A debtor may wish to convert from a chapter 7 to a chapter 13 and visa versa, for numerous reasons. Various reasons why a debtor would want to convert from a chapter 7 to a chapter 13 include the following. After the filing, the trustee objects because the debtor does not meet the chapter 7 criteria. After the filing, the debtor becomes aware that he is not able to fully exempt property that the trustee will sell.

There are various reasons why a debtor would want to convert from a chapter 13 case to a chapter 7 case, that include the following. During a pending case, due to the change in circumstances, the debtor is no longer able to make trustee payments. The debtor decides that she no longer wants to save her house or car, through a chapter 13. A chapter 13 case which is about to be dismissed by the trustee, may be able to convert to a chapter 7 and obtain a discharge.

The case law with regard to whether a chapter 7 debtor has the right to convert from a chapter 7 to a chapter 13 is open and not settled. Typically, a debtor is permitted to convert to a chapter 13 case because he does not meet the chapter 7 criteria and wants to pay back a portion of the debt. Generally, if the chapter 7 trustee is interested in selling an asset, the debtor may convert and pay back the required debt to the creditors. However, under this scenario, if the debtor is unable to make the necessary monthly payment, the debtor will be required to convert back to a chapter 7 and allow the trustee to sell the asset.

If the case was previously converted from a chapter 13 to a chapter 7, the debtor may only convert a back to a chapter 13 a second time, with the permission from the court. This means that a second conversion is not permitted as of right.

Conversion from a Chapter 13 to a Chapter 7

As explained in our section about how a chapter 13 bankruptcy works, in general, a person may file for Chapter 13 bankruptcy protection for various reasons, which may include the following:

• pay a portion of the unsecured debt through the bankruptcy plan due to the failure to meet the Chapter 7 criteria;
• save the house or other property from foreclosure or repossession;
• protect assets from the sale of a Chapter 7 trustee.

The debtor must still meet the income and expense chapter 13 criteria, at the time a case is converted to the chapter 13. Also, the debtor must meet the chapter 7 criteria at the time a case is converted to a chapter 7 as well.

Contact bankruptcy lawyer, Robert Manchel, Esq., for a free consultation.