Life happens to everyone, including those in a Chapter 13 repayment plan. Thankfully, the Bankruptcy Code provides a mechanism for changing (converting) your case from Chapter 13 to Chapter 7 bankruptcy if needed. Let’s take a look at what that entails exactly and what you should know about this affects your property and your debts.
Prior Chapter 7 Case. If you received a Chapter 7 discharge in a case filed within the last 8 years, you will not be able to get another Chapter 7 discharge. While you can technically convert your case, you won’t actually get relief under Chapter 7.
Change of Circumstances. You will need to show the court that you lack the necessary disposable income to continue with the Chapter 13 repayment plan. You will need to amend your Schedule I (Official Form 106I) to show your new income and your Schedule J (Official Form 106J) to show your updated expenses.
Notice of Conversion. Aside from amended Schedules I and J, all you have to do to convert your Chapter 13 case to one under Chapter 7 is file a “Notice of Conversion” that provides notice to the court and your creditors about the change. Contact your court to find out if they have a form you can use for this. You will also be required to pay a one time $25 conversion fee. Typically, the notice to convert will be processed automatically and you won't have to attend any court hearing on the matter.
Secured debt. If you had secured debt, like a car loan or mortgage, when your Chapter 13 case was filed, make sure to file a Statement of Intention (Official Form 108) with the court along with your notice of conversion.
What Happens After My Case is Converted?
After your Chapter 13 bankruptcy case is converted, you will have a new Chapter 7 trustee assigned to your case. The bankruptcy court will then schedule a new 341 meeting of creditors. The creditors’ meeting takes place about 30 days after the conversion of your case.
What happens to new debt incurred after filing Chapter 13?
Any debt incurred after filing Chapter 13 but before converting the case to one under bankruptcy Chapter 7 will be discharged in the converted case.
Adding new creditors. Make sure to file an amendment to Schedules D and E/F, and provide the court with the mailing addresses for each new creditor. Note, there is a $31 filing fee to make this amendment, so be sure to add all new creditors at once otherwise you will end up paying unnecessary additional fees.
For more information about the conversion process, check out our extended version of this article in our Learning Center.
Note: Upsolve's free web app cannot be used to convert your case from one chapter to another.