Many times, individuals who file Chapter 13 bankruptcy find that they may have one or more reasons to convert their cases to Chapter 7. These reasons include a change in financial circumstances which render it impossible to keep making Chapter 13 plan payments, or no longer having a desire to keep certain property subject to liquidation in Chapter 7.
Under Section 1307(a) of the United States Bankruptcy Code, a Chapter 13 debtor can convert to a case under Chapter 7 at any time. However, a debtor may not convert if he or she has received a Chapter 7 discharge within the previous eight years.
The process for converting is relatively straight forward. Here in the Southern District of California, a Chapter 13 debtor need only file a document titled “Notice of Conversion of Case Under Chapter 13 To A Case Under Chapter 7 By Debtor.” Upon conversion, a debtor is also required to file certain schedules and statements as required by the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. Also upon conversion a Chapter 7 Trustee will be appointed to oversee the case, and a new meeting of creditors will be scheduled to move forward with the converted case.
It should be noted, however, that there is an open question among bankruptcy courts as to whether a debtor who wishes to convert from Chapter 13 to Chapter 7 must also pass the means test, which is generally required to file Chapter 7 in the first case. The answer to this question depends on the jurisdiction you are in. You should ask a local attorney whether there will be an issue.
If you have any questions about converting your Chapter 13 Bankruptcy Case to one under Chapter 7, please contact the VC Law Group at (858) 519-7333 or email at info@thevclawgroup.com.