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Converting a Chapter 13 to a Chapter 7 Bankruptcy

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You can't watch the news on TV without hearing the word bankruptcy mentioned.
When most people hear the word bankruptcy, they think of chapter 7.
Chapter 7 is what individuals prefer to file because it's quick and it wipes out all the unsecured debt, making the individual virtually debt-free.
Some consumers file Chapter 7 and think everything is going smoothly until the trustee contacts your bankruptcy attorney because he thinks that your case is an abuse of the system.
At this point, the U.
S.
trustee can change your case to Chapter 13 because of the belief that you are capable of paying at least part of your debt.
People that end up in this situation generally don't have the money for a Chapter 13, after all of their expenses.
Some debtors make a little too much to qualify for the means test, but the reason they are trying to file Chapter 7 is because their living expenses are so high, and have nothing left from their income after they pay their expenses, not including their credit card bills.
Your bankruptcy attorney can defend against this motion and can usually be successful.
Qualifying for a Chapter 7 is much different than a Chapter 13 as it is solely based on the income of the individuals filing.
Basically, anyone will qualify for Chapter 13.
This type of bankruptcy gives the debtor an opportunity to pay back their creditors within a 3 to 5 year payment plan.
The trustee will use the individual's income and expenses to come up with a fair payment plan.
The best use of a Chapter 13 bankruptcy is when you're trying to protect a piece of real estate that has a large amount of equity in it.
Chapter 13, as all chapters of bankruptcy, has the automatic stay that will stop foreclosure and allow the debtor to catch up on the arrears owed.
In today's crazy economy no one is immune from losing a job or having a financial disaster hit their life.
If the debtor is in the middle of a Chapter 13 bankruptcy and gets into trouble making their payments, the trustee can dismiss your case.
You can let the court dismiss your case, but it will leave you with a lot of late payments due on debt.
In this situation, once the automatic stay is lifted, the creditors will come after you with a vengeance.
The better alternative is to convert your bankruptcy case to a Chapter 7.
Contact your bankruptcy attorney and have them file a notice of conversion with the court.
As long as you qualify for Chapter 7, the process should be easy.
After converting your Chapter 13 to Chapter 7, any money that is being held by the bankruptcy trustee should be returned to you less the administrative fees.
Many times people in Chapter 13 have their wages garnished to pay their payment plans.
It is important to have your bankruptcy attorney stop this immediately because it will usually take at least a pay period to get it stopped.
If there are any overages paid, they should be returned to you also.
When the conversion goes through, a Chapter 7 bankruptcy trustee will be appointed and a new 341 meeting will be scheduled.
Your bankruptcy attorney will have to file amended schedules adding any debt that has been incurred.
After your case is converted, you will have your 341 meeting 4 to 6 weeks later, and you should get your discharge about two months after that.
The best part is, you will no longer have a payment plan, and after the discharge you should be debt free.
The downside to this is you might lose some property that you are trying to protect by filing Chapter 13.
This is not necessarily true, as property values continue to drop and you might not have as much equity as you thought.
This is something to discuss with your bankruptcy attorney, so you can choose the path that will work best for your situation, pointing you to financial freedom and being debt-free.
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