You may be able to change your Chapter 13 bankruptcy case to a Chapter 7 if you can no longer afford to make your Chapter 13 bankruptcy payments. You can convert Chapter 13 to Chapter 7 at any time. This holds true unless you have already had a Chapter 7 bankruptcy discharge within the prior eight years. Simply submit a Notice of Conversion with the court and pay a conversion fee to change your Chapter 13 to a Chapter 7. Keep in mind, however, that in order to finish your case and get a discharge, you must still qualify for Chapter 7 bankruptcy.
At O’Bryan Law Offices, we understand that hard times happen unexpectedly. Luckily, bankruptcy is a viable option to help debtors get a fresh start. As a premier bankruptcy firm in Kentucky, our team has extensive experience handling all manner of bankruptcy cases. If you or someone you know struggles with debts or making Chapter 13 bankruptcy payments, we’re here to help. Call our Louisville bankruptcy office today at 502-339-0222, or fill out our online intake form.
Can You Convert Chapter 13 to Chapter 7?
If you haven’t gotten a Chapter 7 bankruptcy discharge in the past eight years, you have the option to transfer your Chapter 13 case to Chapter 7. You must submit a motion with the court to convert your case. If your court does not have forms for this purpose, ask the trustee for assistance. Without a court hearing, the request will be granted immediately. You may need to notify your creditors of the conversion; the trustee should be able to tell you what your court requires.
Why Convert Chapter 13 to Chapter 7?
A Chapter 13 debtor may need or wish to convert Chapter 13 to Chapter 7 in their bankruptcy case. The bankruptcy court might also force a conversion. Although there are numerous reasons to convert, many filers will consider it if one of the following events occurs.
- They cannot afford to make their Chapter 13 payments due to a change in their financial situation.
- They filed for Chapter 13 bankruptcy for the sole purpose of keeping property that they no longer want. Examples include a home or expensive item.
You have the right to convert your claim in most cases. However, this does not always imply that you will be eligible for Chapter 7 bankruptcy relief. Learn about topics including eligibility and when the court may force you to file for Chapter 7 bankruptcy.
How to Qualify for Chapter 7 Bankruptcy
Before you can file for Chapter 7 bankruptcy, you must first meet a few requirements, the most important of which is passing the means test. The means test examines your income and spending to see if you can pay off part of your obligations through a Chapter 13 bankruptcy. You do not qualify for Chapter 7 if you can.
Although not all courts agree on whether you must satisfy the means test, the disagreement is more about form than content. If they allow filers to get out of the means test through first filing Chapter 13 and then converting to Chapter 7, this loophole would be unacceptable. It essentially allows high-income filers to get out of paying their creditors. As it is, the law has a mechanism in place to prevent such results.
Although nobody can force you to take the means test, your creditors or trustee can still catch you. If they prove that you make enough money to pay back your debts by comparing your income to your expenses, there is a very good chance that the court will deny your conversion. In order to avoid this, speak with a Louisville bankruptcy attorney about your options.
What Happens if I Convert My Chapter 13 to a Chapter 7?
When you convert your case, the court assigns a new Chapter 7 bankruptcy trustee to you. You’ll also have to attend a subsequent creditors’ meeting, or a 341 hearing. While you are not required to file a new bankruptcy petition after converting your bankruptcy, you will most likely need to complete extra papers and alter certain schedules.
You may need to file revised Schedules I and J to reflect your current budget if your financial circumstances have changed and you can no longer afford to make Chapter 13 payments. A declaration outlining your reasons for converting may also be required by the court. If you have a mortgage, auto loan, or other secured debt, you must additionally submit a Statement of Intention with the court, detailing your plans for the property that secures the loan.
Additionally, you must reveal whether you have post-petition debts or if you gained post-petition assets during your Chapter 13 case.
How Much Does It Cost to Convert Chapter 13 to Chapter 7?
Apart from filing updated Schedules I and J, all you have to do to convert your Chapter 13 case to a Chapter 7 case is file a “Notice of Conversion,” which informs the court and your creditors of the change. You’ll also have to pay a one-time conversion cost of $25. In most cases, the notice to convert will be processed automatically, and you will not be required to attend a court hearing.
How Long After Chapter 13 Can I File Chapter 7?
You can change your Chapter 13 case to Chapter 7 at any time unless you have already gotten a Chapter 7 bankruptcy discharge within the prior eight years. The court will need you to file a Notice of Conversion and pay a conversion fee. This notification does not have an official bankruptcy form; however, your court may have a local form. In non-conversion cases, however, things are a little different.
You must wait four years after filing a Chapter 7 bankruptcy to get your obligations erased under Chapter 13. If no debts were discharged in the Chapter 7 filing, you can apply for a Chapter 13 before four years, but if you had debts discharged in Chapter 7 and expect to discharge debts in Chapter 13, the waiting period is 4 years.
How Can I Convert My Bankruptcy Without Losing My Car or House?
The Court mandates you to make payments on a three to five-year payment plan when you petition for Chapter 13 bankruptcy protection. Conversion to Chapter 7 may be essential if you are unable to make the required payments under your Chapter 13 plan. Conversion may be achievable regardless of your reason. Depending on your circumstances, you may be able to maintain your home and automobile under Chapter 7, but your payments must be current.
Call O’Bryan Law Offices Today
At O’Bryan Law Offices, we pride ourselves on helping those in need get out of financial binds. Even if you plan out your every financial move ahead of time, unexpected hardships are sometimes unavoidable. If you need help getting back on your feet after hard times, bankruptcy might be the perfect solution. For more information on how we can help you, please call our office at 502-339-0222 today, or fill out our online intake form.