chp 13 to chp 7 conversion quetions

[charande2014]

Hello Family

I been in a chp13 for a yr now and it's killing me (high payment plan). Some friends suggested i quit my current job, wait 30 days and file a conversion for ch 7 stating a "sudden change in circumstances". Any suggestions on this matter? Any successfully do a chp 13 converion to a chp 7 under similar circumstances?

[justbroke]

You would need to follow the process in your local District. If you have loss of income, typically your attorney will seek a forbearance from the Court or Trustee seeking to allow you to miss one or more payments while you seek new employment. Then, after some period elapses, you can seek to convert to a Chapter 7 or seek a hardship discharge.

If your payment plan is high because you have secured debt in the plan, such as a home or cars, please realize that conversion may affect those items. Typically, cars are crammed down and you pay a lower interest rate during the Chapter 13. You may need to cure the difference prior to the Chapter 7 discharge, or risk a repossession or foreclosure.

Do you know why your payment is high? Did you have a change in circumstances? If it is the latter, then you should seek a modification of your secured plan. However, and again, if you're trying to save property, that may be why the payment is "high" and perhaps you just can't afford that property given your current income.

[charande2014]

Yes I have a loss of income (resigned from my job). My payments were high because at the time I thought I could afford them but the past year has been a grind. Once my job was goinng to be eliminated i thought it's best to look into conversion. As far as assets, I have no house, car notes, etc.. all I had originally was credit card & small bank loans but that was taken care of via my chp13. A modification is not gonna work now that I am unemployed. I was advised to stay unemployed until after my ch7 discharge. Any thoughts on this matter?

[justbroke]

You are now down to what we call strategy. In order to get out from your Chapter 13, you must follow the local procedures. That may mean having a forbearance first; reducing your payments to as low as $0. Once the forbearance period is over, or the Trustee and your attorney feel that you will not have new income anytime "soon" (don't ask me what period of time defines soon), then a conversion to Chapter 7 could be appropriate.

Personally I can't recommend that someone quit their job to get to a Chapter 7. In fact, you could have a "bad faith" issue with quitting your job (if you didn't have "cause" to do so). These are issues that your Chapter 13 attorney can help you determine.

[frogger]

You are now down to what we call strategy.

Personally I can't recommend that someone quit their job to get to a Chapter 7. In fact, you could have a "bad faith" issue with quitting your job (if you didn't have "cause" to do so). These are issues that your Chapter 13 attorney can help you determine.

Advice just doesn't get any better than this. Great answer JB.

[justbroke]

In thinking a little more on this, you may not specifically suffer what we call a 707(b)(3) "bad faith" motion to dismiss. I say this because you have been in the Chapter 13 for at least a year. However, you are over-the-median and the United States Trustee (UST) is likely going to review your conversion to Chapter 7 and could start poking at your case.

Then again, you may sail through without a peep from the UST.

This doesn't change your strategy. You will come up with how you'll deal with any (UST) issues in advance because when you file a Notice of Conversion (which instantly converts your case without hearing so long as the instant case has not previously been converted), you must attest that you are doing so in good faith and that you are eligible for a discharge under the converted chapter (Chapter 7).