Occasionally, debtors that have filed for Chapter 13 bankruptcy find it difficult to meet the terms of their Chapter 13 repayment plan. When a major life event occurs such as the loss of a job or death of a spouse, it can make making the required plan payments difficult or impossible. In these instances, converting the Chapter 13 to a Chapter 7 bankruptcy may be the most appropriate action. If you think you may want to convert your Chapter 13 to a Chapter 7 bankruptcy, call one of our experienced Kansas City bankruptcy attorneys, so we can discuss your options.
There are some benefits to converting a Chapter 13 to a Chapter 7 bankruptcy.
- A Chapter 7 bankruptcy has no plan payments. Once converted, you will no longer make any of the repayment plan payments that were required under Chapter 13.
- Even if there was no major life event, a Chapter 13 repayment plan can last up to 5 years, whereas a Chapter 7 typically concludes in 6 months.
- A conversion from Chapter 13 to Chapter 7 is possible at any time during a Chapter 13 bankruptcy.
- Assets that make up the Chapter 7 bankruptcy estate are the same assets that you possessed at the filing of the Chapter 13 bankruptcy.
Additionally, there are drawbacks to converting from a Chapter 13 to a Chapter 7 bankruptcy.
- A Chapter 7 bankruptcy may be as helpful for repaying certain types of debts, such as recent tax debts, which are not always dischargeable.
- If you filed a Chapter 13 to stop a home from foreclosure and pay any arrears on your mortgage, a Chapter 7 will not provide you the time to get caught up.
- There may be some additional fees (such as a $25.00 fee) to convert the bankruptcy from Chapter 13 to Chapter 7.
- To qualify for a Chapter 7, you may need to evaluate your income level under the Means Test.
If you believe it may be appropriate to convert your Chapter 13 bankruptcy to Chapter 7, call one of our bankruptcy attorneys to discuss these and other benefits and drawbacks of converting. We will look at your specific bankruptcy case and explore your options with you.