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Chapter 13 convert to 7 ?

Fort Collins, CO |
Filed under: Chapter 13 bankruptcy

We are in a chapter 13 and been for 2 years. We want to know if chapter 7 would be better. Our attorney is so busy it would take a wk to get an answer from him. Here are a few details.
We make 89k a year. We own 3 vehicles - total asset of all 3 vehicles approx 9,000 we own two properties. They both have equity. First property has 60k in equity and the other has 30k in equity. We have 4 people that live in our home. Would we loose our assets if switched to 7? Thanks and I always appreciate AVVO lawyers. Always quick to reply.

Attorney Answers 4


You are borderline for being able to qualify for a Chapter 7. Your income might disqualify you - although the analysis is more complicated than can be addressed on this forum.

If you convert, you would likely lose the equity in the rental property. You can protect the equity in which ever property you live in, but if the rental can be sold for a net profit the Chapter 7 Trustee will do so.

You can reach Harkess & Salter LLC at (303) 531-5380 or Stephen Harkess is an attorney licensed in the state and federal courts of Colorado. This answer is for general information only and does not create an attorney client relationship between Stephen Harkess or Harkess & Salter LLC and any person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.

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I agree with Mr. Harkness. I will also add that there may be other considerations since you did not indicate the reason the case was filed as a chapter 13 in the first place. Was it to cure an arrearage? Pay priority taxes? Pay enough to creditors to be able to keep the rental property? Other reasons entirely? You really should examine your current situation with your attorney since he will have the most information about your situation and be best able to advise you.

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As Mr. Harkess comments, it depends. For example, you say 4 people live in your home. If all four qualify as household members under chapter 7 means test, then the relevant median household income amount is $82,427. Above that, and you need sufficient allowable expenses on Step 2 of the means test to show no disposable income available for another chapter 13 plan payment.

With what's at stake, consulting with an experienced bankruptcy attorney licensed to practice in your state may be a good idea.

If you want to know more about the meaning of certain key words used in bankruptcy, see the federal courts' web site for a glossary of bankruptcy terms:

My law firm is a federally designated debt relief agency and helps people in Colorado file for bankruptcy relief under chapters 7 and 13 of the Bankruptcy Code.

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Conversion from chapter 13 to chapter 7 is tricky. There are many traps. Once you convert, if things go bad, you may be unable to convert back or voluntarily dismiss your case. You should meet with your attorney in person to go over your case with an eye for possible conversion. Your attorney will want to know your income and expenses now as well as any new debts you have as well as any property you have acquired since filing the chapter 13. There are fees and more documents associated with conversion. You must attend another meeting of creditors, this time conducted by the chapter 7 trustee who is charged with liquidating your estate. Together, you and attorney can decide what is best for you.

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