Converting from 13 to 7 - do they redo the means test?

[NorthernCA]

My lawyer wasn't sure about this, as far as the new laws. Has anyone encountered this?

We are giving up our house and truck, and converting to a Chapter 7. Do they redo the means test, and take into consideration that the house and truck won't be part of our expenses?

For instance, we were over the median income, but with the mortgages, plus other expenses, we qualified for Chapter 7. But, since we're going to surrender all of that, will they now say 'oh, well you can afford to pay off the rest of the stuff, so you will be forced to do a chapter 13 with the other unsecured creditors."?

My lawyer said that before the new laws, they only took into consideration the means test you filed when you initially filed. That included the mortgages because we were planning to keep the home. Now that we're not, will they readjust our income/means? Or will they leave it as is?

My lawyer said that he hasn't come across this situation yet, nor have his colleagues. I told him I would do my research on it, too. Just don't want any surprises. Darn this new BK law! We want to be rid of this whole situation, so I hope they don't go through all of that and have us stuck in a Chapt 13 plan. I guess worst case scenario, we get forced to stay in Chapt 13, and maybe our payback percentages will raise... that's not AWFUL because our unsecured debt is only about $25K (not including the home and car). But I would rather just be done with it, so hopefully this won't happen.

Thanks in advance!

[NorthernCA]

Along the same lines, I lost my job two weeks ago. So what if I get a really high paying job next week? Will they take that into consideration, or will it not even play a factor?

[HHM]

I am afraid I don't have a "certain" answer for you. However, I believe, if you convert, your date of filing is still considered the date you originally filed for BK, and therefore all that information from your original filing is used.

As for the high paying job, no matter what happens, that will not matter as they still only look to the "prior" 6 months worth of income in making your income analysis.

[NorthernCA]

Great - thanks!

[bige1030]

They should use your original filing as the basis for everything. Exception: if you convert in bad faith (then they use your property as of conversion). I think a "bad faith" finding would be rare, though, since I read of a case in which someone filed a 13 and converted to 7 to save their severance pay - and that was not considered "bad faith".

[CATCHMEIFYOUCAN]

I converted from Ch13 to a 7. My lawyer didn't have another means test, it was pretty obvious my income level dropped to half of what I had been making from working two full time jobs down to one! I converted before a repayment plan had been confirmed. I had been paying the ch13 Trustee at $250 a month. The Trustee saw from schedules I and J that I could pay $800. The judge ordered that I submit another plan. But before I did that I decided it was best to quit one job and pay nothing, rather than look at the next 5 years paying the courts pay check to paycheck - what was the point!

Good Luck, Catchmeifyoucan

[whatamess]

Miss catch me ;-D

How long after your income drop did you change over to a chapter 7?
We are just wondering as my DH lost his second job this week and our income has taken a huge punch in the gut. Since they use your last 6 months and that was preety decent how long should we wait?
After all, even last moth our income was $1,000 more a month at times!
WAM

[lrprn]

How long after your income drop did you change over to a chapter 7?
We are just wondering as my DH lost his second job this week and our income has taken a huge punch in the gut. Since they use your last 6 months and that was preety decent how long should we wait?
After all, even last moth our income was $1,000 more a month at times!
WAM

CMIYC was able to switch over from Ch 13 to Ch 7 quickly after quitting job #2 because he had already filed Ch 13.

If you haven't filed yet, then unless your old total income for the number of members in your family was less than your state's median income (see http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm ), then you could have to wait up to six months to file so that the required six-month look back for income will have the lowest total possible (or until the total income allowed for your family drops below your state's median income). Hope this makes sense!

[NorthernCA]

Thanks everyone! I was hoping someone would respond who had done this AFTER the new BK laws came into effect, and it looks like some of you have - so I'm going to think positive about this! Sounds like everything is going to work out.

[CATCHMEIFYOUCAN]

My Ch13 plan was never confirmed from the intial $250 I was paying back the creditors, I had made a total of 3 payments (the 3rd payment I really didn't have to pay - but just did it to cover my ars). I converted quiet quickly as Irpn mentioned. I filed in July, got 341 in Aug, objection to plan confirmation, went to the BK judge in October, dropped my 2nd job and converted instead, had another 341 for Ch7. Was hoping for a discharge on around Jan 8th, but now the Trustee is looking for assets??? I have no clue what he is looking for, only thing I can think of is the $700 I got back from the Ch13 Trustee, FINE AND DANDY he can have it, just give me my discharge!

Good Luck, Catchmeifyoucan

I would like to add to this, I just checked PACER after writing this. GUYS and GALS, I think IM FINALLY DISCHARGED ! ! !

Filed: 1/26/2007 Discharge of Debtor(s)
Filed: 1/27/2007 BNC Certificate of Mailing of Discharge of Debtor(s)

WooooooHoooooo

Catchmeifyoucan

[inseriousdebt]

What exactly do they redo when converting?

If the mean test isn't redone...what do they redo?

[aa06a47]

NorthernCA, may I ask why your are choosing to give up your home and vehical?

I know if you give up your home and car at the start of the chapter 13 (as part of the original plan), then you would pretty much go by the guidelines for housing and transportation in your area. I would verify you would still qualify for a chapter 7 using those figures.

If you get a conversion to chapter 7, then you won't need to worry about future income. If you don't have a job presently, you should easily qualify for a chapter 7. Your attorney should be able to answer these questions.

[SinkingFast]

There was a decision about your type of situation. Annualizing forward contractually due payments to Secured Creditors even tho the property was being surrendered:

http://www.bankruptcyforum.com/showthread.php?t=8093

In this Decision, the payments contractually due for Secured property over the next 60 months were allowed as part of the Debtor's calculations.

[CATCHMEIFYOUCAN]

InSeriousDebt

What exactly do they redo when converting?
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If the mean test isn't redone...what do they redo?

I guess it depends on your case, you have assets?
I didn't have any assets THAT I KNEW OF accept for my new car I had just bought 30 days before I filed.
When I converted I didn't notice that anything was redone, not even my schedules (when I looked on PACER my schedules even looked the same accept for a small note at the bottom of my schedule that I would be quitting one job in 2 weeks time!???
The only thing the lawyer submitted was some notice to the judge/trustee that I quit one job and and wanted to file for a conversion. I guess my drop in Income was pretty obvious. I went from making $50-60 a year to HALF. So I fell below the median income for my area - obviously.
I had to attend a new 341 meeting (for Ch7) so I guess that re-wound the 30-60 day waiting period for creditors to Object all over again.

Best of Luck, Catchmeifyoucan

[hansky]

As for the high paying job, no matter what happens, that will not matter as they still only look to the "prior" 6 months worth of income in making your income analysis.

For the means test, but the means test is only one factor in determining whether someone should be in a Chapter 7. Actual disposable income at or after the filing date is generally relevant.