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Can You Change Your Philadelphia Bankruptcy Chapter?

There are times when Chapter 7 cases become Chapter 13 cases. There are also times when it happens the other way around.

Sometimes this is the borrower’s choice. At other times, the courts themselves force the change. Chapter 13 borrowers often convert to Chapter 7 because they find the entire process too onerous and difficult to keep up with. Courts often force Chapter 13 cases to become Chapter 7 cases when the bankruptcy plan isn’t approved because the creditors are likely to get paid less than they would in a Chapter 7 case.

Is it a good idea to shift your bankruptcy type?

This is a decision only you and your attorney can make together. You should usually only seek to change your Chapter type in some very specific cases.

One case would be that you filed the wrong kind of bankruptcy in the first place. Ideally this wouldn’t happen if you’ve been working with an attorney from Day 1. One of the first things we do is help our clients choose the right type of bankruptcy case.

Another would be if you’re having trouble paying the Chapter 13 plan. We’d usually seek a modification of the plan from the trustee first. If a change in life circumstances is the reason for the trouble then the trustee will usually approve the change.

Do you still have to pass the means test if you convert from a Chapter 13 to a Chapter 7?

Yes. The court will not approve the change if you’re not eligible for the form of bankruptcy you’re seeking to switch over to. 

Remember, your income alone is not the sole determinant of whether you will pass the means test. The courts also look at how that income is spent. If they determine you have too much disposable income you might not be eligible for a Chapter 7 bankruptcy. Looking up the median income for the state of Pennsylvania is only a start.

Will I lose my house or car if I switch to Chapter 7? 

A converted Chapter 7 bankruptcy will work exactly the same way as a case which was put forth as a Chapter 7 case from the start. Your assets will be sold and the proceeds will be given to your creditors. However, bankruptcy exemptions may still make it possible to keep your home or car. Much depends on your personal situation. 

Hopefully if you are taking this route you used your Chapter 13 time to find a new place to live and address transportation issues. Otherwise it might be a good idea to remain on the Chapter 13 plan if you can.

Get help from a qualified bankruptcy attorney today.

Every part of the bankruptcy process is complicated, whether you change chapters or not.

Make sure you set yourself up for success by getting help from a qualified bankruptcy attorney who can help you out from Day 1. Contact Young Marr to get help today.

See also:

How Often Can You File Bankruptcy in Montgomery County, PA?

Will I Lose My Home If I File Chapter 7 Bankruptcy in Pennsylvania?

How Much Money Do You Have to Repay in Chapter 13 Bankruptcy? 


Have You:

Been paying credit card balances that seem to never go down?

Lost your job and are now having trouble keeping up?

Attempted to work out a payment arrangement to no avail?

Been notified of a mortgage foreclosure action?

Been denied for a mortgage or other line of credit?

If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.

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