Converting Your Chapter 13 Bankruptcy to Chapter 7

Bankruptcy Attorney in Kansas City, MO

Missouri Bankruptcy Attorneys

In the legal process known as bankruptcy, an insolvent debtor’s assets are liquidated, the proceeds are distributed among the debtor’s creditors, and the debtor is released from any further responsibility for the debt. The objective of declaring bankruptcy is to give the debtor a fresh start, free from the burden of any outstanding obligations, and to settle the claims of creditors in a manner that is equitable. This is accomplished by dividing the debtor’s remaining assets among the creditors in a manner that is just.

The process of filing for bankruptcy can be initiated in one of two ways: either by the debtor themselves, in which case it is referred to as a “voluntary bankruptcy,” or by a petition filed by the debtor’s creditors, in which case it is referred to as a “involuntary bankruptcy.”

At the Roach Bankruptcy Center, LLC in Kansas City, Missouri, we are bankruptcy attorneys who assist clients in escaping from difficult financial obligations and overcoming difficult financial burdens. We have many years of experience assisting people in escaping difficult financial circumstances, and we will be able to assist you as well. Contact one of our consumer bankruptcy attorneys as soon as possible to obtain any additional information.

Why do I need a Bankruptcy Attorney in Kansas City, MO.?

how to convert chapter 13 to chapter 7 bankruptcyAn attorney who specializes in advising clients on bankruptcy, drafting legal documents for clients, and representing clients in court is a bankruptcy attorney. A lawyer must hold a law degree and a license to practice law in the state where he or she will work.

As your guide through the bankruptcy procedure, a lawyer can offer the following advice:

  • Whether or not to declare bankruptcy
  • What type of bankruptcy must be submitted?
  • How the insolvency procedure operates
  • Which court-issued forms must be filled out?
  • Which obligations qualify for reduction or cancellation?
  • Whether you will be able to keep your home, vehicle, and other property after the bankruptcy case is resolved.

Generally speaking, a bankruptcy attorney can point you in the right legal direction. If you handle your bankruptcy case on your own, you run the risk of making legal errors with long-term financial repercussions.

If you hire a bankruptcy attorney, you can anticipate the following:

  • A legally binding contract between you and the attorney. The agreement will almost certainly include a summary of the attorney’s services.
  • A description of payment arrangements. For instance, does the attorney charge an hourly or flat rate? What will the cost be?
  • Ongoing conversations. You will describe your attorney’s approach to your case.
  • An agreement. You will determine the manner and frequency of attorney case status updates.
  • A catalog of documents. The attorney must provide you with a comprehensive list of the required documents for your bankruptcy case.

What is Chapter 7 Bankruptcy?

Under the protection of a federal court, Chapter 7 bankruptcy can eliminate many forms of overwhelming debt. You may be required to surrender certain assets, such as an expensive automobile or jewelry, but the vast majority of filers do not. Chapter 7 bankruptcy is the quickest and most prevalent type.

Chapter 7 bankruptcy eliminates the majority of unsecured debts, such as medical bills, credit card debt, and personal loans. However, tax arrears, court judgments, alimony and child support payments, and student loans are typically ineligible. A Chapter 7 bankruptcy will negatively affect your credit for ten years. During this time, it will likely be more difficult to obtain credit. Even so, your credit scores will likely begin to improve in the months following your bankruptcy filing.

Facing Imminent Foreclosure?

We can help save your home! Even if time is running out, we’ll find a way. Find out how by speaking with our bankruptcy lawyer in Kansas City, Missouri today.

What is Chapter 13 Bankruptcy?

Chapter 13 is generally known as the wage earner plan. If a debtor (or husband and wife debtors) has any source of income, he may file a petition for relief under Chapter 13 and repay his creditors in full or in part through a Chapter 13 trustee. Within two weeks of filing for bankruptcy, the debtor must submit a plan for repaying some or all of his creditors. The creditors may accept or reject the plan, but the bankruptcy judge makes the final decision regarding plan approval.

Within one month of filing for Chapter 13 bankruptcy, the debtor must begin making monthly payments to his trustee. Once the judge has approved a repayment plan, the trustee distributes the funds to creditors in accordance with the plan. Typically, these payments to the trustee continue for between three and five years. By bringing all delinquent payments and penalties current and making payments to the trustee in accordance with the Chapter 13 plan, a Chapter 13 filing may allow the debtor to halt the foreclosure process. The majority of mortgage payments must then be forwarded to the mortgage company or bank.

Facing Imminent Foreclosure?

We can help save your home! Even if time is running out, we’ll find a way. Find out how by speaking with our bankruptcy lawyer in Kansas City, Missouri today.

Chapter 13 to Chapter 7 Bankruptcy Conversion

A misconception that many of my clients have is that they are stuck with the particular chapter of bankruptcy filed without the opportunity to re-file to account for changed circumstances. Thankfully, the Bankruptcy Code permits debtors who qualify to convert from chapter 13 to chapter 7.

When the Means Test Permist Conversion

Generally, conversion from chapter 13 to chapter 7 under section 1307(a) of the Bankruptcy Code occurs when a debtor with an income above the median loses his or her job or experiences a reduction in pay, if the Means Test permits.

When a debtor decides not to remedy mortgage arrears and relinquishes the property, this is a common occurrence. If the debtor passes the Means Test, section 1307(a) permits an automatic (i.e., not subject to court or creditor scrutiny) conversion to chapter 7 bankruptcy.

Monthly Mortgage Payments

Initially, the chapter 13 plan payment will cover mortgage lender delinquent arrears. (Depending on the circumstances, the overall plan payment may also include priority tax payments to the IRS and/or payments based on monthly disposable income to unsecured creditors.) Even if mortgage arrears are eliminated over the course of 36 to 60 months under the plan, the debtor is still responsible for the normal monthly mortgage payment, which continues to be made to the lender outside of the bankruptcy. 

If regular mortgage payments are not made, the mortgage lender will likely request Relief from Automatic Stay (and ultimately pursue foreclosure) Many debtors abandon their homes as a result of the often onerous burden of making plan payments in addition to their regular monthly mortgage payment. For debtors who pass the Means Test, converting to chapter 7 to eliminate all unsecured debt – especially a deficiency on the mortgage loan(s) – is typically the best course of action.

Call our Reliable Bankruptcy Lawyers in Missouri Now!

Many issues can be resolved using Chapter 13. But following through on a plan is difficult—especially if you have a loss of employment, a sickness or disability, or another event that lowers your income. Ultimately, you might be able to change your case to a Chapter 7 if you are no longer able to pay your Chapter 13 plan installments with the legal advice from a bankruptcy attorney in Missouri.

Issues do come up frequently, so if you’re considering switching from Chapter 13 to Chapter 7, look for a Kansas bankruptcy attorney that can:

  • Determine if your salary is too low to be eligible for Chapter 7
  • Be sure you haven’t been discharged under Chapter 7 in eight years, and
  • Describe whether you’ll keep all you own or whether there’s a danger you might lose some of it.

Learn how to convert chapter 13 to chapter 7 bankruptcy with reliable bankruptcy lawyers in Missouri today to make sure you are making the right decisions. Make an appointment right away to speak with one of our bankruptcy lawyers in Kansas City so that we can assist you in getting the ball rolling on the path toward achieving monetary stability.

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