What do you do if you can no longer afford your Chapter 13 Bankruptcy plan payments? What if the sole reason you are in a Chapter 13 Bankruptcy is because of car or house you no longer want? Conversion Chapter 13 to Chapter 7 Bankruptcy might be an option.
Can I convert my Chapter 13 Bankruptcy case to a Chapter 7 Bankruptcy?
It depends. You must be able to qualify for a Chapter 7 Bankruptcy in the first place. Chapter 7 Bankruptcy is income sensitive so you need to give your Sacramento bankruptcy attorney 7 months of paystubs to complete the means test. Beside this current case, when was the last time you filed and received a discharge for another bankruptcy case? The date of filing of the prior bankruptcy case that you received a discharge is also a factor.
Next question, “Should” you convert your Chapter 13 Bankruptcy case to a Chapter 7 Bankruptcy?
Do you have too much assets that is not protected by the California exemptions? Nonexempt properties are subject to confiscation and liquidation by the Chapter 7 Bankruptcy Trustee. For example, do you want to lose your house if it has too much equity? Do you want to lose your business because the value is too much?
Did you file a Chapter 13 Bankruptcy to lien strip your junior mortgage? Or are you cramming down the value of your car to the retail value? If so, converting it to a Chapter 7 Bankruptcy will reverse this. You will need to complete your Chapter 13 Bankruptcy case.
Are you paying your car loans through a Chapter 13 Bankruptcy Plan? Conversion to a Chapter 7 Bankruptcy will result in the return of the contract term prior to Chapter 13 Bankruptcy filing. This could mean a higher interests or payment arrears because you stretch out the remainder of your car payments into a 60 month Chapter 13 plan payment.
Are you using Chapter 13 Bankruptcy to discharge debts that are not dischargeable in Chapter 7 Bankruptcy? Chapter 13 Bankruptcy has a broader category of debts that can be discharged than a Chapter 7 Bankruptcy. For example, Chapter 13 Bankruptcy can discharge nonsupport debt to a former spouse. Also Chapter 13 Bankruptcy can discharge the penalties of priority tax debt from the Internal Revenue Service or Franchise Tax Board.
For more information call experienced Sacramento CA Bankruptcy Attorney Muoi Chea with offices in Sacramento, Fairfield, and Stockton, California. For over a decade, Muoi Chea has helped consumers and small businesses eliminate or reorganize their debts throughout Northern and Central California like Elk Grove, Citrus Heights, Roseville, Rocklin, Folsom, El Dorado, Vacaville, Vallejo, Tracy, Modesto, Yuba, Woodland, Davis, Lodi, Galt, Stockton, Fairfield, Sacramento, California and other nearby cities.