Voluntary vs. Court-Ordered Dismissal

Two Types of Dismissal

When a bankruptcy case is dismissed, it can happen in one of two fundamentally different ways:

1. Voluntary dismissal: The debtor asks the court to dismiss their own case
2. Court-ordered (involuntary) dismissal: The court dismisses the case on motion from the trustee, a creditor, or on its own initiative

The distinction matters because it affects your rights, your ability to refile, and the consequences you face. Understanding which type of dismissal applies to your situation is essential for planning your next steps.

Voluntary Dismissal

Chapter 13: An Almost Absolute Right

In Chapter 13, the debtor's right to voluntary dismissal is nearly absolute. The word "shall" in the statute means the court must grant the request -- it is not discretionary. Courts have consistently upheld this right, and it can be exercised at any time during the case.

The only exception is if the case was previously converted from another chapter (such as Chapter 7 or Chapter 11). In that situation, the court has discretion rather than an obligation to dismiss.

Voluntary dismissal in Chapter 13 is sometimes strategic. A debtor might voluntarily dismiss to:

• End a plan that has become unworkable without waiting for a trustee motion
• Negotiate directly with creditors outside of bankruptcy
• Refile with a better-prepared petition and plan
• Switch to Chapter 7 (by dismissing and refiling rather than converting, which may preserve certain rights)
• Avoid conditions that the court might attach to an involuntary dismissal

Chapter 7: Much Harder

In Chapter 7, voluntary dismissal is not a right -- it requires court approval under 11 U.S.C. Section 707(a). The court considers whether dismissal would prejudice creditors. If a Chapter 7 trustee has identified assets to liquidate, the court may deny the debtor's request to dismiss. This is a significant difference from Chapter 13.

Court-Ordered (Involuntary) Dismissal

Court-ordered dismissal happens when someone other than the debtor -- typically the Chapter 13 trustee, a creditor, or the court itself -- moves to dismiss the case. The grounds for involuntary dismissal in Chapter 13 are listed in 11 U.S.C. Section 1307(c):

• Unreasonable delay: The debtor is not making progress toward plan confirmation or completion
• Failure to pay: The debtor has not made plan payments as required
• Failure to file a plan: The debtor filed the case but never proposed a plan
• Denial of confirmation: The plan was not confirmable and the debtor has not proposed a modified plan
• Material default: The debtor has materially defaulted under the confirmed plan
• Revocation of confirmation: The plan was confirmed but confirmation was later revoked (typically for fraud)
• Failure to file tax returns: Under Section 1307(c)(9), failure to file required tax returns is specific grounds for dismissal
• Failure to pay domestic support: Under Section 1307(c)(11), failure to pay post-petition domestic support obligations

With Prejudice vs. Without Prejudice

This is one of the most important distinctions in bankruptcy dismissal:

Type	Meaning	Impact on Refiling
Without prejudice	The case is closed but the debtor retains the right to refile	Can refile a new case (subject to timing restrictions under 109(g) and 362(c))
With prejudice	The court imposes a bar on refiling for a specified period	Cannot file a new case until the bar period expires (often 180 days, sometimes longer)

Most voluntary dismissals are without prejudice. Court-ordered dismissals can be either, depending on the circumstances. Courts are more likely to dismiss with prejudice when:

• The debtor has filed multiple cases in a short period (serial filing)
• There is evidence of bad faith or abuse of the bankruptcy process
• The debtor has repeatedly failed to comply with court orders
• The case was filed primarily to delay foreclosure or other creditor action without genuine intent to reorganize

Impact on Future Filings

Any dismissal -- voluntary or involuntary -- can affect your ability to file again and the protection you receive in a future case:

The 109(g) Filing Bar

This means that not all dismissals trigger the 109(g) bar. A purely voluntary dismissal unrelated to a stay relief motion generally does not impose the 180-day wait. But if you dismiss your case after a creditor has moved for relief from stay, the bar applies. Learn more at 109g.org.

The 362(c) Stay Limitations

Even if you can refile, your automatic stay protection may be limited:

• 362(c)(3): If you had one case dismissed within the prior year, the automatic stay in your new case expires after 30 days unless you file a motion to extend it and show good faith
• 362(c)(4): If you had two or more cases dismissed within the prior year, you get no automatic stay at all unless you file a motion to impose it and show good faith

These stay limitations are among the most serious consequences of dismissal. Without the automatic stay, creditors can continue foreclosure, repossession, garnishment, and other collection actions even though you have filed a new case. Learn more at automaticstay.org and serialfiler.org.

Strategic Considerations: Dismiss or Convert?

When a Chapter 13 case is failing, the debtor typically has three options: let it be dismissed, voluntarily dismiss, or convert to Chapter 7. Each has different consequences:

Option	Result	When It Makes Sense
Voluntary dismissal	Case ends, no discharge, debts remain	You want to refile later with a better plan, or you prefer to deal with creditors outside bankruptcy
Involuntary dismissal	Case ends, no discharge, possible prejudice bar	You have not taken action and the trustee moved first. Try to convert or voluntarily dismiss before this happens.
Convert to Chapter 7	Case continues as Chapter 7, possible discharge, possible asset liquidation	You qualify for Chapter 7 (means test), you have no significant non-exempt assets, and you want a discharge now

Frequently Asked Questions

Can I voluntarily dismiss my Chapter 13 at any time?

Yes, under 11 U.S.C. Section 1307(b), you have an almost absolute right to dismiss your Chapter 13 case at any time, as long as the case was not previously converted from another chapter. The court "shall" dismiss upon your request -- it is mandatory, not discretionary.

What is the difference between dismissal with and without prejudice?

Dismissal without prejudice means you can refile a new case (subject to timing restrictions). Dismissal with prejudice means the court has imposed a bar on refiling for a specified period. Most voluntary dismissals are without prejudice. Courts impose prejudice bars in cases involving bad faith, serial filing, or abuse.

Does voluntary dismissal trigger the 180-day filing bar?

Not automatically. The 180-day bar under 11 U.S.C. Section 109(g) applies to voluntary dismissals only if the dismissal occurred after a creditor filed a motion for relief from the automatic stay. A voluntary dismissal for other reasons -- such as wanting to refile with a better plan -- generally does not trigger the 109(g) bar.

Should I dismiss or convert my Chapter 13?

It depends on your goals and circumstances. If you want a discharge of your debts now and you qualify for Chapter 7, converting may be the better option. If you want to preserve the option to refile Chapter 13 later with a better plan, dismissal may be preferable. If you have significant non-exempt assets, conversion to Chapter 7 could result in losing property. This decision should always be made with the advice of a qualified bankruptcy attorney.