Bankruptcy offers a path to a fresh start but it does not guarantee a discharge. South Carolina’s bankruptcy court regularly dismisses cases before debts are erased, and a few filers end up facing federal charges.
An experienced bankruptcy attorney can guide you through the filing process and explain the difference between an honest mistake and a disqualifying act.
Most Dismissals Are About Missed Steps, Not Fraud
The most common cause of dismissed bankruptcy cases is simple error. Most Chapter 13 dismissals happen when the filer falls behind on plan payments.
Common paperwork errors include:
- Not filing the debtor’s schedules and financial statements within 45 days of the petition
- Not completing or missing certificates that prove filers completed the required credit counseling course
Cases dismissed “without prejudice” can generally be refiled, but there’s a 180-day waiting period if the dismissal resulted from willfully disobeying a court order, or if the filer voluntarily dismissed the case after a creditor asked the court to lift the automatic stay. If you refile within a year, the automatic stay that halts collections may last only 30 days unless the court extends it. If two or more cases were dismissed within a year no automatic stay takes effect at all unless the court orders one.
When the Court Finds Abuse
Under 11 U.S.C. § 707(b), a judge may dismiss an individual Chapter 7 case involving primarily consumer debts if granting relief would amount to an abuse of the bankruptcy laws (filers must pass a means test). Courts consider whether the petition was filed in bad faith or whether the filer’s overall finances show abuse, such as the ability to repay creditors through a Chapter 13 plan.
Bad faith does not require outright fraud. In June 2026, the Ninth Circuit Bankruptcy Appellate Panel held that bad faith can be found without proof of fraudulent intent. In that case, the debtor filed mainly to halt a creditor’s lawsuit.
Dismissal “With Prejudice” Can Lock You Out
The harshest civil outcome is dismissal with prejudice, which bars refiling for a set period. South Carolina examples include:
- In 2022, the court found that a debtor’s credit counseling certificate appeared to have been altered from one filed in a 2018 case. The judge dismissed the new case with prejudice and barred refiling for one year.
- Repeat Chapter 13 filers whose earlier cases ended over missed trustee payments received a 180-day bar adopted to curb serial filings.
- In 2024, the court dismissed a Chapter 7 case with prejudice after the trustee sought and received a two-year bar against a debtor who appeared to be using the court to frustrate creditors.
When Misconduct Becomes a Federal Crime
Bankruptcy fraud is prosecuted in federal court, under a statute which covers concealing and making false statements under oath. The American Bankruptcy Institute notes that intentionally undervaluing property can qualify as concealment. Even without criminal charges, hiding assets or lying under oath can result in denial of discharge, meaning the filer still owes the debts.
South Carolina has seen this firsthand. In a 2007 case, a North Myrtle Beach man valued his hot dog stand at $1,500 in his bankruptcy filing, then sold it for $95,000 while his case was pending. He pleaded guilty and faced up to five years in prison and a $250,000 fine.
Protecting Your Case
The safest approach is complete honesty and careful follow-through:
- List every asset, account, transfer, and prior filing
- Meet every deadline
- Keep up with Chapter 13 payments
- If your circumstances change while your case is open, talk with your attorney before acting
Talk to a South Carolina Bankruptcy Attorney
If you are considering bankruptcy or worried about a pending case, Lam Law Firm can review your situation, help you avoid the missteps that lead to dismissal, and guide you toward lasting debt relief. Contact us today to schedule a consultation.
