Can I switch to a Chapter 7 bankruptcy after filing for Chapter 13?

Yes, you can convert a Chapter 13 case to Chapter 7 bankruptcy at any time, for any reason, as long as you qualify for a Chapter 7 bankruptcy. You cannot avoid the qualifications for filing a Chapter 7 simply by converting a Chapter 13. You still need to meet the means testing requirements or the Court will refuse to convert the case.

The typical reason for converting is that you cannot meet the obligations of your payment plan due to changed circumstances. You should be aware that in doing so you will lose some of your property. Any property you own at the date of the conversion belongs to your Chapter 7 estate; unless that property is exempt, the trustee will be able to take it and sell it for the benefit of your creditors.  In essence, the conversion resets the clock. If you have property that was exempt when you filed the Chapter 13 petition, it may have changed to non-exempt property by the time you convert, thereby putting that property at risk.

Furthermore, if you received a discharge in a Chapter 7 case filed within the six years preceding the filing date of the chapter 13 petition, you cannot receive a discharge in the converted case. There would not be much point in converting in that situation.

Depending on your situation, you may want to simply dismiss and re-file as a Chapter 7. Consult with a bankruptcy attorney before converting or dismissing to determine which will work best for your financial situation.

Case Studies: Converting Chapter 13 to Chapter 7 Bankruptcy

Case Study 1: Financial Hardship and Payment Plan Inability

Emily filed for Chapter 13 bankruptcy but experienced a change in circumstances that made it impossible for her to meet the obligations of her payment plan. She decides to convert her case to Chapter 7 bankruptcy. However, Emily understands that she will lose some of her property in the process. She consults with a bankruptcy attorney to assess the risks and benefits of conversion and ensure she meets the qualification requirements for Chapter 7.

Case Study 2: Property Exemption Risk Assessment

David considers converting his Chapter 13 bankruptcy case to Chapter 7 due to financial difficulties. However, he’s concerned about the potential risk to his property. David knows that any property he owns at the time of conversion will belong to the Chapter 7 estate, and if it’s not exempt, the trustee can sell it to benefit his creditors. He seeks the guidance of a bankruptcy attorney to evaluate the status of his property and understand the potential consequences before making a decision.

Case Study 3: Discharge Eligibility and Bankruptcy Timing

Sarah is currently in a Chapter 13 bankruptcy case but contemplates converting to Chapter 7. She wants to determine if she’s eligible for a discharge in the converted case. Sarah discovers that if she received a discharge in a Chapter 7 case within the six years preceding the filing of her Chapter 13 petition, she cannot receive a discharge in the converted case. She consults with a bankruptcy attorney to assess her discharge eligibility and explore the options that will work best for her financial situation.