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When a person in Florida decides to file for consumer bankruptcy a means test is used to determine under which chapter it is appropriate to file. Though it is completely dependent on the individual’s specific situation, most people either file under Chapter 7 or Chapter 13. Occasionally, one will initially file under Chapter 13 and then want to convert to a Chapter 7 bankruptcy instead.

Generally, people file for Chapter 13 bankruptcy because at the time of filing they either do not qualify for Chapter 7, own an asset that they would not be able to keep under a Chapter 7 filing or want to keep their house or car by creating a way to pay the money owed on each. The bankruptcy system understands that circumstances change however. Accordingly, under some circumstances it may be possible for someone to convert from a Chapter 13 bankruptcy to a Chapter 7 bankruptcy.

There are many reasons that a consumer may seek to convert to Chapter 7 from Chapter 13 based on the individual’s change in circumstance. One reason is if the person is ill and has medical expenses that are high. Another reason a conversion may be sought is when a couple separates or divorces creating two households with monthly expenses. A third change that may prompt a conversion is when one receives a loan modification approval. Other people seek to change to a Chapter 7 bankruptcy when they decide to stop paying on their house and let it go. For others, losing a job or a drop in income is the catalyst.

Whatever the reason for seeking a change, because one’s credit is on the line, it is important to look at all relevant factors before making a decision on how to proceed.

Source: FOX Business, “Convert From Ch. 13 to Ch. 7 in Bankruptcy?” Justin Harelik, Sept. 13, 2011