When you initially file a personal bankruptcy you are filed under a chapter 13 or chapter 7. But what happens if your circumstances change so much you cannot stay in your current chapter filed? Your attorney may mention a conversion. A conversion is converting your case from one chapter to another. Most commonly conversions are from 13 to 7, but you may need to convert 7 to 13.
Here are a few examples:
Say you are in a chapter 7 case currently, but your income substantially increases right after the case is filed. Let’s say you receive a big raise and your disposable income leaves enough every month to make payments to your creditors, you may need to convert to a chapter 13 because of the change in income.
Another example, say you are originally in a chapter 13 due to having disposable income. If you income decreases to the point where you cannot afford payments under a chapter 13, you may look at converting your case to a chapter 7.
Not all conversions may be voluntary where you choose to convert. For instance, if your case is audited and you are found to not be in the correct case (for example, too much income in a chapter 7) you may be ordered to convert.
The conversion process with your attorney will be less in depth as the full filing process, as you only look at certain schedules. A conversion goes through your assets, income, expenses, and additional creditors. You will attend another 341 hearing as well.
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