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Can you cancel a bankruptcy?

On Behalf of | Feb 9, 2022 | Bankruptcy

If you’re running a business and having trouble making ends meet, you might decide that bankruptcy is the right choice for you. If you do, you may need to sit down with your attorney to work out what kind of bankruptcy is best and when to file.

Sometimes, business owners who file for bankruptcy realize that they don’t need to go through with it to resolve their debt issues. If you find yourself in that position, you may ask if it’s reasonable to back out of the bankruptcy. The short answer is possibly, but it depends on the kind of bankruptcy and how far along in the process you are.

Filing to dismiss a bankruptcy

It’s sometimes appropriate to file to dismiss your bankruptcy case. For example, if you receive a mass payment you weren’t expecting that allows you to get your business back to normal, then you may ask to stop the bankruptcy rather than continuing through to liquidation. Cancelling a bankruptcy is a legal procedure, so you should talk to someone about getting the case dismissed as soon as you know that you have the money you need to remain open.

It is up to the court to decide if your case should be dismissed or not. The judge will determine if your new situation makes it appropriate to dismiss the case or if it should continue. There may be objections to you cancelling the bankruptcy, because creditors may worry that cancelling will hurt their chances of getting compensated appropriately in the future. If there are objections to the dismissal of a bankruptcy case, you will need to defend your request and why you’ve made it.

Be sure you want to go through with a bankruptcy before you file

It is important for you to be certain that a bankruptcy is the right choice for you before you file. By doing this, you can minimize the risk of finding yourself in a bankruptcy when you don’t need it. Additionally, if you do want to cancel the bankruptcy, you should be positive that you have the funds incoming to support that decision in the future.