The topic in this section is Voluntary Bankruptcy Case Conversion.

Why would a Debtor convert her Chapter 13 Bankruptcy case to a Chapter 7 Bankruptcy case?

One reason is that Debtor can no longer afford the Chapter 13 Bankruptcy Plan payment and that there are no nonexempt property or at least the ones that she is willing to give up. Or Debtor cannot get her Chapter 13 Plan confirmed.

Another reason is that Debtor’s assets lost their value and Chapter 13 Bankruptcy is no longer justified.

Why would a Debtor convert her Chapter 7 Bankruptcy case to a Chapter 13 Bankruptcy case?

The main reason is that there are nonexempt assets that Debtor does not want to give up to the Chapter 7 Trustee. Chapter 7 Bankruptcy is liquidation which means if Debtor’s assets are not protected under the California exemptions, the Chapter 7 Trustee can confiscate it or liquidate it and use the proceeds to pay her creditors. This usually happens when it was discover after filing that Debtor’s asset is worth more than disclosed or was not even disclosed at filing but discovered later.

Another reason is that Debtor wants to take advantage of the broader discharge offered by Chapter 13 Bankruptcy. For example, in a Chapter 13 Bankruptcy, Debtor can discharge penalties portion of her tax debt no matter how recent her tax bill is. This is not the case for Chapter 7 Bankruptcy which requires that the tax debt be at least 3 years old from the due date.

For additional information, call experienced Sacramento Bankruptcy Attorney Muoi Chea in Sacramento, Stockton, Fairfield, CA. For over a decade, she has been helping consumers and small business owners eliminate and restructure their debts through Chapter 7 and 13 Bankruptcy filing. Bankruptcy Attorney Muoi Chea accepts clients residing in Sacramento, West Sacramento, Elk Grove, Woodland, Davis, Roseville, Rocklin, Vacaville, Fairfield, Vallejo, Stockton, Tracy, Modesto, El Dorado Hills, CA and nearby cities in Northern and Central California.