Conversion to Chapter 7 Bankruptcy from Chapter 13

Lawyer Nick GajewskiAt this time of year in particular, we often see a large number of Chapter 13 clients that are considering converting to a Chapter 7 case.  At the start of the New Year, people often re-evaluate where they are financially, and with many people receiving their income tax refunds this can be a great time to make a new financial start with a Chapter 7 case.

Switching to Chapter 7

Converting an existing Chapter 13 case to a Chapter 7 case is, in many ways, like filing a new Chapter 7 case from scratch.  When you convert, you can include any creditors you owe or debts you incurred up to the date of the conversion.  So if you had unfortunate circumstances while in your Chapter 13 case and you’re now faced with a mountain of new medical bills, conversion could be right for you.  Also, the cost to convert is much less that the cost of filing a brand new case.

Not only does the Court charge a greatly reduced conversion fee, but your attorney can use many of the same papers for the conversion that were prepared when the case was originally filed.  And any time that your attorney can save in preparing the case translates to more savings for you!  In addition, you keep the same case number that you were assigned when the case was first filed.  This means that instead of a 2nd bankruptcy case showing on your credit record, you only have a single case showing.  You get the benefits from both kinds of cases without having to file 2 cases.

Issues with Converting Bankruptcy Cases

Unfortunately, converting a case is not without pitfalls.  First, a successful conversion depends on the timing of any previous cases you may have filed.  Since you keep the same case number, then technically the Court considers the day you first filed the Chapter 13 to be your “Filing Date,” not the day you filed the conversion.  As a result, if you filed a Chapter 7 case in the past and then filed your Chapter 13 within 8 years, you won’t be eligible to convert your case.  The timing rules mandate that you cannot have two Chapter 7 cases filed within 8 years of each other.  Since you keep the original file date when you convert, then if you aren’t careful then you can lose your case completely.

Second, a Chapter 7 case does not have the same provisions for paying secured debts as a Chapter 13 case.  If you were paying for a car in your Chapter 13, then you probably won’t want to convert until that car has been paid and you’ve received your title.  Technically, as soon as you convert then the original contract comes back into effect.  Most Chapter 13 cases provide a benefit for any vehicles in the plan, such as a reduced interest rate or a smaller balance owed.  So if you don’t have the title to your vehicle, then the creditor can force you to keep paying on the vehicle until the full contract terms are fulfilled.

I guess the main point I’m trying to get across is that converting your case can carry huge benefits for you, but it is definitely something for which you’ll want the help of a bankruptcy attorney.  At Bond & Botes, our experienced attorneys offer free initial consultations.  Please give us a call at any of our convenient locations in Alabama, Tennessee, or Mississippi.  We’d be happy to sit down and discuss your situation, and we have years of experience in guiding clients through all aspects of the bankruptcy process.

Share This Page

Bond & Botes Law Offices

At Bond & Botes, we now offer full service bankruptcy consultation and filing over the phone or by video from the comfort and safety of your home or office. Please call 1-877-581-3396 or click here to setup your free phone or video consultation.

The lawyers at the Bond & Botes affiliated offices serve clients at offices in Anniston, Birmingham, Mobile, Montgomery, Opelika, Decatur, Huntsville, Florence, Haleyville and Gadsden, Alabama; Vicksburg, Hattiesburg and Jackson, Mississippi. Read our disclaimer here. You can view our Privacy Policy here.

Alabama Offices

Birmingham

2107 5th Avenue North
Age-Herald Building
Birmingham, Alabama 35203
Phone: (205) 802-2200


Shelby County Location
15 Southlake Lane, Ste 140
Birmingham, AL 35244
Phone: (205) 802-2200


Florence Location
121 S. Court Street
Florence, AL 35630
Phone: (256) 760-1010


Huntsville Location
225 Pratt Avenue NE
Huntsville, AL 35801
Phone: (256) 539-9899


Montgomery Location
311 Catoma Street
Montgomery, AL 36104
Phone: (334) 264-3363


Decatur Location
605 Bank Street
Decatur, AL 35601
Phone: (256) 355-2447


Haleyville Location
914 19th St.
Haleyville, AL 35565
Phone: (205) 486-3580


Gadsden Location
430-B Chestnut Street
Gadsden, AL 35901
Phone: (256) 485-0195


Opelika Location
216 South 8th Street
Opelika 36801
Phone: (334) 887-7666


Anniston Location
1302 Noble St #2C
Anniston, AL 36201
Phone: (256) 344-3559


Cullman Location
200 Second Avenue SW
Cullman, AL 35055
Phone: (256) 739-9866


Mississippi Offices

Jackson Location
5760 I-55 North, Ste 100
Jackson, MS 39211
Phone: (601) 353-5000


Hattiesburg Location
607 Corinne St, Ste B8
Hattiesburg, MS 39401
Phone: (601) 264-7200


Vicksburg Location
1212 Farmer Street
Vicksburg, MS 39180
Phone: (601) 353-5000

© 2024 by Bond & Botes Law Offices. All rights reserved. Disclaimer | Privacy Policy