What is a Bankruptcy Conversion?
A “conversion” is when you change the bankruptcy chapter type after you file your original bankruptcy petition. For example, at the time you file your case, you are over the median threshold to file for a Chapter 7 bankruptcy, so you file a Chapter 13 case. Months or even years later, your income declines and you now meet the income threshold to file a Chapter 7. In that situation, you can convert your Chapter 13 case to a Chapter 7 case. It’s a moving target so if your situation changes, there are solutions to change your situation so you are not stuck staying in a Chapter 13 or being forced to have your case dismissed if you can no longer afford the Chapter 13 payment.
Its uncommon to convert a Chapter 7 case to a Chapter 13 . That would be a rare instance if the trustee believes you did not file your Chapter 7 case in “good faith”. In order words, if the trustee’s office believes you have ability to repay your creditors by not reporting your income or expenses correctly. If you cannot pay the amount of your non-exempt assets in a Chapter 7, then you might need to convert to a Chapter 13 to have extended time to pay the trustee. That is why it is so important to have an attorney prepare your bankruptcy petition to ensure you don’t have an unexpected issue about not qualifying for the Chapter type your filing.