Can someone please explain.

[jessegirl]

Hi all, Can someone explain when I see files chapter 13 on say 1/1/2008 and then converted to a chapter 7 on 3/1/08. Does that mean that they couldn't handle the payment on a 13 and then had to do a chapter 7? If so, why would a trustee do a payment plan if you cannot afford it? thanks

[woeisme]

situations change over the course of 5 years. a person may not qualify for ch 7 initially, but perhaps a job loss or other circumstance forces them to convert. or maybe a divorce, or perhaps they filed CH 13 to save certain assets and decide that they are no longer so important to them and are willing to let them go (for example, the house they fought to save now has negative equity after the bubble burst). there are a lot of reasons someone might convert.

[BigJohn]

I know of one person who had a business filed a Chapter 13. In a few months, she filed Chapter 7 and her store was auctioned off. I think what did her in was she claimed more business income on her bankruptcy documents then she actually had.

[woeisme]

Another reason someone might convert is that they have secured assets (like a house) that they are behind on the payments for. You have to be up to date on house and car to keep them in a CH 7. So might go for a CH 13 to save the house, but once the mortgage arrears are covered, could convert to a CH 7 to liquidate the rest of the debt (assuming that the person qualifies for a CH 7)