A Chapter 7 case can only be dismissed for “cause” under 11 U.S.C. § 707(a).  In re  Watkins, 229 B.R. 907, 908 (Bankr. N.D. Ill. 1999). A Chapter 7 debtor does not have an absolute statutory right to voluntarily dismiss a Chapter 7 bankruptcy petition like a Chapter13 debtor has under 11 U.S.C. § 1307(b). Section 707(a) provides as follows: "(a) The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including–(1) unreasonable delay by the debtor that is prejudicial to creditors;(2) nonpayment of any fees and charges required under chapter 123 of title 28 [28 U.S.C. §§ 1911 et seq.]; and(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521, but only on a motion by the United States trustee." 11 U.S.C. § 707(a). Thus, a debtor does not have an absolute right to dismiss a Chapter 7  case even if begun on a voluntary petition.  Schwartz v. Geltzer (In re Smith), 507 F.3d 64, 72 (2d Cir. 2007); Turpen v. Eide (In re Turpen) , 244 B.R. 431, 434 (B.A.P. 8th Cir. 2000); Leach v. United States (In re Leach), 130 B.R. 855, 857 n.5 (B.A.P. 9th Cir. 1991).

Federal Rule of Bankruptcy Procedure 1017(a) mandates that a motion for dismissal by a debtor must be predicated on cause and may only be granted after notice and a hearing. Indus. Ins. Servs., Inc. v. Zick (In re Zick), 931 F.2d 1124, 1126 (6th Cir.  1991).  The decision whether to grant a motion to dismiss a Chapter 7 case lies within the discretion of the bankruptcy court.   Peterson v. Atlas Supply Corp. (In re Atlas Supply Corp.), 857 F.2d 1061, 1063 (5th Cir. 1988); Eastman v. Eastman (In re Eastman), 188 B.R. 621, 624 (B.A.P. 9th Cir. 1995).  A Chapter 7 trustee has standing to oppose a debtor’s request for dismissal.  

In construing § 707(a), courts have refused to dismiss a Chapter 7 case where the  dismissal would cause some plain legal prejudice to the creditors. In re Higbee,  58 B.R. 71, 72 (Bankr. C.D. Ill. 1986).  If dismissal would prejudice the creditors, then it will ordinarily be denied.  Legal prejudice is found to exist where assets which would otherwise be available to creditors are lost because of the dismissal.  In re McCullough , 229 B.R. 374, 376 (Bankr. E.D. Va. 1999). Delay in satisfying creditors’ claims can be sufficient to preclude dismissal.  The debtor has the burden of proving cause for voluntary dismissal of the Chapter 7 petition.   In re Jabarin , 395 B.R. 330, 337 (Bankr. E.D. Pa. 2008). Even if the debtor can show cause, the court may deny the motion if there is a showing of prejudice to creditors.  

In deciding whether to exercise its discretion and grant a Chapter 7 debtor’s motion to dismiss the debtor’s case, the court’s primary consideration is whether dismissal is in the best interest of the creditors and also if those interests will be protected outside bankruptcy. Courts are not impressed with complaints of attorney negligence, lack of representation, or errors in judgment by debtors when considering motions for voluntarily dismissal. See, e.g., In re St. Laurent, 17 B.R. 768 (Bankr. D.Me. 982) (denying motion to dismiss because mistaken belief by debtor and her counsel that she could retain all assets as exempt and receive discharge of all her dischargeable debts was not cause under § 707(a)).

Whether or not a motion to withdraw a Chapter 7 petition will be met with these type of objections will depend upon the particular circumstances of each case.  Any attempt to withdraw a pending Chapter 7 case should be done only through, or after consultation with, counsel.  In addition to the legal issues discussed above, there are several practical considerations which must be weighed.  There are financial and legal repercussions to withdrawing a bankruptcy petition. For example, some assets, such as homes or cars, may be subject to repossession or foreclosure once the petition is withdrawn.  The debtor should also have a plan for debts. Once the bankruptcy is dismissed, all debts will be due and payable, and creditors will want their money. Any past due amounts will also be due immediately. Attorney fees not paid through the bankruptcy will be added to the list of debts.

-Drew Broaddus