Under Section 707(a) of title 11 of the United States Code (the “Bankruptcy Code”), a court may dismiss a chapter 7 bankruptcy case for cause. Section 707(a) provides a list of examples of conduct that constitutes cause to guide the court in making its determination. A chapter 7 consumer debtor has the right to voluntarily dismiss his own chapter 7 case, however, that right is not absolute. When a consumer debtor seeks to voluntarily dismiss his chapter 7 case he must establish cause for dismissal under section 707(a). The court will determine whether the debtor’s voluntary motion to dismiss should be granted by determining whether dismissal would be in the best interest of all the parties involved. One may think that when a debtor attempts to voluntarily dismiss his own chapter 7 case the court should simply grant the motion, but that is not the case. It is important for the court to determine the reason a debtor would elect to withdraw from bankruptcy after voluntarily filing for such protection by looking at the facts and circumstances of each individual case.
This article discusses why the court’s ability to determine whether cause exists for voluntary dismissal of a consumer debtor’s bankruptcy case ensures that individuals cannot enjoy the benefits of bankruptcy without fulfilling their obligations to creditors. Part I of this article discusses the factors set forth in Section 707(a) of the Bankruptcy Code that are considered by the bankruptcy court in determining if cause exists for dismissal of a chapter 7 case. Part II discusses the court’s use of discretion in determining what is in the best interest of the parties as well as the court’s consideration of the facts and circumstances of the case in reaching its conclusion. Part III discusses how “bad faith” is considered a relevant factor by bankruptcy courts when determining whether to dismiss a case.