Question: If one of our members included our loan in a Chapter 13 bankruptcy and we later learn the case has been dismissed, can we collect again?
Chapter 13 bankruptcy plans often fail because members are unable to complete their repayment plans for the term of the repayment. In the event that this occurs, the member or another party may ask the court to dismiss the bankruptcy case, which nullifies the filing. This means that the situation for the debtor returns to the conditions that existed before the bankruptcy, such that you are able to resume regular collections again.
However, oftentimes members that fail to complete a plan may file for bankruptcy again. So it’s always wise, once you get a notice that a Chapter 13 is dismissed, that you check the PACER filing system to see if the member has filed again, then continue to monitor the situation closely. If they do file again, you will need to go through a process similar to what was done when they filed the first time regarding claims, timeframes, and automatic stay (albeit a shorter stay or none at all, depending on how many times the member has filed).
So the answer is, if the case is outright dismissed with no new filings, yes you can; but we always recommend you consult your counsel before making any of those decisions.
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