Converting Chapter 13 to Chapter 7
In some bankruptcy cases, a filer might realize that a Chapter 7 bankruptcy case would better suit her needs than a Chapter 13 case.
It typically is possible to change the type of filing, so long as you are eligible to file both chapters. Some filers who chose at first not to work with an attorney may find themselves overwhelmed and unsure how to proceed in converting from one bankruptcy chapter to another.
To connect with a bankruptcy lawyer in your area for a free consultation, simply fill out the free case evaluation form below.
Chapter 13 to Chapter 7 Bankruptcy Conversions
Generally speaking, a filer may want to convert a Chapter 13 bankruptcy to a Chapter 7 case because of an inability to make payments on the repayment plan, unable to make secured payments outside of the plan, or a change in circumstances that now makes filing Chapter 7 a possibility.
Whatever your reasons, these are the general steps in convert a case:
- Contact a lawyer: If you filed your initial case without help from an attorney, now might be a good time to start working with one, because the requirements for converting a case are a little tricky for those who aren't familiar with bankruptcy law. Plus, a lawyer can help you determine whether you're eligible for a bankruptcy conversion, and, if so, whether one might actually help you financially.
- Take the means test again: In order to qualify for Chapter 7 protection, you must pass the means test that was introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) passed in 2005. There may be other requirements, such as not having previously converted your filing, and not having filed Chapter 7 in the past 8 years. If you do not meet these standards, you may not be eligible to convert your filing.
- File a Notice of Conversion with the court: This bit of paperwork is your official, legal announcement to your bankruptcy trustee and creditors that you intend to change the status of your bankruptcy case. A lawyer can help make sure you fill out the form properly and meet any necessary deadlines.
- Go to the creditors meeting: After filing your conversion notice, you'll have a new creditors meeting. This is their opportunity to object to a Chapter 7 bankruptcy and/or any of its individual terms.
- Get your trustee's approval: Based on the information you include in your conversion forms and any objections your creditors make to your Chapter 7 case, your bankruptcy trustee will decide to either approve or deny your conversion.
Any unsecured debts not protected by state bankruptcy exemptions may be at risk of seizure by the bankruptcy court in a Chapter 7 case. An attorney can help you weigh the risks of converting your case.
Will I Qualify for a Chapter 13 to Chapter 7 Conversion?
The answer to this question varies from person to person, but, generally speaking, you may qualify if:
- You would pass the means test: If you didn't pass the means test to qualify for Chapter 7 bankruptcy when you first filed but would now (because of job loss or income reduction, for example), you may qualify for a bankruptcy conversion.
- Your financial circumstances have changed: If your finances have changed because of a factor beyond your control (such as a death in the family, an illness, unemployment or a new child), and those changes mean that you will likely fall behind on your repayment plan or other payments you’re required to make, you may qualify for a conversion.
Find Out Whether You Qualify for a Bankruptcy Conversion
One way you may be able to determine whether or not you’ll qualify for a bankruptcy conversion is to speak with a bankruptcy lawyer. Connect with an attorney near you today. Simply fill out the free form below to get started.