Can Spouses Separating during a Chap 13 convert to a Chap 7?

[Quicke23]

keepmine asks a good question. Many people come here thinking they don't qualify for a Chap 7, but learn that they do.

On the means test, if a non-filing spouse does not live with the debtor, the non-filing spouse's income is not included unless she contributes to the filing spouse's expenses. If she does contribute, only her contribution is included in income. If you do have to file Chap 13, the same is true when determining your plan payment.

Hypothetical question: what if a married couple living together (one spouse filed for chap 13) and the arrangement just isn't working out with a high payment to the trustee and they decide to split up and live in different households. The filing spouse can no longer afford the chp 13 payments on his own and has the debts converted to a chp 7. Does this ever happen?

[keepmine]

Hypothetical question: what if a married couple living together (one spouse filed for chap 13) and the arrangement just isn't working out with a high payment to the trustee and they decide to split up and live in different households. The filing spouse can no longer afford the chp 13 payments on his own and has the debts converted to a chp 7. Does this ever happen?

Sure does. Anytime you go from a 2 income HH to one income the situation changes. If you qualify for a Chapter 7 based on the lower income and have no property above whatever your state exempts there should be no problem with converting to a 7.

[LadyInTheRed]

Welcome to BKforum, Quicke23!

I moved your question to a new thread since it really isn't the same issue as discussed in the thread you posted in. You will get more responses by starting your own thread instead of posting at the end of an old one.

Also, we prefer to deal with real situations rather than hypotheticals. I suspect this is a real situation and you are the filing spouse. Is that correct? There really is no need to be vague. The more complete information you provide, the better answers you will get. With more information about your income and expenses and whether there are children involved, who they will live with and any related financial arrangements, we may be able to give more realistic input.

I agree with what keepmine said. But, without more information, it is impossible to know if a conversion to Chap 7 is possible or a good option for you. Another option may be to modify your plan to lower your payment. Regardless of help you receive here, if you are the filing spouse and separation is a real possibility for you, talk to your attorney about it sooner rather than later.

[Quicke23]

Testing

[Quicke23]

Thank you LadyInTheRed!

I live in California, so it's a community property state. I am the filer as I have accumulated a 6 figure number of unsecured debt. I have already retained an attorney to file chapter 13 (chapter 7 is not an option right now as I filed 7 years ago). The chapter 13 plan will be at 100% due to my household income being over 150k a year, even for a family of 4. My wife and I split all of our expenses and we maintain separate finances. There is no secured debt, no property. We have two kids. With this being said, I will be making the trustee payment on my own and as you can imagine- it will be very tight; but I can't have my spouse pay back a debt that she didn't incur. We want to stay together for our children and to keep our family together-she actually almost left when she discovered the debt that she had no knowing of. Just seems like we'd be better off in separate households for the purposes of determining household income for BK purposes. I may not be able to afford the trustee payment (debt, attorney backend, trustee 10-11%) and may end up separated anyways. Any thoughts would be appreciated. 5 years living with a payment that will leave me with $100/month for food will be difficult.

[LadyInTheRed]

First, since you have retained an attorney, you should discuss how a separation would effect your plan.

I suggest you and your wife figure out what you are going to do before you file Chap 13. Either you live together and she helps make sure you eat while you are in a Chap 13 or you separate so that you can have a plan payment you can afford. (I'm assuming you will have a lower plan payment if you are separated, but that may not actually be the case which is why my first comment is to discuss this with your attorney). If your wife is not willing to help you while you try to repair mistakes you made, I would say your marriage doesn't have much of a future. As a child of divorce who spent a lot of time in tears while her parents argued, I can tell you that staying together in a marriage that isn't working isn't always the best thing for the children. Of course, if she is going to help you get through this, you need to do your part and not get into debt again!

If you do file Chap 13 while you are living together and separate before you complete your plan, you can petition to modify your plan.

Something you and your wife should both keep in mind is that regardless of agreements between the two of you, if you incurred the debt while in marriage, it very well may be community debt that she is also legally responsible for. Even if you separate, it may be in her best interest to help make sure the debt is taken care of.

[Quicke23]

Thanks again for your help LITR! If we separate now, I don't think an acceptable plan can be put in place for a chapter 13 and chapter 7 is out of the question until next July. So the only prudent option would be to go ahead and file myself with the non-filing spouse's income considered. This plan payment will be upwards of $2300/ month with fees- I'll just need to work some OT and be very thrifty. If next year, the plan isn't working and it's putting a strain on our relationship, we may just split up and I'll have to have my 13 converted to a chp 7. 5 years with a $2300/month trustee payment is crazy- but it's my reality.

Our marriage is wonderful without the $ issue and we don't fight in front of the young kids (lucky to have young parents that live nearby to take care if the kids at times)

If I file chp.7- there may be a chance that my spouse would be on the hook since the debt was incurred while we were married though. Will have to consult with the attorney.

[Realist]

First, since you have retained an attorney, you should discuss how a separation would effect your plan.

I suggest you and your wife figure out what you are going to do before you file Chap 13. Either you live together and she helps make sure you eat while you are in a Chap 13 or you separate so that you can have a plan payment you can afford. (I'm assuming you will have a lower plan payment if you are separated, but that may not actually be the case which is why my first comment is to discuss this with your attorney). If your wife is not willing to help you while you try to repair mistakes you made, I would say your marriage doesn't have much of a future. As a child of divorce who spent a lot of time in tears while her parents argued, I can tell you that staying together in a marriage that isn't working isn't always the best thing for the children. Of course, if she is going to help you get through this, you need to do your part and not get into debt again!

If you do file Chap 13 while you are living together and separate before you complete your plan, you can petition to modify your plan.

Something you and your wife should both keep in mind is that regardless of agreements between the two of you, if you incurred the debt while in marriage, it very well may be community debt that she is also legally responsible for. Even if you separate, it may be in her best interest to help make sure the debt is taken care of.

Uh