Can I Convert My Chapter 13 to Chapter 7?
November 4, 2022
This is a general outline provided by ROBERT J. ADAMS & ASSOCIATES. Offices in Chicago and Waukegan, Illinois
The primary practice of ROBERT J. ADAMS & ASSOCIATES is Chapter 7 and Chapter 13 Bankruptcy.
There are reasons why you filed Chapter 13 instead of Chapter 7. Generally, it was to save something like a car or your home when behind on the mortgage. Some file Chapter 13 because their household income was higher than the Means Test allowed. And, then there a folk who filed Chapter 13 because they had filed a prior Chapter 7 within eight (8) eight years. And, also sometimes you have fallen behind on your Chapter 13 payments and a new Chapter 13 is not practical.
WHY CONSIDERING CONVERTING CHAPTER 13 TO CHAPTER 7?
- Filed to save a car; now it is not worth it;
- Filed Chapter 13 to save your house; now things are bad and you can’t maintain the mortgage payment, Chapter 13 payment and have enough left over to live;
- You incurred more debts;
- Filed Chapter 13 because the household income was higher than allowed by the Means Test. Now there has been a reduction of income or increased expense (unemployment; increase in the number of people in the household; retirement with decreased income.)
WHO CAN CONVERT THEIR CHAPTER 13 TO CHAPTER 7 AND GET A “FRESH START”?
Generally, most individuals can convert their case to Chapter 7 and get a “fresh start.”
LIMITATIONS AND EXEMPTION
First, all the dates that govern are the date of filing of Chapter 13 and if there was a prior Chapter 7 the date of filing the prior Chapter 7 case.
- If you filed a prior Chapter 7 within Eight (8) years of the date of your Chapter 13 case you cannot convert.
- If you filed because you couldn’t pass the Means Test but income went down; or, expenses increase dramatically; and/or the number of people in the household increased. You can do a new Means Test and may now qualify.
WHAT IF IT IS NOW MORE THAN
Eight (8) years since the filing of the prior Chapter 7? The option to consider is voluntarily dismissing Chapter 13 or wait until the trustee moves to dismiss. If there has been a motion to modify the automatic stay while in Chapter 13 (regardless of the outcome) if you voluntarily dismiss you can’t refile any bankruptcy for at least 180 days (6 months.) But if the trustee files a motion to dismiss and the case is dismissed-then you can file Chapter 7 immediately.