whose fault is this? If you provided all information to your attorney and they failed to prepare and file the documents on time, the responsibility is theirs. This is one of the most common forms of attorney negligence in bankruptcy. Research from the Open Bankruptcy Project shows that certain firms file bare petitions at rates far above the district average, leading to predictable dismissals.

2. Missed Chapter 13 Plan Payments

In Chapter 13, you must make monthly payments to the trustee according to your confirmed plan. This typically lasts three to five years. If you fall behind on payments, the trustee will file a motion to dismiss your case.

Courts generally provide some grace period and an opportunity to cure missed payments, but repeated defaults will result in dismissal. Common reasons for missed payments include:

• Job loss or reduced hours
• Unexpected medical expenses
• The plan payment was unrealistically high from the start
• Failure to adjust the plan after a change in circumstances

If your situation changes, talk to your attorney immediately about a plan modification. Waiting until the trustee files a motion to dismiss makes it much harder to save your case.

3. Failing the Means Test

Chapter 7 requires that your income falls below a certain threshold relative to your state's median income, or that your disposable income after allowed expenses is minimal. This is the "means test" under Section 707(b).

If the U.S. Trustee or a creditor determines that your income is too high for Chapter 7, they can file a motion to dismiss or convert your case. If the motion is granted and you do not convert to Chapter 13, the case is dismissed.

How to avoid this: A competent attorney should run the means test before filing your case. If you do not qualify for Chapter 7, the attorney should advise you to file Chapter 13 instead. Filing Chapter 7 when you do not qualify is a sign of poor case preparation.

4. Missing the Section 341 Meeting of Creditors

Every bankruptcy case requires a meeting of creditors under Section 341 of the Bankruptcy Code. You must attend this meeting, typically held about 30 to 45 days after filing. The trustee (and any creditors who choose to attend) will ask you questions under oath about your finances.

If you fail to attend the 341 meeting, the court will typically reschedule it once. Fail to attend the rescheduled meeting, and the case is dismissed.

Legitimate reasons for missing: Medical emergency, lack of transportation, employer conflict, or simple lack of notice. If you have a legitimate reason, contact your attorney immediately to request a continuance before the meeting date passes.

5. Failure to Complete Credit Counseling

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 requires two educational courses:

1. Pre-filing credit counseling -- must be completed within 180 days before filing
2. Pre-discharge financial management course -- must be completed before discharge can be entered

Failure to complete the pre-filing course can result in dismissal. Failure to complete the post-filing course prevents discharge, which in Chapter 13 effectively leads to dismissal. Both courses are available online for approximately $15 to $50 each and take about 60 to 90 minutes.

6. Bad Faith Filing

A court can dismiss a bankruptcy case if it finds the case was filed in bad faith. This is more subjective than the other grounds and involves the court's assessment of your intentions. Factors that suggest bad faith include:

• Filing solely to delay a foreclosure or eviction with no intention of completing a plan
• Concealing assets or income
• Filing multiple cases in quick succession (serial filing)
• Making false statements on your petition or schedules
• Incurring large debts immediately before filing

Bad faith findings can carry serious consequences beyond dismissal, including bars on refiling and potential criminal referral for bankruptcy fraud.

7. Failure to Maintain Insurance or Make Direct Payments

In Chapter 13, your plan may require you to maintain insurance on vehicles or real property, make direct mortgage payments, or make adequate protection payments. Failure to do so can trigger a motion to dismiss from the trustee or a creditor.

8. Unfeasible Chapter 13 Plan

A Chapter 13 plan must be feasible -- the debtor must be able to actually make the proposed payments. If the court determines that the plan is not feasible (your expenses exceed your income, the payment amount is unrealistic, or there is no disposable income to fund the plan), it will deny confirmation. Without a confirmed plan, the case will eventually be dismissed.

An experienced bankruptcy attorney should evaluate plan feasibility before filing. If the numbers do not work, the attorney should recommend alternatives rather than filing a case destined to fail.

How to Protect Yourself

If your case was dismissed and you believe your attorney's negligence was responsible, read our guide on what to do after dismissal and consider consulting with a legal malpractice attorney.