Bankruptcy Chapter Conversion

Conversion is the term used when a debtor switches from Chapter 7 to Chapter 13 and vice versa. The Bankruptcy Code sets forth the requirements for converting from one bankruptcy chapter to another.

Conversion from Chapter 7 to Chapter 13

A debtor who has filed a Chapter 7 case has the right to convert to a Chapter 13 case at any time as long as the case was originally filed as a Chapter 7. If a debtor filed a Chapter 13 and later converted to a Chapter 7, he is prohibited from converting back to a Chapter 13 without first obtaining consent of the bankruptcy court.

A debtor wishing to convert to a Chapter 13 case must be eligible to file Chapter 13 bankruptcy. He must have regular and stable income sufficient to fund his Chapter 13 plan. Additionally, his liquidated unsecured debts may not exceed $336,900 and his secured debts may not exceed $1,015,650.

To convert to a Chapter 13 case, a debtor must file a Motion to Convert and submit a Chapter 13 plan and updated information regarding his income, assets, and debts. Additionally, the debtor must attend a Meeting of Creditors and a confirmation hearing.

Conversion from Chapter 13 to Chapter 7

If, as a result of decreased income or increased expenses, it becomes impossible for a debtor to complete a Chapter 13 case, conversion to Chapter 7 is an option. A debtor may convert to a Chapter 7 case as a matter of right. Additionally, creditors and the Trustee may seek to have a case converted from Chapter 13 to Chapter 7.

To convert to a Chapter 7 case, a debtor must file a Notice of Conversion with the Bankruptcy court and pay the difference between the Chapter 13 filing fee and the Chapter 7 filing fee. Additionally, the debtor must pass either the median income or means tests and file a supplemental schedule of debts incurred since the filing of the Chapter 13 case and a Statement of Intention. Although the conversion is effective immediately upon the filing of the Notice of Conversion and other required documentation, the debtor will be required to attend a Meeting of Creditors in the Chapter 7 case.

Getting Legal Help

It’s best to consult with a qualified bankruptcy attorney before beginning the conversion process. A bankruptcy attorney will assist you in completing and filing the necessary paperwork and can represent you at the Meeting of Creditors and throughout the case.

Think Bankruptcy Might Be for You?