Can anyone convert from a chapter 13 to 7

[ashbylk]

I don't think I am going to qualify for a chapter 7 although I can't pay my debt due to a loss of income. My attorney has been waiting to file until we qualify but in the meantime, i am suffering.
I saw in some places on the Internet that everyone has the right to convert. Is this the case?

[HHM]

You have the right to convert, but what you don't have a "right" too is a discharge in chapter 7. If you don't qualify for chapter 7 upon conversion, you chapter 7 is simply dismissed and you are back to square one (owing everyone money).

[ashbylk]

I am confused. I thought if you converted then you already knew you qualified. What do you mean that I would have to start over?
When I had a consulatation for filing bankruptcy, the attorney told me that there was a loophole in the law that says anyone can convert without going through the means test or anything else. It was a right of conversion.

[HHM]

I am confused. I thought if you converted then you already knew you qualified. What do you mean that I would have to start over?
When I had a consulatation for filing bankruptcy, the attorney told me that there was a loophole in the law that says anyone can convert without going through the means test or anything else. It was a right of conversion.

It doesn't quite work that way. The attorney is correct, under section 1307 you have an absolute right to convert a 13 to a 7; BUT to STAY IN CHAPTER 7 and receive a discharge in chapter 7; you need to show changed circumstances, you still need to demonstrate that you have no disposable income. There is no "loophole" for someone who DOES NOT qualify for chapter 7 initially to file chapter 13 and then a few months or years later convert to a chapter 7 without something changing.

[ashbylk]

U.S. bankruptcy Court says no Means test for converters, just initial 7 FILERS

It has been argued in the United States Bankruptcy court that the law says that only a person filing chapter 7 must pass the means test. A debtor who converts his case to a chapter 7 did NOT FILE chapter 7. therefore they are not subject to the means test.
Does anyone have anything that says this is not the case? Please lead me to the law so that I can read it. I really need an accurate answer.

[maddog2112]

I can`t lead you to the answer somewhere, but I can tell you I was in a 13 for 2.5 years and just successfully converted, and have been discharged in a 7. I "DID" need to pass a means test showing my new circumstances, which was a decrease in income. I could no longer fund the 13. I`m not sure how much clearer than that, anyone can be.

[justbroke]

It has been argued in the United States Bankruptcy court that the law says that only a person filing chapter 7 must pass the means test. A debtor who converts his case to a chapter 7 did NOT FILE chapter 7. therefore they are not subject to the means test.
Does anyone have anything that says this is not the case? Please lead me to the law so that I can read it. I really need an accurate answer.

This is not the case.

I think you're getting confused about something here. The key wasn't whether you had to pass the means test. It was whether you had to complete a new Official Form B22A (Means Test). In any event, the UST can still dismiss you for Totality of Circumstances under 11 USC 707(b)(3)(B) or "bad faith" under 11 USC 707(b)(3)(A).

Whether you're required to submit a new "Means Test" (Form B22A) seems to be District specific. The only two real cases to fight this were in Massachusetts (In re Guarin, 2009 WL 4500476 (Bkrtcy.D.Mass. 2009)) and Rhode Island (In re Perfetto, 361 B.R. 27 (D. R.I.2007)). Each court came to different conclusions! They are both in the 1st District Court of Appeals (1st DCA). Rhode Island says yes to new means test (B22A), and Massachusetts says no, the old means test (B22C) stands.

However, neither of those decisions have anything to do with whether you are qualified to receive a discharge under Chapter 7. I believe the means test is only "administrivia" if you ask me. It allows one to make arbitrary calculations to determine some state of your financial profile at some point in time... that's utterly meaningless in the end. The means test was meant as a bright-line test to quickly determine eligibility, but the UST still has a duty to inquire and to dismiss udner 11 USC 707(b)(3) if the person is not deserving.

[HHM]

Be fair, you first...what case are you referring too? But I am aware of the issue you raise.

People were kicked out of chapter 7 long before there was a means test for having disposable income. There really is no "closet" way into a chapter 7 discharge.

Honestly, if there was such a loophole, it would have been widely exploited, it simply isn't going on. If you file a chapter 13 and have disposable income; and then convert to a 7. Yes, your case WILL BE converted to a chapter 7, but then once in the chapter 7, it will be dismissed for abuse.

[ashbylk]

Let's not get carried away. I have nothing and am not hiding anything. I was told that I am just outside of qualifying for 7 with the means test so my attorney is waiting to file it until the income drops a little more.
I have asked him to just file a chapter 13 so we could get on with our lives, but he has not responded.
The attorney that I had initially consulted with said that anyone can convert their 13 to a chapter 7 and not have to be subjected to the means test. I am not trying to doop anyone, I simply wanted to know if this is true. Why would an attorney say it is true?
Either way, I need to get something done here.

[justbroke]

The attorney that I had initially consulted with said that anyone can convert their 13 to a chapter 7 and not have to be subjected to the means test. I am not trying to doop anyone, I simply wanted to know if this is true. Why would an attorney say it is true?

It is true just as HHM wrote, that you have an absolute right to convert from Chapter 13 to Chapter 7 provided that the case wasn't previously converted. However, conversion and qualifying for a discharge are not synonymous.

Read what I posted above. Just because you aren't required to complete a means test, doesn't mean you qualify to receive a discharge under Chapter 7. The Trustee and UST will still go over your case with a fine tooth comb. As HHM states, if you showed disposable income on your old Form B22C (Means Test for Chapter 13), then you will need to show that you no longer have disposable income -- or that your disposable income fits below the presumptive abuse amounts ($109 or $182.50 per month).

[HHM]

Fair enough...what I think is happening is "filtered" communication.

You heard one thing from an attorney a while ago; the bare statement "anyone can convert from a 13 to a 7" is true; and the bare statement "you don't have to retake the means test" might be true (a district specific issue, and as justbroke points it, is really only an issue of whether you need to file a new form b-22). However, the problem is, you are making the leap in logic that those two statements mean you can receive a chapter 7 discharge by simply converting; that is your fatal assumption. No offense to you, but either the attorney you spoke with was an idiot, or you really didn't understand the full context of what that attorney was telling you.

[ashbylk]

No. it truly is what he said. As a matter of fact, he said that it was a "Loop hole." He said that if we did not qualify for a chapter 7 then he would file a chapter 13 and wait a month to convert it to a chapter 7 because the law only said that people who were initially filing a chapter 7 had to complete the means test. He said that converters did not need to complete a means test at all.

[justbroke]

No. it truly is what he said. As a matter of fact, he said that it was a "Loop hole." He said that if we did not qualify for a chapter 7 then he would file a chapter 13 and wait a month to convert it to a chapter 7 because the law only said that people who were initially filing a chapter 7 had to complete the means test. He said that converters did not need to complete a means test at all.

He must either be new to practicing BK law... or... I don't know. I believe you when you say that he did tell you that.

In your particular circumstances, perhaps he was waiting for income to roll off (from the six month lookback). In that limited case, filing a Chapter 13 to stave off collectors, and converting to Chapter 7 after... may be perfectly okay. That's because the inquiry, which will occur, into your income and expenses will show that you have insufficient income to fund a Chapter 13.

You should ask your attorney to cite 3-5 cases where he has done this before, and the debtors had more than $182.50/month in disposable income.

I'll repeat, just for fun... the mere act of completing a means test or not completing one, has nothing to do with qualifying to receive a discharge under Chapter 7. I can almost guarantee you that the UST will be looking at your means test (Form B22C) that you did complete for your Chapter 13. If that Chapter 13 means test (Form B22C) shows positive DMI over $182.50 (approx.), 401(k) loans and other contributions... you will not receive a discharge under Chapter 7.

Unfortunately, being not required to fill out a new Means Test (Form B22A specific to Chapter 7) doesn't mean that the Trustee will just say "oh, no means test, so don't even look at that one". Just doesn't work that way.

If I were you, I'd ask the lawyer very specifically to show some cases where this worked for him where the debtor had regular income and disposable income over $182.50/month.

[outsidetool]

Prior to filing a 7 over a year ago, I talked with several attys trying to find one I liked, and who would file me in a 7 rather than a 13. Several attys seemed to know less about the law then I did after researching (including getting info on this forum). I was convinced I could file a 7. Several attys told me "no way." Finally I found a guy that "really" knew the law and was a bit of a fighter. My point here is that I think you could easily have had a lawyer tell you that there was a "loophole" and so forth. But, he is wrong. In my BK case, I was very close on the means test and there were issues with my wife not filing and not wanting to turn out with her income going to my 13 payment. My atty and I had considerable discussion about worst case scenarios where I may have been forced in to a 13, not been able to pay, then converting to a 7.
The underlying issue throughout was being able to overcome the means test in a conversion. There is no loophole. As someone else noted, if there was, there'd be many lawyers exploiting that; which isn't happening.

[ashbylk]

I agree with you. This attorney has been in practice for 27 years. the thing I found funny was that he told us to file the 13 for now and wait a couple months to convert so he could make his money from the bankruptcy. Ultimately this is why I did not choose him as my attorney.