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One of the most popular Code options is the absolute right to convert Chapter 13 Into Chapter 7
bankruptcy. In Chapter 13 files, past dues mortgages, taxes, and
priority claims may be rolled into the plan. Once the arrearage on these
extraordinary items are paid current, many debtors choose to then file a
Motion to convert Chapter 13 Into Chapter 7 with the court. The
court must grant the motion unless the debtor is not qualified for
Chapter 7. The discharge in liquidation requires no further payment upon
unsecured claims, and may be granted in as little as three months from
the date of conversion.
Qualification to Convert Chapter 13 Into Chapter 7 Files
Filing a motion is easy, but to prevail, all debtors seeking to convert Chapter 13
into Chapter 7
must qualify under specific criteria. According to the means testing
formula, debtors may not currently earn more than the median income for
their state of residency. In addition, disposable income, multiplied by
a factor of 60, may not exceed 25% of the total of all unsecured
liabilities. Further, this test measure must also be $9,999 or less. To Convert Chapter 13 Into Chapter 7
successfully, current income, as measured over the last 180 days,
determines qualification.
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