If your Chapter 13 plan payments have become unaffordable, you generally have the right to convert your case to Chapter 7 bankruptcy at any time, as long as you qualify for Chapter 7 and are acting in good faith. Converting can eliminate many of your remaining unsecured debts without requiring you to finish years of plan payments. However, it can also affect your home, your vehicle, and certain debts that Chapter 13 would have handled differently. Before deciding, it is important to compare conversion with other options, such as modifying your plan. Winterbotham Parham Teeple, a PC helps Pomona residents evaluate whether converting is the right move.

Why Do Chapter 13 Plans Become Unaffordable?

A Chapter 13 plan lasts three to five years, and a lot can change in that time. Common reasons Pomona residents struggle to keep up include:

• A job loss or reduction in work hours
• Serious illness or injury
• Divorce or separation
• The birth of a child or new family responsibilities
• Unexpected major expenses, such as car repairs

When income drops or expenses rise, the plan you agreed to at the start may no longer be realistic.

Do I Have the Right to Convert to Chapter 7?

Under the Bankruptcy Code, a Chapter 13 debtor generally has the right to convert to Chapter 7 at any point during the case. You do not usually need your creditors’ permission. However, a court may deny conversion if you have acted in bad faith, such as hiding assets or misusing the bankruptcy process.

Do I Still Need to Qualify for Chapter 7?

Yes. You must meet the eligibility requirements for Chapter 7, including passing the means test based on your current income and expenses. In many cases, the same financial setback that made your plan unaffordable also makes it easier to qualify. You also cannot receive a Chapter 7 discharge if you received one in a case filed within the past eight years. You can learn more about Chapter 7 eligibility on our Chapter 7 bankruptcy page.

What Happens to My Property After Converting?

When a case is converted in good faith, the Chapter 7 estate generally includes the property you owned on the date you originally filed Chapter 13 that you still have when the case converts. Property you acquired after your original filing date is usually not included. A Chapter 7 trustee will review your assets, and any property not protected by California exemptions could be sold to pay creditors.

Plan payments you made that the Chapter 13 trustee has not yet distributed to creditors are generally returned to you after conversion.

What Are the Risks of Converting?

Converting is not right for everyone. Before making the switch, consider these potential drawbacks:

• If you are behind on your mortgage or car loan, Chapter 7 does not give you a plan to catch up, which could lead to foreclosure or repossession
• Non-exempt property that Chapter 13 protected may be at risk in Chapter 7
• Some debts that can be discharged in Chapter 13 cannot be discharged in Chapter 7
• Protection for co-signers that Chapter 13 provided may end

Are There Alternatives to Converting?

Converting is only one option. Depending on your situation, your attorney may recommend:

1. Modifying your Chapter 13 plan to lower your monthly payment
2. Requesting a hardship discharge if circumstances beyond your control prevent you from finishing the plan
3. Temporarily suspending payments with court approval
4. Voluntarily dismissing the case, which ends bankruptcy protection

The right choice depends on your income, your assets, and your goals.

Frequently Asked Questions

Will I have to attend another meeting of creditors?

Yes. A new meeting of creditors is typically held after a case converts to Chapter 7.

How long does a converted case take?

Many converted cases are completed within a few months, similar to a standard Chapter 7.

Can I convert back to Chapter 13 later?

In some situations, yes, but this is less common and depends on your circumstances.

Speak With a Pomona Bankruptcy Attorney About Your Options

Falling behind on plan payments can feel overwhelming, but you still have choices. For over 30 years, Winterbotham Parham Teeple, a PC has helped Southern California families find the debt relief path that fits their lives. Visit our Pomona bankruptcy office for a free consultation, or call 800.400.9000 today to discuss whether converting to Chapter 7 is right for you.