Bankruptcy Attorney in Phoenix, AZ

Bankruptcy is a set of federal laws and regulations that can assist individuals and businesses with excessive debt. In almost all 94 federal judicial districts, bankruptcy cases are filed in the bankruptcy court. Cases of bankruptcy cannot be filed in state courts. By liquidating their assets to pay off their debts or establishing a repayment plan, bankruptcy laws enable individuals who are unable to pay their creditors to start over.

Additionally, bankruptcy laws provide for the orderly distribution of business assets to creditors through reorganization or liquidation. The primary objectives of bankruptcy law are:

  • to provide an honest debtor with a “fresh start” in life by erasing most debts, and
  • to repay creditors in an orderly fashion to the extent that the debtor has available property for payment.

In some bankruptcy cases, the debtor is allowed to reorganize and establish a plan to repay creditors, while in others, the debtor’s assets are liquidated. Some might be qualified for bankruptcy 7, while others for chapter 13 bankruptcy. But once this has been determined, is there any way how to convert chapter 13 to chapter 7 bankruptcy and vice versa? 

At Phoenix Fresh Start Bankruptcy Attorneys, we prioritize addressing issues arising from bankruptcies and taking prompt legal action when necessary. If you have any questions, please do not hesitate to call us or make an appointment for a complimentary consultation. At any hour of the day or night, we are available to discuss the various legal options available to you.

Why do I need a Bankruptcy Attorney in Arizona?

how to convert chapter 13 to chapter 7 bankruptcy A bankruptcy attorney is essential for the majority of individuals filing for bankruptcy, navigating bankruptcy proceedings, and recovering after discharge. A bankruptcy attorney serves multiple purposes throughout the procedure and can assist a client in determining the optimal course of action. Insolvency is a highly complex legal process, and bankruptcy courts do not tolerate errors. Even minor errors can result in a judge dismissing a case or the loss of significant assets, such as a home or car. Skilled attorneys ensure that no errors are made and that their clients’ assets are safeguarded to the full extent of the law.

One of the most essential responsibilities of a bankruptcy attorney is to explain bankruptcy to clients. Before consulting an attorney, most individuals have a limited understanding of bankruptcy law. They are aware that it can help them eliminate debt, but they are unaware of its consequences and alternatives. 

Not everyone knows that there are two types of bankruptcy available to individuals: chapter 7 and chapter 13. Both types offer distinct advantages, but one is almost always preferable to the other when a person’s unique circumstances are considered. The possibility of  converting your Chapter 13 Bankruptcy to Chapter 7 can also arise. With the help of a trusted Arizona bankruptcy lawyer, the process would be easier and a favorable outcome awaits. 

What is Chapter 13 Bankruptcy?

Bankruptcy under Chapter 13 is also known as debt adjustment bankruptcy. This is a court-mandated form of debt consolidation. In chapter 13 bankruptcy, a debtor’s debts are consolidated and restructured so that he or she makes a single monthly payment for three to five years. After the term, all debts are settled in full. This type of bankruptcy is highly advantageous for those with a stable income and assets they wish to preserve.

What is Chapter 7 Bankruptcy?

Sometimes referred to as straight bankruptcy, Chapter 7 bankruptcy is also known as liquidation bankruptcy. In chapter 7, the debtor consents to selling his or her assets and distributing the proceeds among the creditors. Certain personal assets, such as home equity, a personal vehicle, and personal effects, are protected. Even if the value of the assets falls short of the amount owed, the debt is discharged in its entirety. Chapter 7 bankruptcy typically lasts only a few months and wipes out almost all forms of unsecured debt.

Chapter 13 to Chapter 7 Bankruptcy Conversion

A debtor who initially files for bankruptcy under Chapter 13 may ultimately decide to file under Chapter 7 instead. They may have filed for Chapter 13 in order to retain a specific asset, such as their home, but ultimately decided not to do so. Alternatively, the bankruptcy court may force them to convert to Chapter 7 if they cannot keep up with Chapter 13 payments, although this is uncommon. You have the option to convert a Chapter 13 bankruptcy to Chapter 7 if you qualify for Chapter 7.

Passing the means test, either explicitly or implicitly, is the primary hurdle to Chapter 7 conversion. Even if a court does not require a debtor to pass the test, it will likely prevent them from converting to Chapter 7 if they have sufficient income to pay back a portion of their debts. This is intended to prevent debtors with substantial income and assets from filing under Chapter 13 and then switching to Chapter 7 to avoid paying back additional debts. The fact that you could not pass the means test when you initially filed for Chapter 13 does not preclude you from passing it now if your circumstances have changed.

Required Conversion Procedures

The majority of the Chapter 13 bankruptcy forms you filed can be transferred to your Chapter 7 proceeding. You must update certain forms if your income, debts, or expenses have changed. (Debts incurred after filing for Chapter 13 can be included and discharged in Chapter 7 if they are dischargeable.) In some states, you may need to resubmit the same information even if your finances have not changed. In addition, you must submit forms regarding the means test and secured debts.

Creditors’ proofs of claims will be transferred automatically from the Chapter 13 proceeding to the Chapter 7 proceeding. Creditors may be able to submit new proofs of claims if the sale of non-exempt property generates additional funds for them. Any exemptions will use the same filing date as your initial Chapter 13 petition, and any property acquired after that date can be retained.

You will be required to attend a new meeting of creditors, which may differ from the meeting you attended in your Chapter 13 case.

Call our Phoenix Bankruptcy Lawyers Now!

Please get in touch with Phoenix Fresh Start Bankruptcy Attorneys as soon as possible via our website if you would like to schedule a no-cost initial consultation. We are available in the evenings during the week and on Saturdays by appointment only. Every year, we are responsible for the management of hundreds of Chapter 7 and Chapter 13 bankruptcies. We are able to manage the transition from a Chapter 13 bankruptcy to a Chapter 7 bankruptcy that you are filing for.