Can a debtor dismiss a Chapter 13 case at will — even in bad faith — and walk away clean? Under §1307(b) of the Bankruptcy Code, the answer has long been yes. But courts are beginning to push back.
In this article, published in Legal League Quarterly (Q2 2025), Albertelli Law Bankruptcy Partner Jeffrey S. Fraser examines the growing trend of courts using their inherent authority under §105 to attach conditions to voluntary dismissal orders — including restrictions on the automatic stay in future filings.
Fraser traces the issue from In re Smith (6th Cir. 2021), where a debtor filed and dismissed three Chapter 13 cases in succession to repeatedly delay foreclosure, to the recent In re Corben (Bankr. S.D.N.Y. 2025), where a bankruptcy court crafted a targeted remedy: limiting the automatic stay in any future case filed within two years, without imposing an outright bar on future filings.
The takeaway for mortgage creditors: when a debtor moves to voluntarily dismiss, that moment is also an opportunity. Courts have the power to fashion appropriate relief on the way out — and creditors should be ready to ask for it.
Read the full article in Legal League Quarterly (Q2 2025) →