You may find yourself in a situation where you can no longer afford your Chapter 13 plan payments. Depending on your circumstances, you may be able to convert your case to a Chapter 7 bankruptcy, giving you the ability to complete your case and receive a discharge (meaning you satisfied all of your obligations).
But, before we discuss how to convert your bankruptcy case, let’s take a look at the differences between a Chapter 13 and 7 bankruptcy.
What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy functions similarly to a Chapter 11; however, Chapter 13 bankruptcies are only for individuals, not businesses. When an individual files for Chapter 13, they can protect their assets (such as their home and car) while negotiating a three to five-year payback of debts.
A Chapter 13 bankruptcy may take approximately three months to complete. However, your bankruptcy won’t be discharged until you complete the three to five-year plan.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a legal process allowing you to eliminate (cancel) your unsecured debt, such as credit cards and unpaid medical bills.
Some other consumer debts that can be eliminated under Chapter 7 bankruptcy include:
- Unpaid utility bills
- Unsecured personal loans
- Payday loans
- Unpaid federal or state income taxes
Bankruptcy cannot discharge domestic support, child support, payroll taxes, or student loans.
Reasons to Convert Your Chapter 13 into a Chapter 7
Here are some reasons why you may want to convert your Chapter 13 bankruptcy into a Chapter 7:
- You can no longer afford to make your Chapter 13 plan payments because of a change in financial circumstances, such as a change in job.
- You wish to surrender some of your property (such as your car or house) that Chapter 13 preserved.
How to Convert Your Chapter 13 into a Chapter 7
First, if you’re considering converting your Chapter 13 bankruptcy into a Chapter 7 bankruptcy, you should talk to a qualified Georgia bankruptcy attorney to walk you through the various steps of the process. With so many complicated rules around bankruptcy, you’ll want someone in your corner.
If you have not received a Chapter 7 bankruptcy discharge in the previous eight years, you can convert your Chapter 13 into a Chapter 7. To do so, you’ll need to file a Notice of Conversion with your local bankruptcy court and pay the conversion fee.
However, you must qualify for Chapter 7 to complete your conversion. This includes meeting the bankruptcy means test in Georgia, which requires debtors to earn a certain amount below a legal threshold.
To fully understand your rights under bankruptcy law, contact an experienced debt management attorney.
Hiring an Augusta, Georgia Bankruptcy Lawyer
Bankruptcy can be overwhelming and stressful. Avoid the stress and enlist the help of a bankruptcy attorney in Augusta, GA. The Law Firm of Seymour and Associates, P.C. can help you navigate through the legal process, helping to pave the way for a better tomorrow. Contact us today to learn more.