In some instances, people who enter into a Chapter 13 bankruptcy wish to convert their cases to a Chapter 7 bankruptcy. As with all things involving your case, you should always consult with a bankruptcy attorney before approaching the court about making the conversion. Generally, you have the right to apply for a conversion, and in some cases, the court may actually instigate the conversion. Here are some of the reasons a Chapter 13 bankruptcy may be converted.
You can no longer make Chapter 13 payments.
Chapter 13 bankruptcy restructures your debt and may reduce it, but it doesn’t wipe it out as Chapter 7 bankruptcy does. Under a Chapter 13 bankruptcy agreement, you will be required to make payments to your creditors. While making Chapter 13 payments, you may have a change in your financial situation that makes you unable to honor your agreement. If this occurs, changing to a Chapter 7 bankruptcy could save you from having to make future payments you can’t afford.
You have property that you now wish to surrender.
Chapter 13 bankruptcy is appealing to many people because it often allows you to keep your property, including your home or your car. Once people begin making Chapter 13 payments, they may decide that they are willing to give up some property that was protected by their agreement. In this case, switching to Chapter 7 bankruptcy allows you to surrender that property so that it can be sold to satisfy some of your debt.
The court forces you to convert.
Sometimes, the court will force people into Chapter 13 bankruptcy to convert to Chapter 7. This happens if you don’t file a Chapter 13 plan by your required due date, if you fail to make payments in accordance with the plan, or if there are unreasonable delays in creating your plan that are harmful to your creditors.
To convert to Chapter 7 bankruptcy, you also have to qualify for Chapter 7 relief. Your bankruptcy attorney in Aurora can help you navigate the complex process and make the right decision for your financial future.