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Bankruptcy: Converting Chapter 13 to Chapter 7

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Bankruptcy: Converting Chapter 13 to Chapter 7

In a bankruptcy setting, some cases may be converted from a Chapter 13 status filing to Chapter 7. Under Chapter 13, the debtor must pay back some or most of their debt under a 3-5 year restructured payment plan. Under Chapter 7, the debtor’s assets are liquidated, and some of the debts discharged, providing the person with a “clean slate” (though their credit will be affected). 

Thus, switching from Chapter 13 to Chapter 7 may be necessary if:

  • The debtor’s personal financial situation has changed, and they can no longer keep up with Chapter 13 repayment plans
  • The debtor originally filed under Chapter 13 because they wished to keep certain items of property, but now they no longer want to keep the property

Converting Chapter 13 to Chapter 7 can generally be requested at any time after the original Chapter 13 claim was filed. The process is basically the same as filing a fresh Chapter 7 claim. Thus, all the usual restrictions apply when making the conversion (such as being required to wait at least 8 years from the previous Chapter 7 bankruptcy filing).

What Is a Forced Conversion from Chapter 13 to Chapter 7?

In some cases, a bankruptcy court may actually require a debtor to convert a Chapter 13 claim to a Chapter 7 claim. This is known as “forced conversion”, meaning that it is backed by a court order to do so. Failure to make the conversion may result in legal penalties for the debtor. 

Forced conversion can only be ordered when the court has good cause to do so, such as:

  • The debtor failed to create a Chapter 13 plan within the given time frame;
  • The debtor failed to keep up with scheduled Chapter 13 payments;
  • The debtor was involved in some unreasonable delay which resulted in harm to the creditor(s)

What Is Needed to from Chapter 13 to Chapter 7?

Converting Chapter 13 to Chapter 7 can generally be requested at any time after the original Chapter 13 claim was filed. The process is basically the same as filing a fresh Chapter 7 claim. Thus, all the usual restrictions apply when making the conversion (such as being required to wait at least 8 years from the previous Chapter 7 bankruptcy filing, and fulfilling the means test if required).

In general, the following need to be addressed when converting from Chapter 13 to Chapter 7:

  • Petition and Schedule: In order to file any bankruptcy claim, a petition needs to be filed with the court. When making a conversion, the original Chapter 13 petition will usually carry over during the conversion process. However, a new schedule may need to be created
  • Proof of Claims: You will need to obtain a “Proofs of Claims”, showing that the creditor has a valid claim on your debt. This also can be carried over from the original Chapter 13 claim
  • Creditor Meeting: You’ll need to attend another meeting with your creditor or creditors, even if one was already held during the Chapter 13 hearings
  • Exemptions: Depending on your jurisdictions, some courts use the date of the Chapter 13 filing to determine exemptions, while others use the Chapter 7 conversion date

Thus, many of the requirements for Chapter 7 will automatically be fulfilled when the claim is converted from the Chapter 13 filing. However, you may need to contact a lawyer for assistance with the other requirements. For example, some of the paperwork that will be carried over might still need to be amended for adjustments to Chapter 7.

Do I Need a Lawyer?

In a bankruptcy claim, converting from Chapter 13 to Chapter 7 can involve many complicated steps. It is to your advantage to hire a bankruptcy lawyer when making such a conversion. A qualified attorney in your area can help explain your filing options to you, and can assist with all the required forms and documents. Also, your lawyer can be on hand to represent you during formal court hearing. 

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 05-02-2018 05:30 PM PDT

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