If you’re in a Chapter 13 bankruptcy and struggling to keep up with payments, you may be wondering:
“Should I convert my Chapter 13 to Chapter 7?”
“Can I even do that?”
“Will I lose my house or car?”
“Is converting better than dismissing?”
This is a very common question — and for many people, conversion can be a smart option when Chapter 13 becomes impossible.
But conversion is not right for everyone.
Here’s what you need to know.
What Does It Mean to Convert Chapter 13 to Chapter 7?
Converting means changing your bankruptcy case from a repayment plan (Chapter 13) into a liquidation bankruptcy (Chapter 7).
In Chapter 13, you repay debts over 3–5 years.
In Chapter 7, most qualifying debts are discharged more quickly, usually in a few months.
When you convert:
- your Chapter 13 plan ends
- you stop making plan payments
- a Chapter 7 trustee is assigned
- your assets and exemptions are reviewedre reviewed under Chapter 7 rules
Why Do People Convert to Chapter 7?
People often convert because:
✅ Their Chapter 13 payment is too high
Rising costs, job loss, medical bills, or reduced income can make Chapter 13 impossible.
✅ They fall behind and can’t catch up
Missed payments can lead to dismissal, so conversion may be a safer alternative.
✅ Their financial situation changed significantly
If your income drops, you may now qualify for Chapter 7 when you didn’t before.
Can Anyone Convert?
Many people can convert, but not everyone qualifies.
You may not be able to convert if:
- your income is still too high under the Chapter 7 means test
- you have significant non-exempt assets
- you are behind on a mortgage and trying to keep the home
- conversion would cause you to lose property you were protecting in Chapter 13
This is why conversion should be reviewed carefully with an attorney.
Pros of Converting to Chapter 7
✅ 1. No More 3–5 Year Payment Plan
One of the biggest benefits is relief from the long repayment plan.
✅ 2. Faster Discharge
Chapter 7 cases typically move much faster than Chapter 13.
✅ 3. Less Financial Stress
If you are drowning in monthly payments, conversion can provide immediate relief.
✅ 4. May Be Better Than Dismissal
If your case is dismissed, creditors can start collections again.
Conversion keeps you protected by bankruptcy.
Cons of Converting to Chapter 7
❌ 1. You Could Lose Property
Chapter 7 trustees can take and sell non-exempt assets.
If Chapter 13 was protecting equity in your home, vehicles, or other property, converting could put those assets at risk.
❌ 2. You May Lose the Ability to Catch Up Mortgage Arrears
Chapter 13 is often used to save a home from foreclosure.
If you convert to Chapter 7, you may no longer have the same ability to catch up missed mortgage payments through a plan.
❌ 3. Your Car Could Be at Risk if You’re Behind
If you’re behind on your car loan, Chapter 13 may have been helping you catch up.
Conversion may remove that protection.
❌ 4. You May Still Owe Certain Debts
Just like in Chapter 13, certain debts may still survive, such as:
- child support
- alimony
- some taxes
- most student loans
Will Converting Hurt My Case?
Not necessarily.
Conversion is a legal option and happens often.
Many people convert and still successfully receive a discharge.
However, conversion can trigger closer review of:
- your assets
- bank accounts
- recent spending
- tax refunds
- transfers of property
So timing matters.
Should I Convert or Modify My Plan?
This depends on your situation.
A plan modification may be better if:
- your hardship is temporary
- you want to keep your home
- you can still afford a reduced payment
- you are close to completing your plan
Conversion may be better if:
- your income dropped significantly
- the plan is no longer realistic
- you are falling behind
- you need a quicker discharge
Should I Convert or Dismiss?
Many people assume dismissal is easier — but dismissal can be risky.
If you dismiss your case:
- creditors can resume lawsuits
- garnishments can restart
- foreclosure can proceed
- repossession can happen
Conversion may be safer because it keeps bankruptcy protection in place.
The Bottom Line
Converting from Chapter 13 to Chapter 7 may be a good option if:
✅ your payment is no longer affordable
✅ your income dropped
✅ you qualify for Chapter 7
✅ you don’t have assets at risk
✅ you need relief sooner
But conversion may be risky if:
⚠️ you have significant home equity
⚠️ you’re trying to stop foreclosure
⚠️ you need Chapter 13 to catch up missed payments
Final Thought
Chapter 13 is not always a “one-size-fits-all” solution. Life changes, and sometimes converting to Chapter 7 is the best path forward.
The most important thing is to explore your options early — before missed payments lead to dismissal.
