2 years into chp 13 bankruptcy - feel we can negotiate with creditors on our own. Have filed motion to voluntarily dismiss bankruptcy. want to know possible ramifications
Without knowing more about your specific situation, it is impossible to speculate.
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Chapter 7 Bankruptcy Attorney
Possible ramifications include remorse on your part when you realize that a global solution which binds all creditors is better than piecemeal workouts with multiple creditors. No interest on unsecured debt is better than interest charged on unsecured debt. A discharge of debt in bankruptcy is better than derogatory trade lines on your credit reports. And paying out of your monthly income over time is better than trying to come up with cash lump payments creditors are demanding.
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Chapter 13 Bankruptcy Attorney
Realization that you did something very stupid without consulting somebody with expertise prior to filing your motion to dismiss your case. Realizing that creditors are very hard to negotiate with successfully. Realization that the amount you will spend settling with individual creditors is significantly higher than the amount you would have spent if you had stayed in your Ch13. Judgments against you from creditors. Possible loss of assets due to dismissal of Ch13 and the subsequent institution of lawsuits and judgments against you.
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You probably just blew it. Short of winning the lottery or receiving a huge inheritance, I have yet (in over 10 years and thousands of clients) to see a case where it made sense for the debtor to dismiss a chapter 13 early and try to "work it out." Read Blake's answer, he spells out the reasons why.
Here is the main reason. The bankruptcy is already on your credit report. If you dismiss, it doesn't go away. So you might as well finish and get the benefit. Dismissing early is a HUGE gamble. Creditors don't have to work with you. At this point, you are not going to be able to hit the reset button and get back on monthly payments. If you dismiss, you need lump sum cash to resolve the debts.
It always happens, about 2-3 years in, a debtor gets what I call debtor fatigue. They forget what it was like before they filed and the peace that fling brought them. Now you think the grass is greener, its not. Unless you received a huge windfall of cash, you are probably should withdraw your motion.
At the very least, go meet with your attorney so he/she can properly advise you based on your "specific" circumstances.
Shooting first and asking questions later is usually a bad idea. Hopefully we're wrong and you'll be able work out favorable terms on your own outside of bankruptcy. If not, you can likely refile.
Chapter 7 Bankruptcy Attorney
I agree with Attorney Barkus and others. First, all the interest and penalties will instantly be added back on. Second, if written off debt from settlements you may still then owe taxes on it. Third, some dischargeable income taxes may become non dischargeable as a result of this filing if you have to turn around and file another bankruptcy. Fourth, you must LOOK AT THE ACTUAL CLAIMS ALLOWED, then compare that to the amount owed to all creditors when you filed (in other words see what creditors did NOT file claims) as the non filed claims will be discharged and the interest and penalties will kick in on the filed claims if you dismiss. There is no "negotiation" in chapter 13 really...the creditors get what they get. AND yonly only may have one year left..we don't know though as Attorney Larkin states as there are too many unknown facts. Finally, the advantages re older secured vehicles, possible non dischargeable debts in a ch 7 that are discharged in a ch 13, and possible discharges of 2nd mortgages, etc. all come into play in some cases...facts which only an experienced ch 13 attorney can go through with you. We don't know if you are in a 5 yr plan and if so why . Good luck.