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Converting a CH13 to a CH7?

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  • Converting a CH13 to a CH7?

    I'm reading that before filing a CH7 a person can sell non exempt assets (mine would be $8K worth) then spend the money. Can this be done in a conversion from 13 - 7?
    What can the money be spent on? I need a surgery I'm putting off because I don't want the bill. I'd rather spend this money then just forfeit it. TIA

  • #2
    You don't have this issue in a conversion. Your bankruptcy Estate existed as of the day you filed. You can't "spend" something retroactively. Any new equity that you gained or any new property that you acquired after filing, are exempt, defacto, in a conversion from Chapter 13 to Chapter 7.

    I thought we "talked" about this in another thread.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      Maybe we did, my bad. I guess I'll kiss them goodbye. Can I qualify for a 7 conversion based my states income guidelines alone or is all about ability to pay? Can I change my household members for the conversion?

      Thanks

      Comment


      • #4
        If you have been in a Chapter 13 for 20+ months, you may have paid the "liquidation" value already. This is something your attorney can check. Chapter 7 qualification is always about ability to pay. You can change your household for conversion so long as you supported them prior to filing the Chapter 13, unless it's a new family member (think, baby) or an ill family member (think, grandma, aging parents, etc).

        But remember, most everything is based on the day your filed your Chapter 13. When you filed Chapter 13, did you have non-exempt property? To what extent? Was the Chapter 7 liquidation test performed? What was the outcome? Otherwise, the answers are meaningless without the context.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #5
          When we filed CH13 my Daughter and Grand Daughter lived with me but my attorney said we'll leave them out because it's a wash. Maybe I should just wait until the 20th month (12-6-2018)?
          The property my attorney said I would lose was there when I filed the CH13. The trustee raised my plan payment $175 a month after the 341 because of the equity in my home but in a CH7 in IA
          it's my understanding a house is exempt no matter it's value. My attorney did say he could not qualify me for a CH7 before we filed. I'm also afraid I'll have to surrender up to a $5K tax refund for 2017. The property auction value is about $4-5K Harley, $2-3K camper. Thanks

          Comment


          • #6
            You would not have to surrender your 2017 Tax Return (if you convert before you have to give it to the Chapter 13). That's because, as I wrote, anything you acquire after filing the Chapter 13, is not counted in a conversion to Chapter 7 (unless there's a question of bad faith).

            If your attorney left them off, there may have been some sort of issue that could raise questions. Otherwise, i would not have left anyone "off" as a dependent, just in case I needed to convert later.

            The equity in the home is not making any sense to me at all. Anything exempt in a Chapter 13, is also exempt in a Chapter 7. The exemptions do not pertain to one bankruptcy Chapter or another -- they exist in both. For example, the Iowa Homestead exemption is unlimited, just like Florida (with some restrictions if you haven't owned the property for more than 2 or so years before filing). That means it's the same whether it's in a Chapter 7 or a Chapter 13.

            It is likely that your payment was raised to pay for the equity in the "non-homestead" property that you list. My lizard brain said that $175 x 60 months = $10,500 which almost adds up to your non-exempt camper and motorcycle. If you were in the plan for 20 months, then it would be $175 x 20 = $3,500 so you could only have $7,000 of exposed equity. Do you understand how that works? Even then, no one may even care (they didn't at my conversion).
            Last edited by justbroke; 11-22-2017, 10:10 AM.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Ok then if my attorney says he can get me converted then I best do this as soon as possible. I'll give up the non-exempt assets.
              If this would become an asset CH7 which can take many months, my trustee payments will stop while the trustee sells the assets? Thanks

              Comment


              • #8
                Originally posted by 5yrplan View Post
                Ok then if my attorney says he can get me converted then I best do this as soon as possible. I'll give up the non-exempt assets.
                If this would become an asset CH7 which can take many months, my trustee payments will stop while the trustee sells the assets? Thanks
                If you convert, your Chapter 13 Trustee is, essentially, immediately fired and all money on hand converts back to you. The only thing the Chapter 7 Trustee does, other than hold a new 341 Meeting, is determine what you had at the time you filed.
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog


                I am not an attorney. Any advice provided is not legal advice.

                Comment


                • #9
                  My Attorney says I can't convert because my income is too high. My income is $65000 and the median income test maximum for 2 in household is $64221 so I make $779
                  a year too much. I would think we could make this fit somehow? He also says my home is not exempt because I have only lived in the home for a year. I bought the home in 2004 lived in it until 2007 rented it out until April 2015, I moved back in in April of 2015 and I still live there.

                  Maybe I should wait for the 20 months and for when the income limit goes up? Could I convert if and when the income limit changes enough?

                  TIA

                  Comment


                  • #10
                    Have you been through the online means test calculator at legal consumer? That should give you a good general idea of whether your attorney could "make it fit" (if he had the desire to do so). That is not exact -- your attorney should have your exact numbers and he knows how it ALL comes together. But it will show you the expenses that "count" on a means test (and what you don't see there, does not). Just put in your zip code and it gives you the allowances for your area etc.

                    Comment


                    • #11
                      Yes I did run through a means calculator at legal consumer as if I was married (wife not filing wife no income) and the results came back with a negative DMI.
                      Thanks

                      Comment


                      • #12
                        I asked my attorney today if he ran a new means test with 2 in household and if he ran a 7 liquidation test but he hasn't answered yet. It usually takes a week or more for him to respond.
                        Thanks

                        Comment

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