Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Filing Chapter 13 does not always mean you will stay in Chapter 13 until the case ends. A job loss, lower income, medical costs, or other new expenses can make the repayment plan harder to afford.
When that happens, switching from Chapter 13 to Chapter 7 may be an option. Whether it makes sense depends on your income, property, debts, and what has changed since you filed. A Wisconsin Chapter 13 bankruptcy lawyer can review those details before you decide.
This guide explains how conversion works, what happens after you switch, and when Chapter 7 may be worth considering.
Federal bankruptcy law offers two primary consumer options, each serving a different purpose. Chapter 13 uses a repayment plan that usually lasts three to five years. You make payments to a trustee, who then pays creditors according to the plan. This may be useful if you need time to catch up on a mortgage, keep certain property, or pay off debts over a longer period.
Chapter 7 does not use the same repayment plan. Instead, a trustee reviews your property to see whether any non-exempt assets may be sold. Many qualifying unsecured debts can then be discharged.
Many people start with Chapter 13 because it offers more time to deal with certain debts. Later, job loss, medical bills, divorce, or rising living costs can make the payments harder to afford.
Yes. Federal bankruptcy law generally allows a Chapter 13 filer to convert the case to Chapter 7 at any time. Under 11 U.S.C. § 1307(a), the same bankruptcy case continues under Chapter 7 rather than starting over.
In Wisconsin’s Eastern District, conversion generally involves filing a notice with the bankruptcy court. A hearing or court order is not usually required.
You still need to meet the rules that apply under Chapter 7, so you should review your income, prior filings, debts, and property before converting.
A repayment plan may become difficult to maintain when your finances change.
Common reasons include:
A payment that worked when the case began may no longer fit your budget months or years later.
A change in income or expenses can make an existing repayment plan much harder to maintain.
When that happens, conversion may be one option. In some cases, changing the current repayment plan may make more sense.
Chapter 7 requirements still apply after conversion. Some filers may need to complete the Chapter 7 means test, which looks at income and certain allowed expenses.
Previous bankruptcy cases and earlier discharges can also affect whether you are eligible for a discharge.
If your financial situation has changed since the original filing, review your current income, expenses, debts, and property with your attorney before converting.
For additional information, you can review resources from the U.S. Courts.
After conversion, a Chapter 7 trustee takes over the case and reviews your property and finances.
Property you owned when the original case was filed may still be part of the bankruptcy estate if you still own or control it when the case converts. Wisconsin bankruptcy exemptions can determine how much of that property is protected.
Payments are treated separately. Money already distributed to creditors through the repayment plan is generally not returned. But wages still being held by the Chapter 13 trustee are generally returned to you after a good-faith conversion.
The process generally includes a few main steps:
Documents already filed in the Chapter 13 case generally carry over to the Chapter 7 case unless the court orders otherwise. You may still need to file additional documents after conversion.
|
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 |
Chapter 7 is not always a better choice simply because Chapter 13 payments have become difficult.
Some debts may remain after Chapter 7. You could also have property that is not fully protected by Wisconsin or federal exemptions.
Depending on the circumstances, you may have other options within Chapter 13, such as asking to modify the repayment plan. A hardship discharge may also be available in limited situations.
Review these options before converting so you understand what could happen to your debts and property.
You can convert your case at any time, but you must still meet the requirements to proceed under Chapter 7.
Money already paid to creditors generally stays with them. Undistributed post-petition wages held by the trustee are generally returned after a good-faith conversion.
Not automatically. Your equity, exemptions, loan status, and other facts determine how property is treated after conversion.
No. Converting does not start a new bankruptcy case. Your existing case continues, but Chapter 7 rules, deadlines, and trustee requirements apply from that point forward.
Yes. Converting your case does not remove Chapter 7 eligibility and other requirements. Your attorney can review how those rules apply to you.
If your current repayment plan is no longer affordable, a conversion may be worth considering. A change in income, expenses, or property can affect what makes sense now.
Before making a decision, review what has changed since you filed and whether another option could solve the problem without switching your case.
Debt Advisors Law Offices can review what has changed and explain which options may fit your situation. Get your free consultation to discuss your case with a Milwaukee bankruptcy attorney.
Debt Advisors Law Offices is a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.
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.
