1) Can I Be Eligible for a Chapter 7 Plan, and What are the Associated Costs?
In filing for bankruptcy, you must know your payment options. It is common for a bankruptcy attorney to offer payment plans for Chapter 7 bankruptcy cases. You can explore other options if your attorney requires full payment upfront during a free consultation.
Before transitioning to a Chapter 7 bankruptcy, you must prove that you cannot make Chapter 13 payments. This may involve amending your bankruptcy schedules to report your current income and expenses.
Remember that you must not submit another Means Test but must meet specific criteria to be eligible for a bankruptcy conversion. If your expendable salary is above a certain amount, you may not be eligible to convert to Chapter 7.
To help estimate your eligibility for a Chapter 7 bankruptcy case and to compare your alternatives, you can use the Chapter 7 Means Test Calculator. The calculator will give you a rough estimate of whether or not you are eligible for a Chapter 7 case.
Additionally, the means calculator can approximate the cost of a Chapter 7 bankruptcy case in your location, depending on your postal code. Understanding your payment options will help you make informed decisions during the filing process.
2) Advantages and Disadvantages of Converting from Chapter 13 to Chapter 7
When considering a transition from Chapter 13 to Chapter 7 bankruptcy, it is crucial to weigh the pros and cons of each option. Be sure to explore all options so you can depreciate your Chapter 13 remission or find alternative solutions to settle your credit issues outside of bankruptcy.
Pros of Chapter 7
- Cheap compared to Chapter 13 bankruptcy.
- Receive a dismissal within 120 days whereas Chapter 13 is a repayment period of 3-5 years.
- Full legal protection.
- You do not have to pay any debt back, it is all discharged.
Cons of Chapter 7
- It will remain on your account balances for ten years.
- The Chapter 13 bankruptcyonly appears on your account balances for seven years.
- May not have any payment plan options.
- Liquidation so you need to be sure your assets are protected.
- Chapter 13 may help more with foreclosure.
- You have to qualify.
You can use the calculator- Advantages and Disadvantages to Convert from Chapter 13 to Chapter 7, to understand the evaluated costs before the transition. This tool will also help you understand each option's benefits and drawbacks.
3) If I Switch from Chapter 13, Bankruptcy, to Chapter 7, Will I Be Able to keep my house?
Transitioning to a Chapter 7 bankruptcy could put your property at risk, as non-exempt equity in assets could result in their loss.
It is necessary to carry out a thorough investigation of the exclusions stated in your Chapter 13 bankruptcy. This will help you determine whether you have a proprietorship in benefits not secured by bankruptcy exclusions. A Chapter 7 calculator can assist in the analysis process.
Bankruptcy exemptions vary by state, and knowing which exemptions apply to your situation is essential. Some countries use federal bankruptcy exclusions, while others have country-specific exclusions that lenders must use.
When it comes to the homestead exemption, it will depend on how much home equity you have. For example, if the state exemption says “60,000” then that means you have to have less than $60,000 in home equity to be able to keep your home, otherwise, Chapter 7 may liquidate it to pay off the debt.
To minimize the risk of losing your property, it is wise to seek legal advice from a bankruptcy advocate before transitioning to Chapter 7.
4) How Do I Go About Converting from Chapter 13 to Chapter 7?
Before converting a bankruptcy case, you must have a new meeting of the creditors' appearance. You must also file the following documents to convert a bankruptcy case:
- Announcement of transition
- Proclamations Agreements
- Revised schedules
- Announcement of intent
- Additional lenders notice.
If you are changing attorneys, the new advocate will also need to obtain several documents;
- Entry of lien
- Motion and Disposition to Substitute and Counsel
- All pre-filing legal documents.
All these documents must be filed correctly and on time.
5) What is the Typical Timeframe for Converting from Chapter 13 to Chapter 7?
You can convert a Chapter 13 to a Chapter 7 case without being bound by a specific deadline. It is possible to request the court to make this conversion during your bankruptcy hearing.
Once you convert to Chapter 7, the timeframe of that bankruptcy will begin, so it may be around 4 months from that point of conversion for the discharge.
However, if you are near the end of your Chapter 13 repayment plan, it might be beneficial to continue with it instead of switching to Chapter 7 bankruptcy.
6) What are the Expenses Involved in Converting from Chapter 13 to Chapter 7?
The cost of filing for a Chapter 13 bankruptcy case is lower than that of a Chapter 7 bankruptcy case. Therefore, if you wish to convert Chapter 13 to Chapter 7, you may have to pay an additional recording fee. The fee is typically $25 unless the recording fees have increased.
It is recommended that you check with the bankruptcy tribunal in your country to ensure that you know the current recording fees for different motions and petitions. Be mindful of the recording fees as they significantly impact your financial situation.
7) In a Converted Chapter 7, What happens to my Guaranteed debts?
A secured creditor claims the assets you have put up as collateral to secure the loan. If you cannot repay the loan, the lender may reclaim or foreclose on the collateral to recover the outstanding debt.
Examples of guaranteed debt include car title loans and mortgages. iling for bankruptcy does not eliminate secured liens.
If you decide to convert your bankruptcy case to Chapter 7, you must keep paying your guaranteed debts or risk losing your property. Catching up on payments should be a priority if you must compensate for mortgage payments. Otherwise, you could face foreclosure, resulting in losing your property.
Similarly, car loans maybe problematic in Chapter 7. In most cases, Chapter 13 plans bring down the amount owed on secured debts, including auto loans, through a process known as "cramdown.”In Chapter 7, however, the auto credit may default, and you may risk losing your car if you must prepare to compensate on payments.
Note that secured debts are given priority over unsecured debts, such as bank card debt, in bankruptcy proceedings. Therefore, it may be wise to prioritize paying off secured debts to protect your property if you cannot pay all your debts.
8) After Converting to Chapter 7, What happens to my un-guaranteed debts?
Certain unsecured debts can be discharged in Chapter 7 bankruptcy, meaning the court can eliminate them. This includes:
- Old utility bills
- Personal loans
- Medical bills
- Credit card debts
- Old wages taxes
However, if credit is overdue, it may survive the Chapter 7 bankruptcy case, and you may still be required to pay it even if you receive an emission in Chapter 7. Examples of on-dischargeable debts include:
- Child support
- Alimony
- Student loans
- Restitution
9) What is the Timeline for Receiving My Bankruptcy Dismissal After Converting to Chapter 7?
When the Chapter 7 custodian decides not to sell any of your property, your case is called a "no-asset" Chapter 7 bankruptcy case. In such cases, you can complete the bankruptcy process within five to six months after transitioning from Chapter 13 bankruptcy.
Conclusion
It’s essential to seek advice from your bankruptcy attorney before taking any steps related to your bankruptcy case. Their expertise can help you make informed decisions and avoid any negative consequences.
