When debtors file for chapter 13 bankruptcy, they must create a repayment plan to pay off some or all debts over the course of a five-year period. Some individuals find that their situation remains unchanged, and they are able to successfully complete their repayment plan. However, others may find themselves in a difficult position where financial circumstances have changed, and they are no longer able to make payments according to their original repayment plan. Unexpected job loss, unforeseen emergencies, or even disability can leave them wondering if they have the option to convert their bankruptcy filing. If you want to convert chapter 13 to chapter 7, we’ll outline the information you need below.
As long as you haven’t received a chapter 7 discharge in the last eight years, you should the ability to convert your chapter 13 case into a chapter 7 case at any time. The process to initiate a conversion is straightforward—you pay a conversion fee, and your attorney files a notice with the court.
Once you decide to convert chapter 13 to chapter 7, you must still make sure that you qualify for chapter 7. You normally must pass a means test in order to qualify for Chapter 7 bankruptcy, however, bankruptcy courts are divided on whether the means test applies in a Chapter 7 case that was converted from a Chapter 13. So, while some jurisdictions still require debtors to pass the means test when they convert Chapter 13 to Chapter 7, other courts do not require the means test in conversion. Because of this, it’s important to work with an attorney that knows the rules in your jurisdiction before attempting to convert your case.
Your obligations differ tremendously between chapter 13 and chapter 7 bankruptcy. If you need help understanding these differences, Parker & DuFresne is here to help. We understand that the decision to convert a bankruptcy is a difficult one that should not be done without the legal guidance of an attorney that you trust. At Parker & DuFresne our goal is to get our clients back on the road to financial stability as soon as possible. We can help you determine if bankruptcy conversion is the right solution for you. Contact us today for a consultation.
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