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Changing Bankruptcy Chapter

Changing Bankruptcy Chapter in Pennsylvania

When it comes to filing for consumer bankruptcy, the chapters one can go for are Chapter 7 and Chapter 13. Often in cases, chapter 7 can become chapter 13 filing. It can also happen the other way round.

Chapter 13 bankruptcy can turn into chapter 7 when the borrowers find it too complicated to follow through. The court can also do the same when they feel that with chapter 13 bankruptcy, the creditors are unlikely to get paid. Our Pittsburgh bankruptcy lawyer will be able to explain more.

Common Reasons to Convert From Chapter 13 to Chapter 7

When you are filing for Chapter 7 bankruptcy, it is more likely that your assets will be liquidated to pay off your secured debts. Even though there are federal and state exemptions for saving your assets, yet that can have a limit. But when you are filing for Chapter 13 bankruptcy, you get a chance to save your assets while paying off your debts with the repayment plan for 3-5 years.

That is why commonly, people tend to file for chapter 13 or convert their chapter 7 to chapter 13 bankruptcy. However, the opposite can also happen in various circumstances.

Loan Modification

Often people who are dealing with the foreclosure of their house, the only option they are left with is filing for Chapter 13 bankruptcy. A home mortgage is a secured loan that you cannot get rid of by filing for bankruptcy. And that is why chapter 13 bankruptcy can offer you a window of 3-5 years of loan repayment that can stop your foreclosure effectively.

While filing for bankruptcy, you are not restricted to try different avenues to deal with your finances. Hence, if you are dealing with a home mortgage, you can go for a loan modification with which our Pittsburgh bankruptcy lawyer can help. If that happens, then you don’t have to follow the repayment plan for paying the mortgage either. Now, you might have unsecured debts that you want to get rid of.

In a situation when you get loan modification as well as qualify for the means test to file for Chapter 7 bankruptcy, our Pittsburgh bankruptcy lawyer can bring the petition for converting your filing. The court might grant you to convert the bankruptcy in good faith.

Change in Situation

Often people with having enough disposable income won’t be able to qualify for Chapter 13 bankruptcy. However, there can be a sudden change in the situation or their employment. There can be a sudden decrease in your income which can have a serious impact on your repayment plan. This situation lets the debtor go for converting to chapter 7 bankruptcy that will let them get rid of unsecured debts. This way you can get protection for your house too.

Common Reasons to Convert From Chapter 7 to Chapter 13

When it comes to filing for consumer bankruptcy, most of the time, people opt for chapter 7 bankruptcy to get rid of the unsecured debts. However, there can be situations when the debtor might want to convert it to a chapter 13 bankruptcy.

  • If you are in foreclosure, with chapter 13 you might get more time for sorting your finances. Opposed to 6 months of Chapter 7, you can get 3-5 years that will help you find a job or buy you some time till you get the inheritance you are entitled to.
  • Chapter 13 offers some unique benefits like eliminating a second mortgage on your house.

In these situations, converting to chapter 13 bankruptcy might be a better option.

Is it a Good Idea to Shift Bankruptcy Type?

For making this decision, you need the help of your lawyer. On one hand, you might have filed for the wrong type of bankruptcy might lead to converting it. Or on the other, you might be having trouble with paying off your repayment plans. The lawyer will help you make the decision. Come to Pittsburgh Bankruptcy Law Group to make the right decision regarding filing for bankruptcy.

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