As the unemployment rate continues to climb many debtors considering Chapter 13 bankruptcy are fearful that they want be unable to keep their payment agreement because of the loss of a job or other crisis. The good news is that the bankruptcy law allows debtors to convert their Chapter 13 bankruptcy case to a Chapter 7 bankruptcy . The debtor also has the option of dismissing their Chapter 13 bankruptcy case. But if the case is dismissed and creditors have not been fully paid you may become vulnerable to creditor action.
If a debtor decides to convert his/her Chapter 13 bankruptcy case to a Chapter 7 bankruptcy, he/she must do so in good faith. If the conversion is done in good faith a debtor should have no problems. Good faith means that the debtor has not attempted to manipulate the bankruptcy system to their unfair advantage or to the disadvantage of creditors.
For example, if a debtor decided to convert the case to a Chapter 7 bankruptcy in order to protect the money he/she would receive from a new/more lucrative job or inheritance the bankruptcy court would consider that bad faith. To find out more about how you can convert your Chapter 13 bankruptcy to Chapter 7 bankruptcy, speak to your Dallas-Fort Worth bankruptcy attorney.