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Chapter 13 to 7 conversion

New Contributor

Chapter 13 to 7 conversion

I filed chapter 13 about 13 months ago. At the time that's the only option my lawyers said I had. Seeing as how I didn't know anything about bankruptcies then, I said okay. But I was reading stuff about chapter 13 to 7 conversions and I came across a page about the means test. Apparently if you make below the median household income in your state or area, you automatically qualify for chapter 7 and do not have to take the means test. I looked over the pay stubs I sent the lawyers and added up those 6 months worth of pay and doubled it to get my pay for a year. I was 4 thousand dollars under. Shouldn't chapter 7 have been an option? Will I be able to convert using those 6 pay stubs I originally filed with?

Message 1 of 21
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New Contributor

Re: Chapter 13 to 7 conversion

 
Message 2 of 21
Regular Contributor

Re: Chapter 13 to 7 conversion


batechmikew wrote:

I filed chapter 13 about 13 months ago. At the time that's the only option my lawyers said I had. . . But I was reading stuff about chapter 13 to 7 conversions and I came across a page about the means test. Apparently if you make below the median household income. . .  you automatically qualify for chapter 7. . .  I looked over the pay stubs I sent the lawyers and added up those 6 months worth of pay and doubled it to get my pay for a year. I was 4 thousand dollars under. Shouldn't chapter 7 have been an option?



Did you add up your take home pay or your gross pay?  You go by gross.  Further, regardless of whether or not you were above or below median and/or whether or not you "qualified" based upon Form 122, what did your Schedule I and J show?  Just because you "qualify" under the means test does not equate to an automatic Chapter 7 if your real time budget (I & J) clearly shows you have the ability to pay. 

 

There are many considerations that go into filing a Chapter 13 and, without all of the details of your case, no one on this Forum can answer your question -  "Shouldn't a chapter 7 have been an option".

 

Des.

Message 3 of 21
New Contributor

Re: Chapter 13 to 7 conversion

I did gross pay. I have all the papers of when I filed and copies of expenses that were taken into consideration. After everything was said and done I had 100 dollars left over this time last year but was still told I had to file chapter 13
Message 4 of 21
Regular Contributor

Re: Chapter 13 to 7 conversion

Is your plan a three or five year plan?
Message 5 of 21
New Contributor

Re: Chapter 13 to 7 conversion

3 years
Message 6 of 21
New Contributor

Re: Chapter 13 to 7 conversion

Even recalculated everything with current gross pay and all expenses not including unsecured debt and I'm negative $350 because my salary went down shortly after my plan confirmation
Message 7 of 21
Regular Contributor

Re: Chapter 13 to 7 conversion

To me, it depends on what your objectives are. I'm 48 months into a 60 month plan. My payments weren't that big as I did not have much debt. At one point, I was considering converting. I was frustrated that chapter 7 let's you rebuild almost immediately while the 13 left me in credit purgatory for a while. I was two years in when I was thinking about this.

Ultimately, I decided to stick it out. I wanted to buy a house and was frustrated that I couldn't do anything to rebuild my credit. We'll, my attorney said I could get a couple of cards as long as the limits weren't past a certain amount. I got Open Sky and Fingerhut. Fast forward two years, and my scores are around 650... And my mid mortgage score is 643.we just received th trustee's approval to buy a home at 225k via FHA.

Every situation is different. I'm glad I stuck it out, as less than two years after discharge, it'll be off of my reports. 7's stay for ten years. You have to evaluate your reasoning? Is your reasoning that you simply can't live with the payments you're making monthly?
Message 8 of 21
New Contributor

Re: Chapter 13 to 7 conversion

It is because of the payments. From my apartment complex raising my rent (I had a promotional rent of 900 on a 12 month lease, but has since went up to 1300) to losing about 300 a month, I cannot afford the payments. I have my phone, electricity, and cable on payment arrangements because I can't afford to pay it all at one time
Message 9 of 21
Regular Contributor

Re: Chapter 13 to 7 conversion

Others opinions may differ from mine, but if you cannot survive with your current payments and can't get them modified, I'd seriously consider the conversion. It'll stay on your reports longer, but that's a secondary concern if you cannot make it financially with your current situation. You'll get to begin rebuilding sooner as well. Is your 13 plan paying your creditors in full?
Message 10 of 21