How to Go About Converting a Bankruptcy Case to a Chapter 13 or Chapter 7 One?

In the recent times due to the economic slowdown and job cuts many individuals have been forced to file bankruptcy to get rid of creditors. Most individuals opt for filing bankruptcy under Chapter 13 in a bid to avoid the stricter Chapter 7. Chapter 13 of the bankruptcy law allows you to keep your belongings. In worst situations you might need to convert or rather be forces to convert to Chapter 7. Here we shall take a look at some of the common questions that cross your mind while converting Chapter 13 to Chapter 7.

Why Convert Chapter 13 to Chapter 7?

You might need to do so when your financial circumstances change and you are unable to make payments under Chapter 13. Alternately you might have opted for Chapter 7 to save a certain property but in the present circumstance you no longer wish to keep this property. However there are situations when the courts force you to convert to Chapter 7 and this is often termed as forced conversion. This happens when

• You file a Chapter 13 plan on time or fail to make payments.
• Cause unreasonable delay harming the cause of your creditors.

Is There Any Restriction on Conversion?

The law allows every individual to convert a Chapter 13 bankruptcy case to Chapter 7 at any time. However there is one major restriction you cannot convert to Chapter 7 if you have benefitted from a Chapter 7 discharge within the last 8 years.

Can I Qualify for Chapter 7 Bankruptcy Relief?

Whether or not you quality for the Chapter 7 bankruptcy relief will depend on certain grounds of eligibility. The biggest among all of these eligibilities is what is known as a Mean Test. Under this your income and expenses will be evaluated and the court will determine if you can pay some of your debts under Chapter 13. In case you can found to be able to do so you cant qualify for Chapter 7. However there are some cases where judges have allowed conversion of Chapter 13 to 7 despite the debtor failing the mean test. Needless to say if precedence is anything to go by in converted case the discretionary power of the judge does play a major role in deciding whether you can get your case converted from Chapter 13 to 7.

I Failed The Mean Test Earlier Can I Pass It Now?

Mean Test evaluates your financial circumstances. You might have failed to pass the test earlier but if your financial circumstances have changed you can pass this test.

What Is The Filing Procedure For Converted Cases?

In most cases the bankruptcy petitions that you filed during Chapter 13 become a part of your case when you seek to convert it to Chapter 7. However you can also amend it and list the debts that you have incurred in the after filing your Chapter 17 case. You will also have to file a Statement of Intention where you outline your plan with secured debts.

The smartest thing to do would be to seek help form a bankruptcy attorney who will guide you in the case.

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