(The Conversion of St. Paul)
One of the most common questions that we get here in the office from clients or potential clients who are considering filing Chapter 13 bankruptcy regards changed circumstances while you are in Chapter 13 bankruptcy. What will happen if our income goes down? What will happen if we lose our jobs? What if we decide to surrender the house or vehicle we are trying to save by filing Chapter 13 bankruptcy?
The good news is that the bankruptcy law allows you to convert from a Chapter 13 to a Chapter 7. In other words, you are not forced to stay in Chapter 13. This right to convert is not automatic. The courts have said that you do have to ask the bankruptcy judge for permission, and as long as you are eligible for Chapter 7, then it is “almost” automatic that you are allowed to convert to Chapter 7. Generally, there must not have been any fraud involved in your reasons to convert from Chapter 13 bankruptcy to Chapter 7 bankruptcy.
As I said above, you will still have to qualify for Chapter 7 bankruptcy under the income means test requirements and all other requirements in order to convert to Chapter 7 bankruptcy. The date of any prior Chapter 7 or Chapter 13 filings is also important to know and can affect whether you can convert a Chapter 13 to Chapter 7.
Filing Chapter 13 bankruptcy is a huge commitment, and it is comforting to know that you do have the option of converting to Chapter 7 during your case if you don’t think you can stay it in. In other words, filing Chapter 13 bankruptcy is not involuntary servitude. There is an “escape valve”, and it is called conversion !
If you think Chapter 13 bankruptcy is an option for you, always discuss with your attorney the option of converting from Chapter 13 to Chapter 7 and why that may come up during your case.