Dismissal

Dismissal summary:

• A dismissal is when a court officially ends a lawsuit filed against you.

• The dismissal of a debt-related lawsuit doesn't automatically erase the debt itself.

• A bankruptcy dismissal is when your bankruptcy case is ended without your debts being resolved. 

Dismissal Definition and Meaning

A dismissal is when a court officially ends a legal case. 

In a lawsuit, a dismissal can happen if the creditor doesn't follow proper procedures, or they’ve missed the statute of limitations for filing the debt lawsuit. Even if a lawsuit against you is dismissed, a creditor might still have the right to collect a debt you owe. 

In a bankruptcy case, a dismissal means you don’t get any debt discharged (forgiven). Bankruptcy dismissal could happen if the judge finds evidence of fraud, or because you failed to complete all the required steps for the type of bankruptcy protection you want. You can also voluntarily ask to have your bankruptcy case dismissed.

Key Aspects of a Lawsuit Dismissal

A lawsuit dismissal basically brings that lawsuit to an end. If you’re being sued over an unpaid debt and the lawsuit is dismissed, the court will not make you pay that debt. A dismissal can happen with prejudice or without prejudice. 

A dismissal with prejudice is considered final, and you can’t be sued for the same purpose again. 

A dismissal without prejudice is not considered final. A creditor could sue you again for the same purpose if they decide to do so.

A lawsuit dismissal will not appear on your credit report, and therefore will not cause damage to your credit standing. A bankruptcy dismissal, however, could appear on your credit report and negatively impact your credit score.

Examples of Lawsuit Dismissals

There are number of reasons why a lawsuit filed against you by a creditor could be dismissed in a court of law:

• Expired statute of limitations: Each state sets its own time limit for when creditors can file a lawsuit to recoup a debt. The statute of limitations also depends on what kind of debt is involved. If a creditor waits too long to start legal action, the suit could be dismissed.

• Insufficient proof: If you're being sued by a creditor, they have to prove that the debt exists and that you're responsible for it. If they can't produce evidence like a credit card agreement or loan documents, your lawsuit may be dismissed.

• Identity theft: Identity theft could lead to unpaid debts that a creditor tries to recoup. If you can prove that your identity was stolen and used to rack up the unpaid debt you're being sued over, it could lead to a dismissal.

• Errors in paperwork: States have a process for filing lawsuits. If a creditor doesn’t follow the rules, the case could be dismissed.

• Consumer protection violations: Debt collectors need to follow the Fair Debt Collection Practices Act (FDCPA), as well as state laws, when collecting debts and filing lawsuits related to them. If they don’t, it could lead to dismissal.

• Debt settlement: Debt settlement can lead to the dismissal of a lawsuit if the creditor agrees to dismiss the case as part of the settlement agreement. A debt settlement firm can negotiate this.

Key Aspects of a Bankruptcy Dismissal

In the context of personal bankruptcy, a dismissal is when a case is ended without having your debt discharged (forgiven). This means you're still responsible for paying your creditors. Bankruptcy dismissals can happen for a number of reasons. Common reasons include failing to complete all the required steps, or missing required hearings.

Examples of Bankruptcy Dismissal

• Fraud: A bankruptcy case could be dismissed if a judge finds evidence of fraud.

• Failing to complete required steps: Bankruptcy involves required steps that you must take. For example, you may be required to have credit counseling as part of the bankruptcy process. If you don't, the bankruptcy could be dismissed.