Converting From Chapter 13 To Chapter 7 Bankruptcy

Charlotte Bankruptcy Attorney Bryan W. Stone answers the question: “What is Chapter 7 Bankruptcy?”


It happens sometimes that individuals initially file for Chapter 13 bankruptcy protection and later consider converting that bankruptcy to a Chapter 7. How does this work and why does it happen? To learn more, keep reading.


Two way signs Charlotte Bankruptcy Attorney North Carolina Chapter 7, 13 LawyerWhy would you ever convert?


Typically when someone decides to convert a Chapter 13 bankruptcy to a Chapter 7 bankruptcy the reason is that his or her financial circumstances have changed. One good example might be that your income has dropped since you first filed, either because of a job loss, job change or divorce. Your new income may not be sufficient to continue making your Chapter 13 plan payments and a conversion could therefore be a good option.


Another reason you might convert from a Chapter 13 to a Chapter 7 bankruptcy is because you have changed your mind and no longer wish to keep certain items of property. Sometimes individuals choose to file a Chapter 13 over a Chapter 7 because they want to keep a house, a car or some other important piece of personal property. If your wishes have changed, a Chapter 7 where you simply walk away from the property may be a better bet.


Restrictions on conversion?


Though you may have decided that converting to a Chapter 7 bankruptcy is the best option, there is one important restriction that could get in the way. Federal bankruptcy code says that debtors cannot convert from a Chapter 13 to a Chapter 7 bankruptcy if they already received a Chapter 7 discharge in the previous eight years.


Do you qualify for a Chapter 7?


Though you not be restricted from converting, you still have to qualify for a Chapter 7 by passing a means test. A means test analyzes your income and compares it to the median income in your state. If your income is found to be too high relative to others in your state and with your similar family size, then you will not be allowed to convert to a Chapter 7. However, if your income is low enough, possibly because of changed financial circumstances, then the conversion can move forward. In North Carolina, the most recent figures show that for a family of four, the median income is $67,116. To pass the means test, your income would need to fall below this level.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828 or find more resources here. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.


About The Author: 

Bryan 1  Bryan Stone is a Partner with Arnold & Smith, PLLC where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord tenant issues.  Originally from Macon Georgia, Mr. Stone attended the University of Georgia for a BBA in Banking and Finance and went on to Wake Forest to earn his law degree.  After law school Mr. Stone relocated to Charlotte where he has become quite involved in many local organizations.  He is currently the Chair of “Bravo!” the young professionals organization of Opera Carolina, he also founded the UGA Alumni Association of Charlotte.  In his spare time he enjoys perfecting his BBQ skills for the annual “Q-City BBQ Championships” and playing softball with the Mecklenburg County Bar Softball League.




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