Can I dismiss (meaning cancel) my chapter 13 bankruptcy?

Can I dismiss (meaning cancel) my chapter 13 bankruptcy?

The short answer is “yes,” under normal circumstances you can cancel your chapter 13 at any time, for any reason.

Recently, the Ninth Circuit Court of Appeals in In re Nichols, 10 F.4th 956 (9th Cir. 2021), held that a debtor could dismiss a chapter 13, even if the debtor had been acting in bad faith. The Court relied on the supreme court case of in Law v. Siegel, 571 U.S. 415 (2014) which held that  bankruptcy courts “may not use their equitable powers under § 105(a) to contravene express provisions of the Bankruptcy Code.” The debtor in Siegal was allowed to retain the full amount of his homestead exemption, even though he appeared to have engaged in illegal conduct. The Siegal court held that since the homestead exemption was clearly provided for in the bankruptcy code, the bankruptcy court lacked the authority to take it away from the debtor.

Bankruptcy Code 1307(b) clearly states that a debtor can dismiss a chapter 13 “at any time.” Accordingly, the Nichols court concluded this right could not be taken away from the debtor, even if the debtor had acted in bad faith.