What is the Process for Converting to Chapter 7 from Chapter 13?
The process for converting an active Chapter 13 to a case under Chapter 7 is a relatively straightforward process, that in some ways parallels the process of filing bankruptcy using a smaller set of information. The sequence of conversion would be summarized as follows:
- Consult about the effects of conversion. Conversion changes some important dynamics about the bankruptcy process. The first step is an attorney-client consultation, wherein the benefits and downsides of converting can be discussed. As it may have been years since attorney action in a chapter 13 case, having a deliberate review of the prior activity in the case is important before providing advice.
- Gather information needed for conversion papers. Conversion requires a report of new debts from the date of filing the chapter 13 case to the date of conversion, as well as property disposed of, property acquired, and new contracts outstanding.
- Conversion papers are drafted. These are much shorter than bankruptcy schedules, typically between 2 and 5 pages. They disclose the information gathered above, as well as declare intentions regarding secured debts. They require signature prior to filing.
- Notice of Conversion is filed. The date the notice is filed is the conversion date.
- Court issues notice to creditors. The court issues a new notice to creditors, setting a meeting of creditors presided over by the appointed chapter 7 trustee, about 3 to 5 weeks after conversion.
- Discharge is entered Assuming no objections to discharge (which are rare), a discharge would be entered shortly after 60 days following the date for the meeting of creditors.
- Case is closed. After the trustees have finished their work, the case is closed with the bankruptcy court. Note that if the chapter 7 trustee has assets to distribute, this that work must be done prior to closure.
In some situations it makes sense to notice a conversion very quickly, and in other times it may be prudent to go slowly. In optimal conditions, it takes just over 3 months to get a case converted, discharged, and closed.
Conversion has $25 court filing fee associated with the notice of conversion. Attorney fees associated with the conversion process and chapter 7 representation are collected prior to conversion, and vary somewhat depending on the complexity of conversion. They are uniformly less than the cost of filing a chapter 7 fresh, as much of the work of the chapter 13 process does not need to be redone.