You can convert a Chapter 13 case to Chapter 7 at almost any point while your case is open. Federal law gives most debtors the right to do it by filing a Notice of Conversion, paying a $25 fee, and qualifying for Chapter 7 under the means test and the prior-discharge rules. Converting Chapter 13 to Chapter 7 is much cheaper and simpler than dismissing your case and filing a new one, but it changes what happens to your property, and it doesn’t help with debts Chapter 7 can’t discharge.
The right to convert comes from 11 U.S.C. §1307(a), which says the debtor may convert “at any time” and that any waiver of that right is unenforceable.1Office of the Law Revision Counsel. 11 U.S. Code 1307 – Conversion or Dismissal People usually reach for it after a job loss, a pay cut, or a medical event makes the three-to-five-year repayment plan impossible to sustain. Sometimes the reason is strategic instead: the house you were protecting has become unaffordable, or the assets you were trying to save no longer feel worth years of payments.
Who Actually Qualifies
The conversion right is often called “absolute,” but that overstates it. The Bankruptcy Code allows conversion only if you “may be a debtor” under Chapter 7, and the Supreme Court has confirmed that a bankruptcy judge can block a conversion made in bad faith.2Justia. Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007) Ordinary financial hardship almost never triggers bad-faith concerns. Hiding assets or accumulating property during Chapter 13 and then converting to shield it does.
The Means Test
Chapter 7 is income-restricted. If your average monthly income over the six months before the means test date is below the median for your household size in your state, you pass automatically.3U.S. Trustee Program. Census Bureau Median Family Income By Family Size If you’re above median, you subtract standardized IRS living expenses; if the resulting disposable income times 60 comes to $10,000 or more, abuse is presumed and Chapter 7 is likely off the table.4Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion
Conversion often has an edge here. If you filed Chapter 13 while employed and later lost income, the means test uses your current, lower income, which may put you below the state median even though you didn’t qualify at the original filing.
Prior Discharge Timing
Two look-back rules can block a Chapter 7 discharge even if your income qualifies:
- Eight years must have passed from the filing date of any prior Chapter 7 or Chapter 11 case in which you received a discharge.5Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge
- Six years must have passed from the filing date of any prior Chapter 13 case that ended in discharge, unless that plan paid unsecured creditors in full or paid at least 70% in a good-faith best-effort plan.6Office of the Law Revision Counsel. 11 USC 727 – Discharge
If your current Chapter 13 is your first bankruptcy and no discharge has been entered, neither bar applies. You’re converting an open case, not starting a new one after a completed one.
How the Conversion Actually Works
You file a Notice of Conversion (sometimes titled Notice of Voluntary Conversion) in the bankruptcy court handling your Chapter 13 case. It contains your name, case number, and a statement that you’re converting to Chapter 7. The filing fee is $25, compared to $338 for a brand-new Chapter 7 case. A voluntary conversion generally doesn’t require a hearing; the court enters the conversion order on the papers.
Once the case is converted, a Chapter 7 trustee is appointed and a new meeting of creditors — the “341 meeting” — is scheduled. You attend and answer questions from the trustee and any creditors who appear. Within 14 days of conversion, you must file a schedule of every unpaid debt you took on after your original Chapter 13 petition and before the conversion date, as Federal Rule of Bankruptcy Procedure 1019 requires.7Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1019 – Converting or Reconverting a Chapter 11, 12, or 13 Case to Chapter 7 Your earlier schedules carry over, though the trustee may ask you to update them.
You’ll also need to complete a debtor education course before your Chapter 7 discharge can be entered, even if you already took one in the Chapter 13 case. It applies to every individual filer.
What Happens to Your Property
Chapter 7 is a liquidation. The trustee can sell any property you own that isn’t protected by exemptions and pay the proceeds to creditors.8United States Courts. Chapter 7 – Bankruptcy Basics State exemption laws generally protect some equity in a home and vehicle, retirement accounts, and household goods, with everything above those limits exposed.
The critical rule for converters sits in 11 U.S.C. §348: when a Chapter 13 case converts to Chapter 7, the bankruptcy estate is defined by what you owned on the original Chapter 13 filing date, not the conversion date. A tax refund, inheritance, or vehicle you acquired after filing generally stays out of the Chapter 7 estate. The exception is bad-faith conversion: if the court finds you converted in bad faith, the estate expands to include everything you own on the conversion date.9Office of the Law Revision Counsel. 11 U.S. Code 348 – Effect of Conversion
Any wages you paid to the Chapter 13 trustee that are still sitting undistributed come back to you. Payments the trustee already sent out to creditors do not.
Debts You Took On During Chapter 13
Debts you incurred after your original Chapter 13 filing but before conversion — medical bills, for example — can be swept into the converted case and discharged. That’s the reason for the 14-day schedule requirement under Rule 1019. Miss the deadline and those debts may not be discharged, so treat it as hard.
Debts Chapter 7 Won’t Erase
Several categories of debt survive a Chapter 7 discharge no matter what. If your worst debts sit in these buckets, converting won’t deliver the relief you’re expecting.
- Domestic support obligations, including child support and alimony.
- Most recent income taxes, and taxes tied to unfiled or fraudulent returns.
- Student loans, unless you can prove “undue hardship,” a standard that is difficult to meet.
- Debts obtained by fraud, false pretenses, or a materially false financial statement.
- Judgments for willful and malicious injury to a person or property.
- Debts for death or personal injury caused by driving while intoxicated.
Run through this list honestly before you convert. Losing non-exempt property in a Chapter 7 only to still owe the same core debts is a bad outcome that a little advance analysis prevents.
What Conversion Does to Your Credit Report
Federal law lets credit bureaus report a bankruptcy for up to ten years from the date the order for relief was entered, and the statute doesn’t distinguish between chapters.10Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports11Consumer Financial Protection Bureau. How Long Does a Bankruptcy Appear on Credit Reports? The major bureaus voluntarily remove completed Chapter 13 cases after seven years because the debtor tried to repay, but that’s bureau policy, not law. Once you convert, the case is a Chapter 7, and it will almost certainly stay on your report for the full ten years from the original filing date. If you’re several years into a Chapter 13 plan, that lost time is worth weighing.
Should You Convert or Dismiss and Refile Instead?
You can also dismiss your Chapter 13 outright and file a new Chapter 7, provided your current case wasn’t itself converted from another chapter.1Office of the Law Revision Counsel. 11 U.S. Code 1307 – Conversion or Dismissal It costs more — the full $338 filing fee, new schedules, a new 341 meeting — and it usually means higher attorney fees.
The trade-off runs through the property valuation date. In a conversion, the estate is measured as of the original Chapter 13 filing. In a new filing, it’s measured as of the new petition date. If your assets have shrunk since you first filed, a new case may protect more of what remains. If you’ve acquired valuable property since filing, conversion is safer because that property stays outside the estate.
The refiling path has a serious catch: the automatic stay. File a new bankruptcy within one year of a prior dismissal, and the stay in the new case expires after 30 days unless you move to extend it and prove the new case is filed in good faith. With two or more prior dismissals in the past year, the stay doesn’t go into effect at all, and you face a presumption that the new filing wasn’t in good faith.12Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay During any gap, creditors can restart lawsuits, garnishments, and foreclosure. Conversion sidesteps the whole problem because the case continues rather than ending and restarting, so the stay stays in place throughout.