No, you cannot "convert" your case to a Ch. 7 case because the date of filing of your Ch. 13 case is used to determine the time limit to file a new Ch. 7 case. However, you may voluntarily dismiss your Ch. 13 if the circumstances are such that you can no longer afford to make the payments. You may then file a new Ch. 7 case if it has been 8 years since the file date of your last Ch. 7 case. You had earlier indicated that you thought the time limit was 7 years to file a new Ch. 7, but, that time limit was increased to 8 years under the new Bankruptcy laws of 2005. Further, to file a Ch. 7 case you must pass the "median income" test of the new bankruptcy law. You should have an attorney discuss your legal options, including any change of circumstances.
You cannot convert your current joint case to a 7 if you were ineligible to file a 7 at the time the 13 was filed. Dismissal and refiling as a 7 may work, depending upon your current eligibility for a 7 (8 years from the date of filing of your most recent 7).
If your circumstances have changed so that the current plan payments are unaffordable, you should discuss with your chapter 13 attorney whether you may seek a plan modification.
In the District of Minnesota, the proponent of a modification of a plan in a Chapter 13 case must demonstrate some form of "cause" for the modification, in anticipation of objection from parties that would be adversely affected by the approval and administration of the modification. Any modification that would reduce a debtor's payment obligations and creditors' distribution rights must be supported by a material, adverse change in the debtor's financial circumstances, that took place after the confirmation of the original plan.
The process for getting a plan modification approved is complex, and you will almost certainly need the assistance of your chapter 13 counsel to accomplish it. This may provide an additional option for you, however, to address the circumstances that led to your question.
This communication may be considered an Attorney Advertisement under the Minnesota Rules of Professional Responsibility. Rogers Law Office is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code within the meaning of Title 11, United States Code Section 528.
Since you have filed the current Chapter 13 within 8 years of the Chapter 7, you would not be eligible to convert your pending Chapter 13 into a Chapter 7. But, if eight years have now elapsed since the last Chapter 7 case, you may be eligible to dismiss your Chapter 13 and file a new Chapter 7. Your husband, who had not filed a previous Chapter 7, may be eligible to convert his case now. But, it may make more sense to keep the cases together. You would also have to make sure that you meet the other requirements of a Chapter 7. You should consult with a qualified attorney in your jurisdiction.
Your question also raises issues about the difference various chapters of bankruptcy. In general, bankruptcy may be one method of allowing individuals and businesses experiencing financial hardships to get fresh starts. In appropriate circumstances, a bankruptcy will allow the debtor to eliminate or reorganize debt while saving important assets such as a home or car. The filing of a bankruptcy will also force creditors and collection agencies to stop calling, and, in most cases, will permanently stop lawsuits and wage garnishments. Two types of bankruptcy are most commonly used by consumers. These are typically referred to as Chapter 7 and Chapter 13.
A Chapter 7 proceeding, often referred to as a "straight bankruptcy," is available to qualifying individuals. In a Chapter 7 case, most unsecured debts are completely discharged, while allowing the debtor to keep exempt assets; typically including a home (with limitations on equity), vehicles (up to a specified value), retirement accounts (IRAs & 401ks), disability & social security benefits, certain work-related tools, and general household furnishings (up to a certain amount).
A Chapter 13 bankruptcy is available to many individuals who have regular income. Chapter 13 bankruptcy provides a means by which debts can be reduced and/or paid over an extended period of time (typically 3-5 years) under court supervision and protection. Often, the amount repaid to unsecured creditors will be much less than the amount actually owed. A Chapter 13 proceeding also allows appropriate debtors who may be behind in their car payments or mortgages to get current over time, and, importantly, save their cars from repossession and their homes from foreclosure.