There are two types of personal bankruptcy cases that can be filed. Whether you end up in Chapter 7 or Chapter 13, there are some things you need to know about the future of your case. More specifically, there could be instances in which your case is converted to the alternate chapter. Here is why:
A voluntary conversion of your bankruptcy case occurs when you declare your intent to proceed under a different chapter of the Bankruptcy Code than originally filed in your petition. You may choose to convert your Chapter 7 case into a Chapter 13 reorganization case, for the purposes of increasing your asset protection. This happens when people underestimate the value of an asset that could be subject to liquidation. In order to protect this asset, the law allows for a one time conversion to Chapter 13 out of Chapter 7. On the other hand, conversions from Chapter 13 to Chapter 7 may occur if you were to experience the loss of income or ability to maintain the Chapter 13 repayment plan. Converting to Chapter 7 can ensure that the remaining debts aren’t subject to dismissal due to your inability to maintain the Chapter 13 plan. It is important to note that in either case, a conversion could be denied if the court feels your reasoning for converting has fraudulent intent or your original filing was done in bad faith.
An involuntary conversion is the decision of the bankruptcy court. The court may rule for your case to be converted if they suspect fraud, are concerned about your ability to fulfill the requirements or determine you to be ineligible for a chapter at a later time. For example, your Chapter 7 case could be converted to a Chapter 13 case if there are changes to your assets or level of disposable income. If the court feels you could sustain some repayment of your debt, they may require you to convert to Chapter 13. Conversions from Chapter 13 to Chapter 7 are rarely ordered by the court, but could result if they felt your ability to maintain a Chapter 13 is compromised.
It is always recommended to follow the guidelines of your Dayton bankruptcy lawyer when seeking help through bankruptcy.