How to Convert Chapter 7 Into Chapter 13 After Divorce

by Tom Streissguth
Couples may not file for joint bankruptcy after a divorce is final.

Couples may not file for joint bankruptcy after a divorce is final.

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Bankruptcy can provide a bit of shelter from overdue bills and overbearing creditors. In a Chapter 7, a bankruptcy trustee seizes the debtor's "non-exempt" property to pay debts. At the end of the process, the court grants a discharge, which cancels all debts the law allows to be cancelled. The bankruptcy rules allow conversion from Chapter 7 to a Chapter 13, in which debtors keep their property and agree to a partial repayment of debts. Whether the couple remains married or divorces during the process, the steps to conversion are the same.

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Step 1

File a motion for conversion of your Chapter 7 to a Chapter 13. You must provide grounds for the motion. For example, you must be earning enough income to meet a repayment schedule. The federal bankruptcy code provides that the court may only convert a case if the debtor requests or consents to the conversion. In the case of a joint bankruptcy, this means that both spouses must consent.

Step 2

Affirm in the motion that the case has not previously been converted. The bankruptcy court will normally grant a conversion, either from a Chapter 13 or a Chapter 7, but will deny a request to convert if the case has previously converted to Chapter 7 on a motion from a creditor or trustee or by the court. In addition, the court may deny a conversion if it finds the debtor has acted in bad faith during the case, for example by not disclosing valuable assets or failing to list all creditors.

Step 3

Affirm in the motion that both spouses have regular income, and do not have unsecured debts more than $383,175, or secured debts more than $1,149,525. As of April 2014, these are the maximum amounts a bankruptcy debtor may have to qualify for a Chapter 13, and apply to conversions as well as initial filings.

Step 4

Serve the motion on all parties to the case, including creditors and the Chapter 7 trustee. You may accomplish service by mailing a copy of the motion by US mail, with a certified mail return receipt request to confirm that the motion was received. Creditors and the trustee have the right to object to conversion of the case.

Step 5

Attend the court-scheduled hearing on the motion to convert. Answer questions from the judge in full, as well as any objections from creditors, and bring any documentation you have gathered to support the motion. If the motion is granted, you must set up a repayment schedule with a newly appointed court trustee. The repayment plan allows you to discharge of the debt after partial payment over a period of three to five years.