Can a Chapter 13 bankruptcy be converted to a Chapter 7?

Consumers in the midst of Chapter 13 bankruptcies sometimes find that the payments are too onerous to keep up with. They may wonder about the possibilities of converting their bankruptcy filing from a Chapter 13 to a Chapter 7 and still retain possession of the family home.

While there are exceptions to everything, in general this is either not possible or a very risky venture. Below are the reasons why.

Many consumers wind up filing Chapter 13 instead of 7 because they are disqualified from the latter via the means test, i.e., they earn too much money. So unless their circumstances are radically altered, this option remains unavailable.

Another problem facing homeowners who wish to convert to Chapter 7 is that their mortgage lender was initially unwilling to cooperate with them to modify their home loan. While it is not impossible that a lender could change direction and decide now to work with the homeowners, it is definitely unlikely.

However, homeowners who stay the course and continue to make their scheduled mortgage payments under the terms of their Chapter 13 bankruptcy will not have to face uncertainties about the agreement. Even those that were delinquent on their payments will have between three to five years to catch up on the balance in incremental payments.

Still other homeowners forced into bankruptcy have more equity in their homes than is able to be protected by filing Chapter 7. For them, Chapter 13 remains the only viable option.

In cases where there are second or third mortgages in place, your bankruptcy attorney can advise as to whether or not filing Chapter 13 will discharge severely underwater mortgages.

Source: Bankrate, "Failed Chapter 13 bankruptcy may cost home," Justin Harelik, accessed May 16, 2017

No Comments

Leave a comment
Comment Information
  • MCBA | Maricopa County Bar Association
  • State Bar of Arizona
  • ABA | American bar Association | Defending Liberty Pursuing Justice
  • Oregon State bar
  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
Schedule A Consultation Today

Attorneys You Can Depend On And Trust

From our office in Surprise, The Dodds Law Firm, PLC, serves our clients' needs throughout the Valley. To schedule a consultation with a lawyer, call 623-208-6098 or toll free at 877-827-9906. You can also contact us online.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy