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How a dismissed bankruptcy affects credit

People in Michigan whose bankruptcies have been dismissed might wonder how this will affect their credit rating. A dismissed bankruptcy may occur either with or without prejudice.

In the latter example, a bankruptcy is dismissed because of an error in the paperwork or another procedural mistake. If this happens, the person can refile immediately. The person can also request that the automatic stay from the previous bankruptcy be carried over. In the former example, the bankruptcy is dismissed because of committing bankruptcy fraud, filing multiple bankruptcies as a way to hinder creditors, not following court orders or other disruptive behavior.

Unfortunately for the person who may make an honest error on bankruptcy paperwork, a dismissal appears on the credit report, and subprime lenders are rarely concerned with whether the dismissal occurred with or without prejudice. In general, lenders may see a dismissal as evidence that a person is unlikely to keep up with loan payments. As a result, people who have a bankruptcy dismissal on their credit report may struggle to get loans for cars and other consumer goods. Therefore, a person who has a Chapter 13 bankruptcy who is having trouble making the payments should contact the trustee to find out what options may be available rather than risk having the bankruptcy dismissed for nonpayment.

An attorney can review a client’s options for debt relief and help decide whether bankruptcy is the right choice. The two principal forms of consumer bankruptcy are Chapter 7 and Chapter 13, and the attorney can outline the eligibility requirements for each.