So with all of the economic uncertainty, for people who have been in longstanding Chapter 13 cases, it might be a good time to re-examine your circumstances.
There are a number of reasons why someone might file for a Ch. 13, such as:
I was ineligible for a Ch. 7 at the time.
My house was going into foreclosure.
I was being garnished and I couldn't afford to pay the attorney's fees for a Ch. 7
I was making too much money to qualify for a Ch. 7
There are a number reasons why someone might file for a Ch. 13, but because the Chapter 13 plan lasts for several years (3 or 5 years in most cases), people's circumstances might change.
One option, if your circumstances change, is to convert your case to a Ch. 7 Bankruptcy. The Ch. 7 Bankruptcy usually completes in a few short months. You will not have monthly payments to the Court, and it will discharge most common types of debt.
Converting your Ch. 13 Bankruptcy case to a Ch. 7 Bankruptcy case is a great option to explore if your circumstances have changed.
For example, if you were making good money when you filed the Ch. 13 case, but have since lost hours, or lost your job altogether, you might qualify for a Ch. 7 case.
If you filed for a Ch. 13 case to save your house or your car, and your needs have since changed, a conversion to a Ch. 7 might make a lot of sense. I have been talking to a client today who needed a Ch. 13 for a number of reasons, one of which was in order to keep her car. The original reasons for her Ch. 13 Bankruptcy case have largely resolved themselves and she no longer wants to keep her car, or the car loan, so conversion to a Ch. 7 makes a lot of sense.
A conversion can be a powerful tool, but it is not for everyone. Remember that if you are dealing with long term debt, after the Ch. 7 Bankruptcy case concludes, you will have to address that debt. For loans where there is secured collateral (such as a car or a house) and there are still outstanding arrears on the loan, you will have to address those arrears soon after the Ch. 7 case concludes. If you had monthly payments that were reduced as a result of your Ch. 13 plan, you can expect those payments to go back to normal.
Despite the shortcomings of conversion to a Ch. 7, this solution can be a great relief to a lot of people and it can help many people start their post-Bankruptcy life off sooner than if they had completed their Ch. 13 plan. Only an experienced Bankruptcy attorney can advise you as to whether or not a conversion from a Ch. 13 to a Ch. 7 makes sense for your circumstances, but it is worth looking at as a potential option.