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:

  1. 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.
  2. 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.
  3. 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.
  4. Notice of Conversion is filed. The date the notice is filed is the conversion date.
  5. 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.
  6. 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.
  7. 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.

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