Filing for bankruptcy is always a tough decision. That means there's a chance you might change your mind after filing for bankruptcy. Are you able to stop bankruptcy once it starts?
Why Would You Want to Stop a Bankruptcy Filing?
There are several reasons why you might want to stop a chapter 7 bankruptcy. The first reason is that you're not sure if the bankruptcy will work out in your favor or not. You may have debts that you've learned it isn't certain they'll be discharged in your bankruptcy. If you can't get rid of those debts, bankruptcy may no longer be worth it.
The second reason is that you may have to give up assets you don't want to. For example, you may learn that you'll be forced to sell your home when you were hoping to keep it. That might make you want to explore other options.
Finally, your circumstances might have changed. For example, you might have gotten a new job with a higher salary. You might now be able to pay off your debt without using bankruptcy.
Can You Stop a Bankruptcy Filing?
Yes, you can stop a bankruptcy filing. The way you do this is by withdrawing your bankruptcy petition.
When you withdraw your bankruptcy petition, you tell the court you no longer want to proceed. As long as your bankruptcy hasn't been finalized, you can withdraw your petition.
What Happens If You Withdraw Your Bankruptcy?
Once you withdraw your bankruptcy, you lose all the protections of bankruptcy. Keep in mind that you gained several important rights just by filing for bankruptcy.
When you filed for bankruptcy, your debt payments were put on pause, and your creditors were prohibited from contacting you. Normally, those protections remain in place until you complete your bankruptcy and the court discharges your debts. Since you're not going forward with bankruptcy, you'll lose those protections and have to pay your debts as originally agreed.
Can You File for Bankruptcy in the Future?
Withdrawing your bankruptcy won't prevent you from filing for bankruptcy in the future. There are rules that say you have to wait for a certain number of years after going through bankruptcy. However, if you haven't completed your bankruptcy, those rules don't apply.
The reason for the limits is to keep people from getting the benefits of bankruptcy too many times. Those rules are actually an important reason why you might want to stop your bankruptcy and wait until later.
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