Converting Chapter 13 to Chapter 7 Bankruptcy
If you've filed for Chapter 13 bankruptcy but your financial situation has recently changed, you may be concerned about making payments as scheduled in your repayment plan. Luckily, you may be able to convert your Chapter 13 bankruptcy case to a Chapter 7 case.
To consult with a lawyer about the specifics of your case, please fill out this form and arrange a free, no-obligation case evaluation.
The Chapter 13 to Chapter 7 Conversion
In order to be eligible for a Chapter 13 to Chapter 7 bankruptcy conversion, it's essential that your case has not yet undergone any other conversions. If it hasn't, you'll likely have to take these steps to begin the conversion process.
- Take the Chapter 7 means test. If you didn't pass the means test when you initially filed for bankruptcy, but have experienced a change in your financial circumstance (which might include income loss, expansion of the family, a chronic illness or something similar), you may be able to pass the means test now.
- File a Conversion Notice with the court. Assuming you pass the means test and are eligible for Chapter 7 bankruptcy protection, you and your lawyer will have to officially notify the court that you intend to convert your case. In most cases, you'll be required to pay a conversion fee.
- Attend the Creditors Meeting. Because converting your bankruptcy case will alter the terms of repayment to your creditors, you'll have to attend a second meeting of the creditors, at which you'll have to testify under oath to the completeness and accuracy of the information in your conversion documents.
- Wait for approval. Ultimately, your bankruptcy trustee will either approve or deny your petition to convert your bankruptcy case. Depending on the circumstances surrounding your case, your trustee may take into account your financial situation, objections filed by your creditors and a number of other factors when making the decision.
Considerations Before Converting Your Bankruptcy Case
While some financial circumstances may necessitate the conversion of your Chapter 13 case to a Chapter 7 case, it's important to understand some of the potential consequences of switching to Chapter 7 bankruptcy. Converting from a Chapter 13 to a Chapter 7 case might mean:
- You lose repayment plan privileges: If you've fallen behind on payments on your home or car, Chapter 13 bankruptcy offers you a time span to catch up on them. But exiting Chapter 13 means you must either cover your asset-backed debts in a lump sum or risk having your property repossessed or foreclosed upon.
- You get your discharge more quickly: If you're successful in converting to a Chapter 7 case, you may be able to expect a bankruptcy discharge in just a few months. This means, of course, that the protection of the automatic stay will only last for that shorter time.
Ask Your Questions to a Bankruptcy Lawyer Near You
Naturally, the specifics of any bankruptcy conversion depend on the individual filer. If you'd like to learn more about converting your Chapter 13 case to a Chapter 7 or filing bankruptcy under either chapter, take advantage of this opportunity to consult with a bankruptcy lawyer near you.
Laws may have changed since our last update. This is for informational purposes and is not legal advice. Speak to a local attorney for legal advice about your particular situation.