Your Voluntary Dismissal of a Chapter 13 Case

 Posted on April 16, 2025 in Bankruptcy Procedure

Suppose you filed for Chapter 13 bankruptcy and have regrets. Can you simply end it? Well, according to the Bankruptcy Code, yes you can. It explicitly states that the court will dismiss a Chapter 13 case at the request of the person who filed it, and you can do so at any point during the Chapter 13 process. If you filed a Chapter 13 bankruptcy and think you may want to voluntarily request a dismissal, you could likely benefit from speaking with a San Antonio, TX bankruptcy attorney with extensive experience practicing bankruptcy law.

Where Does the Bankruptcy Code Say That You Can Dismiss a Chapter 13 Case?

Section 1307(b) of the Bankruptcy Code, which addresses the conversion or dismissal of bankruptcy, clearly states, "on request of the debtor at any time…the [bankruptcy] court shall dismiss a case under this chapter." It is important to highlight the two distinctive elements within this statement.

First, it states that you can ask for a dismissal "at any time." That means that at any point while a Chapter 13 case is considered, you have the right to request a dismissal. You may realize soon after filing that you made a mistake and change your mind, or it could be a case of changing circumstances that result in Chapter 13 no longer being relevant for you.  

Second, the law says that the court "shall" dismiss the case whenever you ask. The wording is not that it "may" dismiss your case. This seems to mean that the bankruptcy court does not have any choice in the matter; if you filed, you can request a dismissal, and the court will have to approve your request. Therefore, if you ever want your Chapter 13 case dismissed, it is typically just a matter of having your bankruptcy lawyer file a motion to dismiss. Be aware that there is no similar statute enabling a simple dismissal of a Chapter 7 bankruptcy case. This is a powerful right that is unique to Chapter 13 cases.

Why Does the Dismissal Option for a Chapter 13 Bankruptcy Exist?

Congress likely included this right to provide an incentive for people to file under Chapter 13. People are naturally more inclined to try a particular legal solution when they have a clear option for backing out when necessary. The idea is to encourage people to pay part of their debts instead of writing them off, as you do under Chapter 7 bankruptcy.

Your right to dismiss is so important that Congress decided you cannot even be forced to give it up. According to the dismissal statute, "Any waiver of [this] right to dismiss... is unenforceable." Therefore, even signing a contract to waive your right to voluntarily dismiss a Chapter 13 will not cause you to lose that right.

Why Might You Want To Dismiss a Chapter 13 Case?

There are a few common reasons why a person may want or need to back out of a Chapter 13, and they mostly relate to changing circumstances:

• Case length: Chapter 13 cases generally last much longer than Chapter 7 cases, often between three and five years, making it necessary to include some element of dismissal.

• Reason for filing not relevant: Sometimes, the reason why you filed may no longer apply. For example, you may have needed to catch up on home mortgage payments, but then you got a job out of state. As a result, you decide to surrender or sell the home instead and do not need the Chapter 13 case.

• Improved financial circumstances: If your financial situation has improved since you filed, you may no longer need Chapter 13 bankruptcy to meet your financial obligations. Following the example of being behind on your mortgage, if you came into some money, you might be able to quickly catch up and no longer need the time that Chapter 13 buys you.

• Insufficient support: The help your case provides may not be enough. For example, if your income decreased so significantly that the extended time the Chapter 13 provides is inefficient, the existing case may not be of use to you.

In these and countless other circumstances, it may be in your best interest to voluntarily dismiss. If you have questions about whether a dismissal makes sense under your unique circumstances, an experienced bankruptcy attorney could offer professional guidance to help you navigate these decisions.

When Is Dismissal Denied?

While it is very rare, there are some extreme situations under which a debtor might decide not to dismiss a Chapter 13 case. Bankruptcy judges have debated the issue, and some have decided that in situations of serious debtor abuse or fraud, the debtor should not be allowed to escape the jurisdiction of the court by simply requesting a dismissal. However, the likelihood of having your dismissal request denied is very minimal. In most cases, you will receive a dismissal shortly after you request it.

Can Conversion to a Chapter 7 Bankruptcy Be a Better Option?

Despite the simplicity of the process, dismissing a Chapter 13 case is not always your best option. If you still have debts, you will still be obligated to pay them after your bankruptcy case is dismissed. Chapter 13 does not result in the legal write-off of your debts until it is successfully paid off and completed. In some cases, it might be better to consider a conversion from a Chapter 13 to a Chapter 7 bankruptcy.

Under the same Bankruptcy Code mentioned above, an automatic conversion to a Chapter 7 is allowed if you pass the Means Test. This test determines whether you are eligible for Chapter 7 bankruptcy by measuring your monthly income against your expenses. It tells the court whether you can feasibly pay off your debts.

Schedule a Free Consultation with a New Braunfels, TX Bankruptcy Attorney

If you are considering trying to get your Chapter 13 bankruptcy dismissed or converting it to a Chapter 7, you could benefit from speaking to a Boerne, TX bankruptcy lawyer at Law Offices of Chance M. McGhee. As the director of the San Antonio Bankruptcy Bar Association, I have walked clients through every aspect of financial complications imaginable and am always available to listen with a compassionate ear. Call 210-342-3400 today to schedule your free consultation and learn more about your legal options.