Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Filing for bankruptcy doesn’t always go as planned. Many people start a Chapter 13 case intending to repay their debts, but later face income changes or expenses that make payments hard to maintain. When that happens, a common question is whether it is possible to switch from Chapter 13 to Chapter 7 in Wisconsin.
In many situations, conversion is allowed, but the rules are more detailed than they may first appear. Factors like income, assets, and timing all matter. For this reason, many filers consult with Wisconsin Chapter 13 Bankruptcy Lawyers before deciding whether a conversion makes sense.
Here’s a straightforward guide to help you understand how conversion works, what to expect, and when it might be the right move.
Federal bankruptcy law offers two primary consumer options, each serving a different purpose.
Chapter 13 is a repayment Plan. You make monthly payments to a trustee over three to five years, based on your income and expenses. Many Wisconsin filers choose Chapter 13 to catch up on mortgage arrears, protect nonexempt property, or deal with higher income levels.
Chapter 7 is a liquidation option. It focuses on wiping out qualifying unsecured debts, often within a few months. Instead of monthly payments, a trustee reviews your assets to determine whether any nonexempt property must be sold.
Many start with Chapter 13 because it feels safer or more flexible. Over time, job loss, medical bills, divorce, or rising living costs can make payments unaffordable.
Yes. Federal bankruptcy law allows most filers to convert a Chapter 13 case to a Chapter 7 case. Under 11 U.S.C. § 1307(a), a debtor generally has the right to convert at any time. This isn’t a new filing; it’s the same case under a different chapter. Wisconsin bankruptcy courts follow this federal rule.
Courts may check whether a case was filed or converted in bad faith. Conversion is usually allowed when financial circumstances genuinely change, not when someone is trying to misuse the system.
Eligibility for a Chapter 7 discharge is still evaluated under Chapter 7 rules after conversion.
Loss of income is one of the most common triggers. Reduced hours, layoffs, or business closures can make plan payments unmanageable. Medical expenses or caregiving responsibilities can also strain a budget beyond what a Chapter 13 plan allows.
Some filers discover that their original income projections were unrealistic. Others experience life changes that make a three- to five-year plan no longer workable.
The outcome usually depends on income, assets, and timing at the moment of conversion—not when the case was originally filed.
After conversion, the court looks at whether you meet the Chapter 7 means test. This test compares your household income with Wisconsin’s median income and examines your allowable expenses. If your income is too high, you may not qualify for a Chapter 7 discharge.
Timing also matters. Recent bankruptcy filings, prior discharges, and changes in income can affect eligibility. The U.S. Trustee may review the case to see if conversion is appropriate.
Under 11 U.S.C. § 1307, conversion is a procedural right, but courts may review cases for abuse or bad faith.
For official guidance, filers can review resources from the U.S. Courts at https://www.uscourts.gov.
Payments already made to a Chapter 13 trustee are typically distributed to creditors and aren’t refunded. After conversion, a Chapter 7 trustee is appointed and reviews your assets.
Property acquired during Chapter 13 may or may not be part of the Chapter 7 estate, depending on timing and circumstances. Wisconsin bankruptcy exemptions determine what property you can keep.
The automatic stay generally continues after conversion, protecting you from most collection efforts while the Chapter 7 case proceeds.
Converting a Chapter 13 case to Chapter 7 in Wisconsin follows a series of steps:
Understanding these steps in advance can help reduce delays and unexpected complications.
|
Factor |
Before Conversion |
After Conversion |
| Case goal | Repayment plan | Debt discharge |
| Payment structure | Monthly payments | No repayment plan |
| Trustee role | Plan administration | Asset review |
| Asset risk | Generally protected | Depends on exemptions |
| Timeline | 3 to 5 years | About 3 to 6 months |
| Eligibility review | Disposable income | Means test |
Converting to Chapter 7 is not always the best solution. Some debts cannot be discharged, and certain assets may be at risk if they are not fully protected under Wisconsin exemption laws. In other cases, modifying your Chapter 13 plan or requesting a hardship discharge may be a better solution.
Because each option carries long-term financial and legal consequences, taking time to review the available paths can help ensure the decision aligns with both current needs and future goals.
Yes, most filers can convert at any point, though the court may review income, timing, and good faith before allowing the case to proceed.
Payments already made to the Chapter 13 trustee are typically distributed to creditors and cannot be returned after conversion.
That depends on Wisconsin exemption laws, available equity, and whether mortgage or loan payments are current at the time of conversion.
No, conversion continues the same bankruptcy case but applies Chapter 7 rules, procedures, and trustee oversight going forward.
Yes, your current income and expenses are reviewed under Chapter 7 means test standards to determine eligibility for discharge.
Switching from Chapter 13 to Chapter 7 in Wisconsin is legally allowed and, in some situations, necessary. However, conversion is not automatic or risk-free. Eligibility requirements, asset protection, and timing all play an essential role in how a case moves forward. Understanding these factors can help reduce uncertainty and prevent unexpected outcomes.
As a debt relief agency, Debt Advisors Law Offices helps individuals file for bankruptcy under the Bankruptcy Code and focuses on explaining available options so that informed decisions can be made based on each person’s financial reality.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
