The goal when you file for Chapter 7 bankruptcy is to have the court discharge your debts. When a discharge happens, it means the court approves your case and your debts are no longer your obligation to pay under the law. Not every Chapter 7 will end in a discharge, though. In some instances, the court may dismiss your case.
According to the U.S. Courts, a dismissal is when the court denies your bankruptcy claim. You will not have any further protection under bankruptcy laws, and you will retain responsibility for any debts you tried to discharge in bankruptcy. There are several reasons why the court may dismiss your case.
Grounds for dismissal
The court will dismiss a case if it feels you were trying to break the law. This may mean that it uncovers that you hid assets or otherwise disposed of them to avoid having the court liquidate them to pay your creditors. It may also include breaking any bankruptcy laws, such as not getting credit counseling or not reporting your full income.
Dismissal may occur if the court feels you did not keep adequate financial records. It may feel it cannot grant the bankruptcy because it cannot verify all the information you provided on your petition.
If you lost assets prior to filing your bankruptcy and cannot explain why this happened, the court may look unfavorably on this and dismiss your case. The court must know all the details of your finances, including what you did immediately before filing your petition for bankruptcy.
Finally, the court has the right to deny your bankruptcy request if you do not meet the most current requirements to file a Chapter 7. You must meet a means test to file this type of bankruptcy. In this situation, the court may let you convert to a Chapter 13 instead of just dismissing the case.