Income changes during Chapter 13

Convert to Chapter 7

Many times, Debtors have to file Chapter 13 because their income is too high, or their expenses are too low.  During the Chapter 13 their financial situation changes and they can no longer continue making their plan payments.  One option is to file a Motion to Modify the plan to reduce the payment.  However, in many cases, a Debtor can convert their case to a Chapter 7.

There are many cases where the Debtor didn’t initially qualify for Chapter 7, but down the road the eventually do.  Debtors who cannot keep up with the Chapter 13 plan or mortgage and car payments during the plan, should consult with their attorney to see if converting is possible.

The Chapter 13 plan is designed to change with the Debtor’s financial situation.  Therefore, it is not something set in stone.  The sooner the Debtor speaks to their attorney, the sooner they can determine the options they have.

On the other hand, there are barriers and possible issues with converting your Chapter 13 case to a Chapter 7.  Chapter 7 is considered liquidation.  Speak to your attorney to make sure your assets can be exempted if you convert your case to a Chapter 7.