Lost job, conversion to 7?

[Air00Max]

I am currently 3.5 years in on my 13. I lost my job on 12/31 and am receiving a severance that is below the median for my state. I have some possible opportunities for work that would put my income above the median, but would take 4-5 months to get up and running. What would I do to convert to a 7, and would I be able to convert with no issue???? Would we have to go back to court and meet with the trustee again ???

[LadyInTheRed]

You can read a little about the conversion process at http://www.nolo.com/legal-encycloped...chapter-7.html

As you will see, the exact process varies by court. But, you will have to go to another 341.

We can't tell you whether you can convert with no issue because we don't know the details of your case. You should contact your attorney to discuss whether a conversion is an option for you.

[AngelinaCat]

My 'Hub and I initially tried planning for a CH13, but when I lost my FT job, and he lost his major contracting employer, we had no choice but to file a CH7.

All of this happened before we filed, so I don't know that this response will help you, other than offering moral support.

[Air00Max]

I was able to meet with my attorney, and based on my current situation, I should have no issues converting to a 7. I am extremely excited about this, as I will be able to get this put to bed sooner than I had thought. My 13 has been going on for close to 4 years....however, my attorney said that the fee to convert to a 7 will cost me $1K. I was a little taken back by this, as I thought the courts only charged roughly $25 on their end for a conversion. It appears the attorney is going to be taking me to the cleaners for his fee. My 13 filing cost quite a bit in the beginning....

[justbroke]

That conversion fee is actually pretty good. Some attorneys will charge you the FULL Chapter 7 amount which is typically $2,500 and more. The attorney is probably charging you a flat rate of 4 hours at $250.00/hour as a retainer and it is predicated on the fact that they have all your paperwork as they have been your attorney of record for your Chapter 13.

You probably don't realize this, but the attorney has to prepare your Notice of Conversion, update your Schedules, and attend another 341 Meeting. They also need to do the Statement of Intentions, and handle any real and personal property that you are dealing with. The cost may be higher if you're going to redeem a vehicle. It is not as if they just file the Notice of Conversion and you're done. I would say that 4 hours of attorney time is probably about normal to convert a case that has been ongoing for 3+ years. If you had just filed Chapter 13 and the Order Confirming Plan had not been issued, I could see a lesser amount.

[Air00Max]

JustBroke, thank you for the clarification! I feel much better about the $1K now. Thanks again!

[justbroke]

I am glad that you can see where the costs come from. The $25 to "convert" is really just the filing fee difference between a Chapter 13 and a Chapter 7. It is not the total "cost" to convert. Additionally, the attorney may have other costs if your District requires the attorney to serve the Chapter 7 Notice of Bankruptcy (and Notice of Conversion) on all your creditors. If you do have new creditors you get to include them in the Chapter 7!

While your attorney has to serve the Notice of Bankruptcy directly on those creditors, these post-petition creditors can be included and discharged. (These are the creditors that you established after filing your chapter 13 but before filing your Chapter 7!) That's one of the most powerful things about a Chapter 13/11 being converted to a Chapter 7! You get to keep the same petition date (your original filing date), but everything up until your conversion date is included in the bankruptcy.