Converting from Chapter 13 to Chapter 7

You have the right to convert your Chapter 13 case to one under Chapter 7, the only restriction is that the debtor cannot convert if a Chapter 7 discharge was issued to the debtor within the previous eight years. Converting the case is a simple procedure, but you must still jump through many of the same hoops as a newly-filed Chapter 7 case.

In order to proceed with your Chapter 7 case, you must qualify as a Chapter 7 debtor. For most that means passing the bankruptcy means test. However, bankruptcy courts are split on the issue whether you must pass the means test when you convert your Chapter 13 case to a Chapter 7 case. The majority of bankruptcy courts find that a presumption of abuse under Section 707(b) applies equally to Chapter 7 cases and to cases converted from Chapter 13 to Chapter 7. A minority of courts do not apply this section to converted cases.

You must also file new bankruptcy paperwork called “conversion schedules.” In most courts the bankruptcy paperwork you filed during your Chapter 13 case becomes a part of your converted Chapter 7 case. When you convert, you must update any changes and amend your forms. Any new debts that arose after the initial bankruptcy filing can be added to your case and possibly discharged. You are also required to file a Statement of Intention, which is your intention to either reaffirm, redeem, or surrender secured property.

You may review your exemptions, which a majority of courts hold are determined on the date of conversion. Your assets may have increased or decreased in value; or been surrendered, lost, or transferred. It is therefore important to perform another accounting, file amended schedules, and apply your legal exemptions.

Converting your case from Chapter 13 to Chapter 7 is a second chance at a fresh start. Make the most of this opportunity by consulting and cooperating with your bankruptcy attorney.