If you're in a Chapter 7 bankruptcy and behind on your car payments and home mortgage you could face a vehicle repossession and foreclosure. For those Chapter 7 bankruptcy debtors facing vehicle repossession and/or foreclosure converting their Chapter 7 bankruptcy into a Chapter 13 bankruptcy may be the right choice.
Changing a Chapter 7 Bankruptcy Into Chapter 13 Bankruptcy
Here's what you need to know:
- It is a lot easier to convert a Chapter 7 bankruptcy into a Chapter 13 bankruptcy than the other way around. However, you will still need to convince the bankruptcy trustee that the conversion is not being done in bad faith. You may not be granted a conversion if you converted in the past.
- To receive approval for a conversion from Chapter 7 bankruptcy to Chapter 13 bankruptcy, you need to have a very good reason to convert. Most likely if you're facing a vehicle repossession or foreclosure that may be reason enough.
- You must be able to afford the Chapter 13 bankruptcy payments. If it is obvious that you cannot afford Chapter 13 bankruptcy, you won't be granted the conversion.
- Once your Chapter 7 to Chapter 13 bankruptcy conversion is approved you will need to have another meeting of the creditors and some of your debts may be treated differently. For example, if you have credit card debt, you may be required to repay some or all of those debts in your Chapter 13 bankruptcy.
- And finally, once your bankruptcy conversion is approved you will be granted a brand new bankruptcy trustee who will then review and approve/disapprove your Chapter 13 bankruptcy repayment plan.
The good news is that once you convert to Chapter 13 bankruptcy your creditors will not be able to move forward on any collections actions because of the automatic stay. If you have any more questions feel free to contact the bankruptcy attorneys at Allmand Law to schedule a free consultation.