Many people are surprised to learn that in many cases you can convert from Chapter 7 to Chapter 13 or from Chapter 13 to Chapter 7.  The conversion process does require a few extra steps but it can be done if your original financial situation changes during the course of your case.

Let’s look at the most common conversion scenarios:

Converting from Chapter 7 to Chapter 13

There may be instances where you file Chapter 7, and in response to an objection or a change in your financial circumstances, you choose to convert to Chapter 13.

Example: you file Chapter 7 and the trustee objects to your means test calculations.  The trustee argues that you have improperly claimed expenses or that you have not fully disclosed your income.  If the documentation is not in your favor, you and your attorney may decide that at attempt at a Chapter 13 repayment is preferable to a dismissal of your Chapter 7 case.

Example: you file Chapter 7, and shortly thereafter, you land a new, higher paying job, or your inherit substantial assets.  When this new information is disclosed, as it must be, the trustee will object to your Chapter 7 and move to convert your case to Chapter 13.

Example: you file Chapter 7 with the intention of reaffirming your house or car loan.  However, when your attorney contacts the lender, they refuse to agree to reaffirmation and advise your counsel that they intend to take back the collateral after the Chapter 7 is discharged.  You can convert to Chapter 13 and use the payment structure to pay down your debts and keep your property.

Converting from Chapter 13 to Chapter 7

Usually, we find that our clients become interested in converting from Chapter 13 to Chapter 7 following a job loss or reduction of income, or an unexpected increase in expenses during the Chapter 13.

Example: you file Chapter 13 and two years in, you lose your job.  Despite your good faith effort to find a new job you remain unemployed and the trustee files a motion to dismiss your Chapter 13 for non-payment.  You may look at converting to Chapter 7 to discharge unsecured debt.

Example: you file Chapter 13 and after about a year you discover that you do not have enough money each month to pay for food and utilities.  You cannot reduce your Chapter 13 payment because the math does not work, so instead you file a motion to convert to Chapter 7.

Example: you file Chapter 13 and two years in, your spouse, who is also working, dies unexpectedly.  Your income alone is not sufficient to fund the Chapter 13, so you move to convert.

Conversion from One Chapter to Another will Require Documentation

Generally, you will need proof of changes to your budget when you move to convert.  Often motions to convert must be heard by the judge and you may have to testify.

Our experiences has been that judges are often receptive these motions if you can explain and document why your original chapter is no longer appropriate for your situation and that you do not expect your new situation to change again.

About 

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need bankruptcy protection. Call him at 770-393-4985 for a confidential discussion.

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