I Am Struggling to Make Chapter 13 Payments — Can I Switch to Chapter 7?
Individuals and married couples who choose to file for Chapter 13 bankruptcy do so for a number of reasons. Often, Chapter 13 is preferable because it is the type of bankruptcy through which a debtor can stop a foreclosure, catch up on mortgage payments, and keep their home. Chapter 13 bankruptcy also allows debtors to catch up on other types of debt over time with their bankruptcy repayment plan, and it does not require the liquidation of any assets. At the same time, consumers may prefer to file for Chapter 7 bankruptcy — a liquidation bankruptcy — but are ineligible because their income is too high, for example.
Regardless of the reason you initially filed for Chapter 13 bankruptcy, what are your options if you are now struggling to make the payments to meet the terms of your repayment plan? In particular, you may be wondering: can I switch to Chapter 7 bankruptcy? It depends, and our bankruptcy lawyers in West Palm Beach can explain in more detail.
Converting from Chapter 13 to Chapter 7: You Must Pass the Means Test
If you want to convert from Chapter 13 to Chapter 7 bankruptcy, you will need to pass the “means test” (just as anyone initially seeking a Chapter 7 bankruptcy is required to do). The means test looks at your disposable income to determine if your resources are limited enough that allowing a liquidation bankruptcy would not be considered an abuse of the bankruptcy system. If you did not pass the means test initially and filed for Chapter 13 bankruptcy instead, you could now pass the means test if your circumstances have changed.
What types of circumstances must have changed? Usually, when a debtor is able to convert from Chapter 13 to Chapter 7, they have lost or experienced a significant reduction in their income. For example, you might have been laid off from your job, or you may have been diagnosed with a disabling medical condition that prevents you from working. No matter what the change in circumstances is, you will need to show that you now can pass the means test and are eligible for Chapter 7 bankruptcy.
File Notice of Conversion
If you are eligible to convert your bankruptcy case from Chapter 13 to Chapter 7 bankruptcy, the next step will be filing your official notice in which you ask the court to convert your case.
This form, a Notice of Conversion, is something that your bankruptcy attorney can assist you with, in addition to the revision or additional filing of forms required to move forward with a Chapter 7 bankruptcy case.
Contact Our West Palm Beach Bankruptcy Lawyers Today to Learn More About Converting Your Bankruptcy Case
Are you currently working through a Chapter 13 repayment plan but struggling to make your payments due to a change in circumstances? You may have more than one option. If your circumstances have changed such that you are now eligible for Chapter 7 bankruptcy, it may be possible to convert your case from Chapter 13 to Chapter 7 as we discussed above. If you are not eligible for Chapter 7 bankruptcy, you may be able to modify your repayment plan and remain in your Chapter 13 case. You should seek advice from one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC. Contact our firm today to learn more about how we can assist you.
Source:
law.cornell.edu/uscode/text/11
