One of the most common questions asked by people navigating the bankruptcy process is what type of bankruptcy is best for them. Many people overlook the fact that what type of bankruptcy works best can change during the process. If an individual is no longer able to afford Chapter 13 bankruptcy payments, it is possible to convert a case to Chapter 7.
The following reviews some of the important details about the conversion process that individuals weathering the bankruptcy process should understand.
Qualifying for Conversion
Unless an individual has received a Chapter 7 bankruptcy discharge within the last eight years, it is possible to convert a Chapter 13 bankruptcy to Chapter 7 at any point in time.
To initiate the conversion process, a person must file a Notice of Conversion with the court and pay a conversion fee. An individual also must still qualify for Chapter 7 bankruptcy, which involves passing the means test. Other courts, however, do not require individuals to pass the means test.
As a result, if a person filed for Chapter 13 bankruptcy because he or she could not qualify for Chapter 7 bankruptcy, it is often a wise idea to first discuss conversion with an experienced bankruptcy lawyer. Even if a person is not required to pass the means test to qualify for Chapter 7 bankruptcy during conversion, an individual should still anticipate being required to explain to a bankruptcy court why he or she has decided to change bankruptcy types.
Why Some People Decide to Convert Bankruptcy Chapters
There are several reasons why people decide to convert from Chapter 13 to Chapter 7, which include the following:
- Financial circumstances have changed and the individual can no longer afford to make Chapter 13 payments
- The individual wants to give up certain types of property, which means that Chapter 13 bankruptcy is no longer required to save these assets
- Sometimes, a court might require a person to convert from Chapter 13 to Chapter 7 bankruptcy so some assets can be sold to pay creditors
What to Expect after Changing Bankruptcy Types
After conversion occurs, a person will receive details about a Chapter 7 bankruptcy trustee. An individual will also likely be required to attend a new creditor meeting. Consequently, a person will likely be required to file additional forms that were not part of the Chapter 13 process.
For example, a person might need to file amended Schedules I and J to prove to bankruptcy court that the individual’s budget has changed. Other times, an individual might be required to file a Statement of Intention to inform a court what they intend to do with the assets securing the loan.
Speak with an Experienced Bankruptcy Attorney
The bankruptcy process is complex, but it need not be. An experienced bankruptcy attorney can help to make sure that this process proceeds in the best manner possible.
If you need the assistance of a knowledgeable bankruptcy lawyer, do not hesitate to contact Adam Law Group today to schedule a free case evaluation.