After a layoff, can a Chapter 13 be converted to a Chapter 7?

[swampwiz]

I'm curious. If someone has too high of income to do Chapter 7, and thus does a Chapter 13, but then loses his job, can he transform the BK into Chapter 7?

[backtoschool]

Yes, assuming there is a significant change in income and circumstances.

[UpsideDownMI]

You can convert your case from 13 to 7 at anytime, as long as you pass the means test.

[swampwiz]

What is the means test?

[justbroke]

What is the means test?

It's a financial test which determines whether you qualify to receive a discharge under Chapter 7.

Generally speaking, you are not going to be able to immediately convert. What you do is immediately ask the Trustee to suspend your payments for several months. If after those 3 months, you continue to not have employment, then you could file for Chapter 7.

[HHM]

When a person is laid off in a chapter 13, you need to go through the following steps.

1. Request a 3 month forbearance in chapter 13 payments. (from the trustee); while you look for work.
2. If, after 3 months, you have found no work, bam...changed circumstances, then you can convert to a chapter 7.

[diegodog]

When you convert to a chapter 7 from a 13 do you basically do a 7 from scratch or do they skip steps. What if you obtained assets while your in your chapter 13? Do they look at all that again? What if you lose your house during this process? Can you use your home exemptions to protect the new assets?

Thanks!

[justbroke]

When you convert to a chapter 7 from a 13 do you basically do a 7 from scratch or do they skip steps. What if you obtained assets while your in your chapter 13? Do they look at all that again? What if you lose your house during this process? Can you use your home exemptions to protect the new assets?

As the word "conversion" implies, all you do is submit a Notice of Conversion (in most Districts). In some Districts, they want you to file a new Form B22A (Means Test). You would also file a Statement of Intentions within 15-30 days of conversion.

Unless you were found to not be credible, then the property of your Chapter 7 (converted) estate is the same as it was at the time you filed your Chapter 13. Suffice it to say that 99.99% of the time, it's what you had when you filed Chapter 13... not what you have right now. You do not re-list new property on your schedules.

[Flamingo]

I'm curious. If someone has too high of income to do Chapter 7, and thus does a Chapter 13, but then loses his job, can he transform the BK into Chapter 7?

If you file a chapter 13 and lose your job after the filing date at any time, your attorney will need to be contacted immediately and you are usually advised to find another job immediately. Your attorney should ensure your payments due are put under forbearance as your Plan may require you to make monthly payments even if your income stops (ours was specifically worded that payments must be made even upon job loss). If you cannot find another job and are unable to fund the plan as filed, then depending on your financial circumstances a modification can be made or a Chapter 7 investigated. You will probably be looking also at further attorney's fees for the conversion/filing and/or modification. The company I was working for at the time of filing went bankrupt six weeks after we filed. My attorney advised me to find another job immediately which I did but at $6,000 less per year. Our plan was modified at our initial hearing to accomodate that drop in income.

[kym]

We did it.. It goes by the means test... with our 13th we had nothing available for food (seriously-unemployemnt didnt pay well...lol) so we converted and am sooo glad we did