Chapter 13's are high risk...77.5% of closed cases ended in dismissal

[alo]

So, justbroke, you are saying that it is rare to go in with a proposed Ch 13 and be converted to a Ch7? In what scenario would this happen?
And I think you also implied that you can apply for a Ch 7 and if dismissed, then you can convert to Ch 13? Again, in what scenario would this happen?

Any clarification on what is potentially possible is appreciated!

I had one attorney consult so far and she said she'd put me in at a Ch 7 if I insisted (I pass the means but am over the medium income). Maybe Ch 13s are her preference (I've heard that some attorneys don't like to file Ch 7s).

However, if it was dismissed I didn't have any recourse (which I took to mean I wouldn't be able to convert to Ch 13). Or perhaps she meant I'd have to pay her again (or maybe just more)?!? Or maybe she meant we would have to go back and regroup and how long would this add?!?

I have two more attorney consults scheduled this week and hope to be better prepared with my on-the-spot follow up questions to their responses. Joining this forum has already helped me get a grasp on the basics.

Thanks.

[justbroke]

So, justbroke, you are saying that it is rare to go in with a proposed Ch 13 and be converted to a Ch7? In what scenario would this happen?

It could happen if there was fraud in the case or if the Trustee believes that you abused the Bankruptcy code in order to hinder, delay and/or defraud creditors in such a way, that liquidation is better. Very rare and those cases are almost always fraud cases. But, if the person has no real assets to liquidate, then the conversion is a useless tool for the Trustee.

And I think you also implied that you can apply for a Ch 7 and if dismissed, then you can convert to Ch 13? Again, in what scenario would this happen?

Once a case is dismissed, you can't convert. You would need to refile. If you file a Chapter 7 and they tell file a Motion to Dismiss or Convert to Chapter 13, then you can convert at that point (saving the filing fee since it's the same case).

I had one attorney consult so far and she said she'd put me in at a Ch 7 if I insisted (I pass the means but am over the medium income). Maybe Ch 13s are her preference (I've heard that some attorneys don't like to file Ch 7s).

Over the median Chapter 7 cases could be difficult to fight. If the United States Trustee (UST) decides to scrutinize the petition, which they certainly will, it could lead to a bunch of litigation. That costs money. It's not so much that a particular attorney cares about only doing Chapter 13s. This will usually mean a more expensive Chapter 7 case and the potential that it ends up as a Chapter 13 anyhow.

That being said... there are many people on here who have instructed their attorney to go for the Chapter 7 and they were successful. Some of those same people had a lot of litigation and fighting Motions to Dismiss and Dischargeability complaints (APs), but some did not hear a peep from the UST.

However, if it was dismissed I didn't have any recourse (which I took to mean I wouldn't be able to convert to Ch 13). Or perhaps she meant I'd have to pay her again (or maybe just more)?!? Or maybe she meant we would have to go back and regroup and how long would this add?!?

Yes, you would pay again on a conversion, but it should be cheaper than an entirely new case.

[alo]

Once a case is dismissed, you can't convert. You would need to refile. If you file a Chapter 7 and they tell file a Motion to Dismiss or Convert to Chapter 13, then you can convert at that point (saving the filing fee since it's the same case).

Thanks for the prompt and thorough reply.
Just so I'm clear...if the UST doesn't approve the Ch 7, they move to dismiss it. Right? Then my attorney might step in and file a motion to convert? Is there ever a time when it is simply dismissed with no option for a motion to convert to Ch 13.

What is the potential timeline?

file for Ch 7
341 for Ch 7
UST moves to dismiss (suspects abuse, requests back up documents on expenses, other reasons...)
motion to convert filed by attroney
conversion allowed/approved by UST
file ch 13 with submitted payment plan
341 for Ch 13
then...

[justbroke]

The UST would, if the case is an "abuse" of the provisions for a Chapter 7 discharge, file an adversary proceeding (AP) to get the case dismissed "or" converted. It's your choice to either fight or convert immediately. You could still fight and then, if you lost the battle, still convert.

This usually happens within 60 days of your 341 Meeting (before the discharge date). The UST only has until the dischargeability date (the 60 days past your 341 meeting) to file this complaint. (Unless the UST motions the court for more time.)

0 days - File
30-45 days - 341 Meeting
90 days - dischargebility bar date (the last date for the UST or a creditor to "complain")
91-??? days - discharge
91-??? days - close

[alorth]

The UST would, if the case is an "abuse" of the provisions for a Chapter 7 discharge, file an adversary proceeding (AP) to get the case dismissed "or" converted. It's your choice to either fight or convert immediately. You could still fight and then, if you lost the battle, still convert.

This usually happens within 60 days of your 341 Meeting (before the discharge date). The UST only has until the dischargeability date (the 60 days past your 341 meeting) to file this complaint. (Unless the UST motions the court for more time.)

0 days - File
30-45 days - 341 Meeting
90 days - dischargebility bar date (the last date for the UST or a creditor to "complain")
91-??? days - discharge
91-??? days - close

Yes, alo....and this is exactly what happened in my case earlier this year.

So now we're in a 13 when we soooo hoping to be a 7, but the numbers just didn't work in our favor. One tiny mistake by our atty in reading the actual rules of the ch.7 means test ended up costing us thousands as he "advised" us to go for the 7 when it should have been clear that we were not qualified. Now, IF we had actually been successful in reaching discharge on the 7, it sure would have been nice, but the UST just wasn't going to let that happen. To think if we made about 10-12k less per year, we would have been able to go through with the 7.

But if ifs and buts were candies and nuts....

So here we are in month 5 of 60....and it is going so painfully slowwwwwwwwwww.....

Doable? Yes. But not fun in the slightest and there's just such a long long road ahead. Hope we make it. Sometimes I have my doubts....especially as these unexpected repairs and expenses keep popping up, and eating into our small cushion.

[Motivatedx3]

I am currently 46 months into my 48 month Chapter 13 and it has been very difficult.

All payments have been made on time.

I've read several posts and what worries me is not being able rebuild after the CH13. It seems easier for those who file CH7.

[justbroke]

A Chapter 13 debtor should be in a much better position. First, the Chapter 13 bankruptcy will fall off the report 7 years from filing (not 10 years as in a Chapter 7). Second, Chapter 13s are known as Wage Earner Plans and the credit score model tends to be nicer to those. Finally, the old "bad" debt (late payments) are seasoned by the time you exit a Chapter 13. There is at least 2-3 years of "time" between the bad debt and the debtor emerging from Chapter 13.

In essence, Chapter 13 debtors are in a better place. Unless, they messed up during their Chapter 13.