When a person in Texas is facing financial challenges and makes the decision to file for bankruptcy, the individual might not be fully knowledgeable about how the process works. One aspect that is often confusing is when a Chapter 13 can be converted to a Chapter 7. The petitioner can decide to do this or it can be done by the U.S. trustee. The law for bankruptcy covers this and it can be beneficial for a debtor to understand when and how this can be done as steps might be taken to prevent it or it might be preferable to make the change.
A Chapter 13 bankruptcy can be converted to a Chapter 7 at any time. If there was a waiver to the right to convert it, it is unenforceable. The debtor can make the request that the case be dismissed under Chapter 13 as well. This too has a stipulation that any waiver to dismiss it will be unenforceable. Except in a circumstance in which the debtor is a farmer, the party in interest or the U.S. trustee can convert the case to a Chapter 7 or dismiss it. It depends on what is in the best interests of the creditors.
The cause for which there can be a dismissal or conversion includes the following — an unreasonable delay on the part of the debtor that will be prejudicial to the creditors, a failure to pay fees and charges that fall under a particular chapter and title of the bankruptcy law, a failure to plan timely payments, a denial of confirmation, a material default when there is a confirmed plan, the revocation of the order of confirmation, the termination of the confirmed plan if a condition that was specified occurs, if the U.S. trustee requests it, if the debtor does not file within 15 days or extra time allowed by the court and if necessary information is not filed.
Debtors who are concerned about a Chapter 13 filing and would like to convert it to a Chapter 7 have the right to do so provided all the requirements are in place. Since this can be complicated and there are various subsets to the law that have to be fully understood, it is advisable that those who are planning to file for bankruptcy have assistance from a legal professional who is fully aware of the process of Chapter 13 from start to finish and if a Chapter 7 might be a better option.
Source: gpo.gov, “1307. Conversion or dismissal,” accessed on Aug. 9, 2016