Yes, converting Chapter 13 to Chapter 7 is a right most debtors have under federal law, and you can request it at any point during your Chapter 13 case. The mechanics are simple: file a notice of conversion with the bankruptcy court, pay a $25 fee, and the case shifts to a liquidation proceeding. The harder part is deciding whether you should. Conversion changes what happens to your property, which debts get discharged, and how long the bankruptcy stays on your credit report.
Why People Switch to Chapter 7
Chapter 13 runs on a three-to-five-year repayment plan. When something disrupts your ability to keep making those payments, conversion starts to look attractive. A job loss, a pay cut, or a medical crisis can turn a manageable plan into one you can no longer afford. Rather than falling behind and risking dismissal, you can ask the court to move your case to Chapter 7.
Sometimes the reason is strategic rather than a crisis. You may have entered Chapter 13 to save a home and later decided the mortgage is not worth keeping, or you may have concluded that the assets you were protecting are not worth years of payments. The Bankruptcy Code recognizes the right to convert under 11 U.S.C. ยง1307(a), which lets a debtor convert “at any time” and treats any waiver of that right as unenforceable.1Office of the Law Revision Counsel. 11 U.S. Code 1307 – Conversion or Dismissal
Do You Qualify for Chapter 7?
The right to convert is not a right to a discharge. You still have to qualify as a Chapter 7 debtor.
The Means Test
The means test compares your average monthly income over the six months before the test date to the median for a household your size in your state. Below the median, you pass.2U.S. Trustee Program. Census Bureau Median Family Income By Family Size Above the median, the test looks at your disposable income after standardized living expenses, and if that disposable income multiplied by 60 hits $10,000 or more, abuse is presumed and Chapter 7 is likely blocked.3Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion
Conversion often helps here. If you lost your job or took a pay cut after filing Chapter 13, your current income may now fall below the median, making the means test easier to pass than it was when you originally filed.
Prior Discharge Time Bars
Two separate rules can block a Chapter 7 discharge even if you pass the means test:
- Eight-year rule: You cannot receive a Chapter 7 discharge if you already received a Chapter 7 or Chapter 11 discharge in a case filed within the last eight years. The clock runs filing date to filing date.4Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge
- Six-year rule: If you received a Chapter 13 discharge in a case filed within the last six years, you are barred from a Chapter 7 discharge unless your Chapter 13 plan paid 100% of unsecured claims, or paid at least 70% and was proposed in good faith as your best effort.5Office of the Law Revision Counsel. 11 USC 727 – Discharge
If your current Chapter 13 is your first bankruptcy and you have not received any discharge yet, neither time bar applies. You are converting a pending case, not filing after a completed one.
When a Court Can Block the Conversion
Courts sometimes call the conversion right “absolute,” but the Supreme Court rejected that reading in Marrama v. Citizens Bank of Massachusetts (2007), holding that a bankruptcy court can deny conversion if the debtor acted in bad faith.6Justia. Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007) Straightforward financial hardship rarely raises bad-faith concerns. But if you acquired significant assets during the Chapter 13 case and are converting to shield them, expect the trustee or a creditor to push back.
How the Conversion Works
File a Notice of Conversion (sometimes called a Notice of Voluntary Conversion) with the bankruptcy court handling your Chapter 13 case. It includes your name, case number, and a statement that you are converting to Chapter 7. The fee is $25, compared to the $338 filing fee for a brand-new Chapter 7. A voluntary conversion usually does not require a hearing; the court enters an order and the case shifts.
After conversion, a Chapter 7 trustee is appointed and a new 341 meeting of creditors is scheduled. You will need to attend and answer questions. Within 14 days of conversion, you must file a schedule of all unpaid debts you incurred after the original Chapter 13 petition but before the conversion date.7Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1019 – Converting or Reconverting a Chapter 11, 12, or 13 Case to Chapter 7 Your existing schedules carry over, though the trustee may ask you to update them. You will also need to complete a debtor education course before discharge, even if you already completed one during your Chapter 13.
What Happens to Your Property
This is where conversion bites. Chapter 7 is a liquidation: a trustee can sell your non-exempt property and distribute the proceeds to creditors.8United States Courts. Chapter 7 – Bankruptcy Basics State exemption laws protect a set amount of equity in a home, a vehicle, retirement accounts, and household goods, and anything beyond those protected amounts is exposed.
The key protection for converting debtors is the valuation date. When a Chapter 13 case converts to Chapter 7, the property of the estate is determined as of the original Chapter 13 filing date, not the conversion date.9Office of the Law Revision Counsel. 11 USC 348 – Effect of Conversion Property you acquired after filing, such as a tax refund, an inheritance, or a new vehicle, generally stays out of the Chapter 7 estate.
The exception matters: if the court finds you converted in bad faith, the estate expands to include all property you own as of the conversion date.10Office of the Law Revision Counsel. 11 U.S. Code 348 – Effect of Conversion
Payments already made to the Chapter 13 trustee follow specific rules. Post-petition wages the trustee still holds and has not yet distributed must be returned to you. Payments the trustee already sent to creditors are gone.
Debts You Took On During Chapter 13
Debts you incurred after filing your Chapter 13 but before conversion can be included in the Chapter 7 discharge. Medical bills or other obligations that piled up while your plan was pending do not fall through the cracks; they are swept into the converted case. That is what the 14-day schedule under Rule 1019 is for.7Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1019 – Converting or Reconverting a Chapter 11, 12, or 13 Case to Chapter 7 Missing the deadline can mean those debts are not discharged, so treat it as a hard cutoff.
Debts That Chapter 7 Will Not Wipe Out
Several categories of debt survive a Chapter 7 discharge regardless of your financial situation:
- Domestic support obligations, including child support and alimony.
- Most recent income taxes and any taxes tied to a fraudulent return or a failure to file.
- Student loans, unless you can prove “undue hardship,” a notoriously hard standard.
- Debts obtained through fraud, false pretenses, or a materially false financial statement.
- Court judgments for willful and malicious injury to people or property.
- Debts arising from death or personal injury caused by driving while intoxicated.
If the debts driving your financial problem sit in these categories, conversion will not deliver the relief you might expect. You could lose non-exempt property and still owe the same balances on the other side.
What Conversion Does to Your Credit Report
Federal law lets credit bureaus report any bankruptcy for up to ten years from the order for relief, and the statute makes no distinction between chapters.11Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports12Consumer Financial Protection Bureau. How Long Does a Bankruptcy Appear on Credit Reports? In practice, the major bureaus voluntarily remove completed Chapter 13 cases after seven years because the debtor tried to repay. That is bureau policy, not a legal guarantee. Converting to Chapter 7 will almost certainly mean the case remains on your report for the full ten years. If you were well into your plan, the shorter reporting window under bureau practice is a real reason to think twice.
Converting vs. Dismissing and Filing a New Chapter 7
You have another option: dismiss your Chapter 13 entirely and file a fresh Chapter 7. You have the right to dismiss as long as your case was not originally converted from another chapter.1Office of the Law Revision Counsel. 11 U.S. Code 1307 – Conversion or Dismissal It costs more and carries a serious risk.
The cost difference is direct. A new Chapter 7 filing is $338 versus $25 for a conversion, plus new paperwork, a new 341 meeting, and typically higher attorney fees. The main upside is that a new case uses a current valuation date. If your home has lost value or your savings have been depleted since you filed Chapter 13, a fresh Chapter 7 might let you protect more of what you have. If you have acquired valuable assets since filing, conversion is better because those assets stay outside the estate.
The Automatic Stay Risk
Dismiss-and-refile puts your automatic stay in danger. If you file a new bankruptcy within one year of a prior case being dismissed, the automatic stay in the new case expires after 30 days unless you file a motion to extend it and persuade the court that the new case was filed in good faith. With two or more dismissals in the prior year, the stay does not take effect at all in the new case, and you face a presumption that the filing was not in good faith.13Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay During any gap, creditors can resume lawsuits, wage garnishments, and foreclosure proceedings.
Conversion sidesteps this entirely. Because the case continues rather than ending and restarting, the automatic stay stays in effect through the transition. If active collection pressure is part of your situation, that continuity is often the deciding factor.
Dismissing and refiling still makes sense in some situations, particularly when your financial picture has changed so much that a fresh valuation and clean schedules would help. Talk through the trade-offs with a bankruptcy attorney before choosing that path.