What happens when a Chapter 11 bankruptcy filing is dismissed?

When a Chapter 11 bankruptcy filing is dismissed in the state of Arizona, it means the court has found the filing to be insufficient or improper to be considered and approved. When a bankruptcy filing is dismissed, the debtor is no longer protected from the claims of creditors. This means that creditors can continue to pursue their legal rights against the debtor in order to collect the debts. Creditors may attempt to garnish wages, attach assets, file lawsuits, or contact the debtor directly in an effort to collect the debts. If there has been a turnover of assets, such as a sale of personal property or other assets, the proceeds of which are to be used to settle the debts, these proceedings must continue. Another outcome of a Chapter 11 dismissal is that if the court finds that there has been any sort of abuse of the bankruptcy process, the court can issue sanctions to the debtor. This can include additional financial penalties or the court could take away any discharge of the debts that the debtor was hoping to achieve. Additionally, a Chapter 11 dismissal can also result in the debts reverting back to their pre-petition status. This means that creditors may once again attempt to collect the full amount of the debts that were owed prior to the filing, along with any additional fees, penalties, and interest that may have accrued since the bankruptcy was initiated.

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What happens when a Chapter 11 bankruptcy filing is dismissed?

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