If you had successfully filed a Chapter 13 bankruptcy case, but later on ran into financial troubles that prevent you from making payments as arranged in your repayment plan, you can dismiss your Chapter 13. After doing so, you can file a case under Chapter 7. This process has some pros and cons you should be aware of before taking your next step.
Pros Of Filing A New Chapter 7
If you choose to file a new Chapter 7 bankruptcy after having your Chapter 13 dismissed, there are some advantages for you.
- Any new, beneficial changes in the law will apply in your new case
- You can delay filing bankruptcy, so any debts incurred on the cusp of the first bankruptcy are seen as fraudulent
- You may be able to sell assets you'd lose in Chapter 7 and use that money for living expenses
- You can reestablish your homestead exemption if you've moved during your Chapter 13 case
- When you dismiss a Chapter 13 to file a Chapter 7, you have the option of converting your Chapter 7 back into Chapter 13
You also have the choice of converting your Chapter 13 to Chapter 7, but you won't get the same benefits. Whether conversion or dismal is best is something you should discuss wit your bankruptcy attorney.
Cons Of Filing A New Chapter 7
While you may enjoy more advantages when filing a new Chapter 7 over converting to one, there are some cons associated with the process.
- Your attorney fees and cost may be higher than they would if you converted
- Any unfavorable changes in the law will apply when you file your new case
- Your new case will be governed by Bankruptcy Abuse Reduction and Consumer Protection Act (also referred to as BARF)
- The "automatic stay" is not automatic; you must first convince the court that you have a good reason to dismiss your earlier bankruptcy
The Role Of Your Attorney
Your attorney can be a great asset when deciding how to proceed. Dismissing and converting from one type of bankruptcy to another can be very complicated. Generally, a hardship discharge gives you a better deal than converting, this is not always the best option. Some courts may interpret in different ways, which means some courts may reserve it only for debtors who have some some catastrophic event.
Conversion does have one advantage over refiling due to hardship discharge. You can get debt relief for debts that occurred after you filed your Chapter 13, which is not true of a hardship discharge. A law firm, such as Wiesner & Frackowiak, LC, can help you decide if dismissing and refiling is right for you based on your circumstances.Share