If you have been set up in a payment plan for a Chapter 13 bankruptcy and you find yourself unable to make the payments either because of a loss of a job or other unforeseen debt, you may be able to convert your case to a Chapter 7 liquidation bankruptcy. A debtor, trustee or creditor may request a conversion.

To qualify for a Chapter 7 bankruptcy you must not have filed Chapter 7 within the last eight years, and pass the Chapter 7 means test. One portion of the required means test is to inform the court why you can no longer make your payments. This may include an investigation into your overall financial profile.

In some cases, the court will convert your Chapter 13 to a Chapter 7. In this case, your nonexempt assets can be liquidated to pay your creditors. The conversion can be a result of many circumstances such as an increase in income, fraudulent reporting of information, or an abundance of secured assets.

Notice of Conversion

A conversion will restart the case, due to different rights and responsibilities for the debtor and creditors. To change from a Chapter 13 to a Chapter 7 bankruptcy you need to file a notice of conversion with the court and sometimes pay a conversion fee. When you file for Chapter 7, you can surrender property like a house or a car, that you no longer want to make payments on.

New Process

When changing from a Chapter 13 to a Chapter 7 bankruptcy, you will get a new trustee for the new case. You will also attend a new 341 meeting and file amended forms that describe why you wish to change your case.

When converting from Chapter 13 to a Chapter 7 bankruptcy. Talk to an Elk Grove Bankruptcy attorney before converting your case to find out what bankruptcy rules will apply to your particular situation.