In certain cases, a debtor who has filed for chapter 13 bankruptcy may, in reality, require a chapter 7 bankruptcy. Courts at times forces individuals to convert from a chapter 13 bankruptcy to chapter 7 in a forced conversion.
Usually, conversions occur when financial circumstances alter and chapter 13 plan payments are impossible or you filed Chapter 13 for holding certain property or assets that you found you no longer want to retain or the courts consider unnecessary for you to keep. Many individuals also find out through the filing process of chapter 13 that it would be more beneficial for them to sell their home or assets considering the personal situations they are in.
Courts can force the conversion if there is a failure to keep up with the payment plan of chapter 13, or an unreasonable holdup that persists to cause harm on your debts or creditors. You will be able to conduct successful conversion once you hire a professional bankruptcy lawyer.
The sole reason that could bar you from filing for Chapter 7 is if you have already had a Chapter 7 discharge for bankruptcy within 8 years. Other requisites for the conversion include eligibility tests.
The main eligibility test is a means test that allows you to qualify for Chapter 7 bankruptcy. When your income and expenditures permit you to pay through some of your debts on a chapter 13 plan, you get disqualified for Chapter 7 bankruptcy relief. However, when your financial circumstances change you can take the means test again to qualify for Chapter 7. On passing the means test, you enter the next stage in which you will complete a petition, amend your forms, fill out a statement of intention, a form for proof of claims and be present at a new creditors meeting.
Certain courts conduct exemptions on payments starting the day you file for chapter 13 bankruptcy or other courts determines exemptions based on the time you convert to chapter 7.
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