At The Sellers Law Firm our Montgomery, Selma and Central Alabama bankruptcy attorneys have a great deal of experience in handling Chapter 13 conversions. Occasionally Chapter 13 debtors need or want to convert their Chapter 13 debt consolidation case to a Chapter 7. The reasons for conversions vary, but generally it is because the Chapter 13 debtors want to surrender all or part of their property and have a fresh start Chapter 7; however just because you want to convert from a Chapter 13 to a Chapter 7 does not mean that you will automatically qualify to convert to that Chapter 7 relief.
You generally have a right to convert your Chapter 13 debt consolidation case to a Chapter 7 bankruptcy case at any time with a few restrictions. First, you cannot convert to a Chapter 7 if in the past 8 years you have received a Chapter 7 discharge. Second, you still must meet the means test. In other words, if your income is too high for a Chapter 7 you will not be allowed to enter into that Chapter 7 bankruptcy case. If your income exceeds the means test limits you will not be eligible for Chapter 7 discharge. Generally, the reason why people are in a Chapter 13 is because they are not eligible for the Chapter 7; however the means test is based upon your current income, and not the income that you had when you filed the original Chapter 13 case. To determine if you would qualify for Chapter 7 based on your new income our Montgomery, Selma, and Central Alabama bankruptcy attorneys would look at your average income for the household for the past 6 months.
If you meet the eligibility requirements to convert from a Chapter 13 debt consolidation case to a Chapter 7 bankruptcy, there is certain bankruptcy paperwork that must be filed in your case. Generally, all of your previous petitions, schedules, and proof of claims are brought into the new converted Chapter 7 case. Additionally, a new Chapter 7 bankruptcy petition must be filed; however, you will be allowed to amend some of your schedules to include any new debt that you incurred. Since the filing of your Chapter 13 case most of the debt that we see that people have incurred come in the form of medical bills. You are also required to file a new form with a Chapter 7 case which is called a Statement of Intention.
The Statement of Intention informs the Court and the trustee what you plan to do with your secured property. If you list new creditors in your Chapter 7 case, then they will be allowed to file a proof of claim in this case. The proof of claims that were filed in the Chapter 13 debt consolidation case carry over to your Chapter 7 case. Also, as you did in your Chapter 13 debt consolidation case, you are required to attend another Meeting of Creditors. You can generally convert to a Chapter 7 case for as little as $325.
Finally, in very rare situations a bankruptcy court will order a conversion for a Chapter 13 to a Chapter 7. This is referred to as an involuntary conversion. It rarely happens, but when it does it can be because of unreasonable delays and plan payments when the delays cause harm to your creditors or because of your failure to make your plan payments; however, this is a very rare situation and one that we have encountered only a few times in over four decades of experience.
At The Sellers Law Firm, we are here to help you in either a Chapter 7 or Chapter 13. All consultations are always free, and we can generally meet with you within 24 hours. We have offices located in Montgomery, Selma, Greenville, and Troy. Please call or text us at 334-LAWYERS (529-9377) to set an appointment. Our phone lines are answered 24 hours a day! You may also use the Contact Form on our website or email us at bsellers@sellerslawfirm.com. Remember that doing nothing changes nothing so call us today!