Chapter 13 conversion to 7 or dismissal

[Twigs1972]

We are 30 months into a 5 year chapter 13. Our payment increased from $850 to $1250 after 17 months due to paying off our 401k loan. My husband was in a car accident, not his fault, and will probably receive a 40k settlement. I was advised to convert to a 7 because the payment has increased so much. However, when I spoke with a new attorney about filing the conversion. He told me to just file for dismissal instead and either refile later after we receive the settlement or just wait to see if we can settle with any creditors that may contact us after the dismissal. He said the settlement offers would probably be much less than the $37,500 still owed in our plan. Does that make sense?

[justbroke]

Welcome to BKForum!

It reads to me as though you are getting good advice and the strategy seems to be good. Of course, it's an untested strategy and you hope that the remaining creditors will settle for less than the plan value remaining. Just take your time and look at the math and see what works best for you. Especially consider that you write that there is only $37,500 remaining in the plan and you could payoff the plan early (if allowed). (Early plan payoff in a 60-month plan is tenuous because plans less than 100% payback may just absorb the amount and want you to continue until the 60th month.)

[Twigs1972]

Thanks, I think we will dismiss the 13 and see what happens. I also had heart surgery in 2025 and will have knee surgery soon in addition to having to buy a car. I may be off work for awhile and not get paid during that time. I feel that we will have more flexibility not being under the restrictions of the 13. Thanks so much for your quick response and input. I really appreciate it.