Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

Why Convert a Chapter 13 Bankruptcy to Chapter 7?

Most New York bankruptcies are filed in chapter 7 because debtors have mainly unsecured consumer debts and don’t have the income for a chapter 13 repayment plan to be feasible. Others, though, prefer the benefits of chapter 13, but once they’re partway into it, they find that chapter 7 might be a better fit after all and want to switch their bankruptcy to chapter 7. Why would a debtor want to do this? There are multiple reasons:

(1)  The most common reason is that the chapter 13 repayment plan isn’t going well. Perhaps modifying the plan won’t work because the debtor has lost an income source, or maybe the debtor isn’t eligible for a hardship discharge. Conversion can prevent the trustee from dismissing a bankruptcy case due to lack of payments.

(2)  Another common problem is when debtors can’t make their payments on their mortgages or auto loans. Like chapter 7, chapter 13 bankruptcy shields debtors from foreclosure or repossession via the automatic stay, and debtors can cure any arrearages during the repayment plan. If the debtor can’t make the payments, creditors might move the bankruptcy court for relief from the automatic stay and then initiate (or resume) the foreclosure or repossession. Debtors in these circumstances probably aren’t going to keep the house anyway, so converting to chapter 7 saves time and effort.

(3)  Debtors who have accumulated new, unsecured debts have the opportunity of amending their schedules to include those debts. This can happen when debtors have been forced to take on credit card debt to pay for medical emergencies.

(4)  Finally, some debtors might think that the benefits of converting to chapter 7 will outweigh the costs of completing the chapter 13 repayment plan. Losing a house, for example, might be worth mitigating the uncertainty of completing a difficult plan.

Converting a bankruptcy to chapter 7 requires debtors to restart the bankruptcy process all over again, like filing a $25 notice of conversion, attending a new meeting of the creditors, filing a “statement of intention,” amending the bankruptcy schedules, and going through the means test. It won’t be as involved as filing the chapter 13 case was originally because most of the same information is already in place. After that it will proceed like a typical chapter 7 bankruptcy with a discharge after about three to four months followed by the case closing.

For answers to more questions about converting a bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »

What Is a ‘Pot Plan’ in Chapter 13 New York Bankruptcy?

The answer has to do with paying money into a pot, not other kinds of pots. There is surprising flexibility in how debtors can structure their repayment plans in chapter 13 New York bankruptcy, especially as they apply to unsecured creditors. The reason for this flexibility isn’t simply to give debtors more options; rather, it’s

Read More »

Good Math Skills Needed When Amending a Chapter 13 Plan

New York bankruptcy lawyers aren’t always known for their math skills. In fact, there are many jokes about lawyers as liberal arts majors who can’t do math or science. The issue of lawyers and math, however, is quite serious in consumer bankruptcy, which can be “numbers intensive.” Unfortunately, easy math mistakes can plague a chapter

Read More »

Bruce Weiner named a member of the 2021 New York Super Lawyers

Bruce L. Weiner, a partner at Rosenberg Musso & Weiner LLP, Brooklyn bankruptcy attorneys, has been named a 2021 New York Super Lawyer. This list recognizes only five percent of lawyers in the state. Super Lawyers, a part of Thomson Reuters, is a rating service, research-driven and peer-influenced, that lists outstanding lawyers who’ve attained a

Read More »

Options for Debtors Whose Co-Signers File Bankruptcy

It’s one thing to consider filing New York bankruptcy when you run into financial problems, but it’s another thing entirely when a co-signer of a debt files bankruptcy. The co-signer who is doing fine might suddenly find himself or herself in serious trouble. Here are some things for co-signers to consider should a co-debtor file

Read More »
Scroll to Top