If you convert from 13 to a 7

[sassiebaz]

Can you include new debt, or is the debt with the ch13 the only debt allowed?

[gingerbug]

You can add the new.

[lockedout]

there will be a charge for each creditor added, thats what my attorney said.

[lrprn]

You can add the new.

Whoa.....hang on....this is not the case. Any new debt that appears after filing *cannot* be added on as a part of the confirmed 13 plan.

HOWEVER, unexpected new debt that significantly hampers your ability to pay your 13 plan for a defined period of time - for example, an emergency hospitalization and the bills it generates - can impact a confirmed Ch 13 plan because the filer's available disposable income has to fall in order to pay off the new debt.

In this case, the trustee may allow a filer to skip several Ch 13 payments or restructure the Ch 13 payments temporarily in order to pay off the unanticipated bills. If the after-filing new debt is significant enough, it may reduce the filer's disposable income enough to be able to dismiss the 13 and file a 7.

But the after-filing debt will never be added to the Ch 13 plan. What can be a part of that plan was set on filing day.

[justbroke]

Can you include new debt, or is the debt with the ch13 the only debt allowed?

Probably need to mention that you are talking about adding new debt when converting from a Chapter 13 to a Chapter 7. Absolutely yes. As part of the conversion process to a Chapter 7, a debtor may include any new debt from the filing of the Chapter 13 and the conversion to the Chapter 7. (Federal Rules of Bankruptcy Procedure Rule 1019(6).)

there will be a charge for each creditor added, thats what my attorney said.

There is no fee for each creditor added... unless your Attorney himself charges such a fee for each creditor.

The court fee for conversion is $15. You are also allowed to file an Amended Petition and Form B22A (Means Test for Chapter 7). Whether the Court charges your $26 to file amended Schedules (A-F) is questionable, but it would only be $26 for all those schedules.

Now, your lawyer will probably charge attorney fees for handling the conversion and that could run you as much as filing Chapter 7 from scratch.

[sassiebaz]

Ok, here is why I asked. I have a family member in a chapter 13. Income has been lost and they have added new medical debt. They are considering getting the bk dismissed and then just using a paralegal to file a ch7. Is this dangerous? I didn't know how to answer this for them.

[justbroke]

Ok, here is why I asked. I have a family member in a chapter 13. Income has been lost and they have added new medical debt. They are considering getting the bk dismissed and then just using a paralegal to file a ch7. Is this dangerous? I didn't know how to answer this for them.

They should really be using an attorney. First, and this isn't legal advice, I would do a conversion over a dismiss and re-file anyday. If they can't afford an attorney, but they can throw down $300 plus paralegal ($300-$500) for a new filing (total of $800), but can't do a conversion at $26, plus the attorney fees ($1,500 or so)?

If they are in a Chapter 13 there are many many issues. If they have property that has arrears... how are they going to correct that before filing Chapter 7? If they have automobiles in the Chapter 13, and the Trustee has only been making adequate protection (low) payments, how do they fix that arrearage? What if the Chapter 13 crammed down the vehicle values and/or modified the interest rate?

A conversion from Chapter 13 to Chapter 7 could have many landmines for a pro se debtor who filed the Chapter 13 with an attorney.

Better yet, if they became permanently disabled or otherwise can't generate income in the future, how about a hardship discharge?

[sassiebaz]

Yeah, Im not sure about all of the details. They are relatives in another state. They said something about just walking away from it all, home included I guess. I really didn't get into it, and I did tell them to ask their current lawyer about it. I think what justbroke is saying is very logical and I will pass that along.

[rrockinggramma]

a conversion looks better than a dismissal and then a refiling.