Wow, I have to Convert to a Chapter 13
Since October 17, 2005 it has become tougher to file a Chapter 7 Case. Whereas before the Reform Act, filing a Chapter 7 case was not as scrutinized as it is today. When preparing to file a Chapter 7, you must first qualify. In order to qualify, your income cannot exceed the IRS guidelines (which vary according to the state you live in) compared to your household size. In most instances, those who file a Chapter 7 qualify, only because the attorney has made sure that the income reported does not exceed the allowable amount, defeating what is known as a “presumption of abuse.”
However, there are times when people initially qualify for a Chapter 7, but after further review, the trustee decides otherwise. This sometimes occurs when the client’s income after deducting the allowable expenses is borderline and the US Trustee may feel that some of the expenses taken are unreasonable. If this occurs, you have three choices. First, you can fight the US Trustee incurring more attorney fees and hoping that you succeed after the hearing before the Bankruptcy Court. Second, your Chapter 7 case may be dismissed. Third, converting your case to a Chapter 13 Case.
If you find that you have to change your Chapter 7 case to a Chapter 13 case, this may be beneficial in the long run. First and most importantly, you will still have the ability to be protected from all of your creditors by being under the protection of bankruptcy. Second, the monthly payment to be made will be at an amount that you can make and those payments are being made to creditors that you probably intended to pay back before considering Bankruptcy. Third, by converting to a Chapter 13 case, you are still able to always move your case back to a Chapter 7 case in the future, if by some chance your income cannot support the monthly payments and you can prove that.
Some people see the conversion to a Chapter 13 as a losing cause, when in fact it can be useful to you in the long run.
Please fill out our free evaluation form to determine if bankruptcy is right for you.
