Should you convert your bankruptcy from Chapter 13 to Chapter 7?
If you are contemplating filing for bankruptcy, one key decision you will have to make is whether to file for Chapter 7 or Chapter 13 bankruptcy. Usually, this choice is not too difficult – if you are in deep debt and have no ability to pay any of your bills, Chapter 7 is probably the best choice. If you are able to pay some of your debts and want to maintain ownership of your home or another asset, Chapter 13 may be right for you.
When you file for Chapter 13 bankruptcy protection, the Georgia bankruptcy court will place you on a court-monitored 3- to 5-year payment plan, during which you will be required to make payments on some or all of your debts. But what happens if, during those three or five years, you become unable to make the payments on your payment plan? Will the bankruptcy court allow you to convert your bankruptcy from a Chapter 13 to a Chapter 7? The short answer to this question is yes.
There are several common reasons for a Chapter 13 to Chapter 7 conversion. Someone who loses their job, files for divorce, or incurs unexpected medical expenses may no longer be able to make the payments on their Chapter 13 payment plan.
However, converting may not always be possible. In order to qualify for Chapter 7 bankruptcy protection, the filer musts meet certain income limits, among other requirements. The bankruptcy court will make a full assessment of your “financial picture” to determine whether your financial situation justifies the release of all of your debts under Chapter 7.
For more information or to determine whether you might qualify for Chapter 7 bankruptcy, contact an experienced bankruptcy attorney.
Source: Fox Business, “Convert From Ch. 13 to Ch. 7 in Bankruptcy?” Justin Harelik, Sept. 13, 2011