Converting Chapter 13 to Chapter 7 Bankruptcy

DuPage County Attorneys Representing Debtors Throughout Bankruptcy

In some situations, after filing for Chapter 13 bankruptcy, you may decide Chapter 7 bankruptcy is a more appropriate fit. Your financial circumstances may have changed, and you may not be able to keep up with payments under Chapter 13. Perhaps you filed for Chapter 13 bankruptcy intending to keep an asset which you determine you will not be keeping. Converting Chapter 13 to Chapter 7 bankruptcy is possible, if a debtor is eligible. At the Bankruptcy Center of Illinois, we assist people seeking to convert their bankruptcy from Chapter 13 to Chapter 7. Our Chapter 13 DuPage County bankruptcy lawyers can help you determine if converting your bankruptcy case makes sense, and provide representation throughout the process.

Converting Chapter 13 to Chapter 7 Bankruptcy

A distinguishing element of Chapter 7 bankruptcy is the means test. This method of determining whether a debtor qualifies for Chapter 7 bankruptcy essentially looks at whether that person is truly experiencing financial hardship. If they pass the means test, they will be eligible for filing under Chapter 7. If not, there is a process to determine potential Chapter 7 eligibility. If you are in a different financial situation than when you filed for bankruptcy, it is possible that you may pass the means test, even if you did not pass when you initially completed paperwork under Chapter 13.

The means test often serves as a barrier to converting from Chapter 13 bankruptcy to Chapter 7. A court may prevent a debtor from converting to Chapter 7 if they are capable of repaying some of their debts. This would not be an explicit failure of the means test. However, when a debtor has substantial income, the court may deem them capable of repaying debt and it is implied that they will not be able to escape paying their debts under Chapter 7.

A bankruptcy court has the right to order a conversion from a Chapter 13 to Chapter 7 bankruptcy. This ruling may follow an unreasonable delay in making payments, or a complete failure to plan payments. Chapter 13 bankruptcy includes a repayment plan that takes place over a period of years, and debtors must keep up with these payments.

Unlike involuntary conversion forced by the court, debtors can also voluntarily convert their bankruptcy case. If they are considering converting Chapter 13 to Chapter 7 bankruptcy, they must not have received a Chapter 7 discharge within the last eight years.

In many cases, the bankruptcy forms filed for a Chapter 13 bankruptcy can be transferred to a Chapter 7 proceeding. Of course, if there are changes to debt or income these must be updated. It will be necessary to submit forms related to the means test, as well as forms regarding secured debts. There is an automatic transfer of the proofs of claims submitted by creditors in a Chapter 13 proceeding to the Chapter 7 proceeding.

After your Chapter 13 bankruptcy case is converted to Chapter 7, you will be assigned a new Chapter 7 trustee. The court will then order a new meeting of creditors. In most cases, this occurs 30 days after the conversion of the case.

Consult a Skilled DuPage County Chapter 13 Bankruptcy Attorney Regarding Your Case

If your financial circumstances have changed or you are thinking about converting Chapter 13 to Chapter 7 bankruptcy, we can help. At the Bankruptcy Center of Illinois, DuPage County bankruptcy lawyers are here to provide counsel on how to convert your case, including helping to assess eligibility for filing a Chapter 7 bankruptcy. Unfortunately, small errors can lead to the inability to secure a discharge of debt. To learn more about how our diligent Chapter 13 bankruptcy attorneys can help, contact us at (773) 993-0024 or online. We are proud to help clients throughout Cook County, including Berwyn, Chicago, Evanston, Hoffman Estates, Oak Lawn, Orland Park, and beyond.