Ruling Could Limit Chapter 7 Conversions

Posted on December 29, 2011 at 1:33pm by

According to a Thompson-Reuters News and Insight report, your options to convert a Chapter 13 bankruptcy case could soon be limited. The ruling comes by way of an August 2008 case filed by couple in Virginia.

The couple successfully requested conversion of their Chapter 13 case to a Chapter 7 case, but the trustee challenged the ruling because the couple did not pass the Chapter 7 means test. The most surprising part of this ruling is that in the conversion they reported $2,000 in disposable income, approximately $1,833 over the Chapter 7 limit dictated by the US Bankruptcy Code.

This ruling could impact other conversion filings when it comes to qualification and passing the Chapter 7 means test.



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