How to Convert Chapter 13 to Chapter 7 Bankruptcy (2025 Guide)

If you're three months into a five-year Chapter 13 repayment plan and you just lost your job, you're staring down a choice: miss a payment and risk dismissal, or keep draining your emergency fund until it's gone. But there's a third option most people don't realize exists. You can convert your Chapter 13 case to Chapter 7 and wipe out your unsecured debt in about 90 days instead of continuing to pay for years.

Converting from Chapter 13 to Chapter 7 is legal, often straightforward, and can save you thousands of dollars in plan payments. But it's not automatic. You need to qualify, file the right paperwork, and understand what happens to your property and secured debts after the switch.

This guide walks you through the process step by step.

When Converting to Chapter 7 Makes Sense

You filed Chapter 13 for a reason. Maybe you needed to catch up on mortgage arrears, or you made too much money to qualify for Chapter 7. But life changed. Your income dropped, medical bills piled up, or you realized the 60-month plan is unsustainable. Those are legitimate reasons to convert.

Common scenarios where conversion makes sense:

• Job loss or income reduction: Your plan payment was based on your old salary. Now you're making 40% less.
• Medical crisis: New expenses make your current plan payment impossible to maintain.
• Divorce or separation: You were counting on two incomes. Now there's one.
• Failed mortgage modification: You entered Chapter 13 to save your house, but the lender rejected your modification.
• Business closure: Self-employed filers who lose their income stream mid-plan.

If you can't afford the plan and you're willing to surrender nonexempt property, Chapter 7 often delivers faster relief. The typical Chapter 7 case closes in 90 to 120 days. No more monthly payments to the trustee. No more annual budget reviews.

Who Qualifies to Convert

Section 1307(a) of the Bankruptcy Code gives you the right to convert your Chapter 13 case to Chapter 7 "at any time." But that right has limits. You must qualify for a Chapter 7 discharge, which means passing two tests.

The Means Test

Chapter 7 requires that your income fall below your state's median or that you have little disposable income after allowed expenses. If you qualified for Chapter 13 because you made too much money, your circumstances must have changed. Job loss or income reduction usually does the trick. If your income stayed the same, conversion might fail.

The 8-Year Rule

You can't receive a Chapter 7 discharge if you received one in a Chapter 7 case filed within the past eight years. Count from filing date to filing date, not discharge date to filing date. If you filed Chapter 7 on March 1, 2018, you can't get another Chapter 7 discharge in a case filed before March 1, 2026.

If you received a discharge in a prior Chapter 13 case, the waiting period is six years before you can get a Chapter 7 discharge. There's an exception if you paid back at least 70% of your unsecured debt in the prior Chapter 13, but that's rare.

Good Faith Requirement

Courts can deny conversion if you're acting in bad faith. Filing Chapter 13 just to buy time, then immediately converting to Chapter 7 to skip plan payments, can trigger scrutiny. But if your circumstances genuinely changed, good faith usually isn't an issue.

How to File the Conversion

The mechanics are simple. You file a one-page notice, pay a small fee, and the court processes the conversion. No lengthy motion. No evidentiary hearing in most cases.

Step 1: File a Notice of Conversion

Download your district's Notice of Conversion form (sometimes called a Notice of Election to Convert). The form states your intent to convert your case from Chapter 13 to Chapter 7. You sign it, file it with the bankruptcy court clerk, and serve it on the Chapter 13 trustee, your creditors, and any other parties in interest.

Step 2: Pay the $25 Conversion Fee

Converting from Chapter 13 to Chapter 7 costs $25. If you can't afford it, you can file a fee waiver application, but most courts expect you to pay since you've been making plan payments.

Step 3: Attend a New 341 Meeting of Creditors

Once your case converts, a Chapter 7 trustee is assigned. That trustee schedules a new 341 meeting, usually within 30 to 40 days. You'll answer questions under oath about your assets, income, and expenses. Bring a government-issued ID, proof of Social Security number, and recent pay stubs or tax returns.

Step 4: Complete Financial Management Course

If you didn't finish the required financial management course during your Chapter 13 case, you must complete it now. The course costs about $10 to $50 and takes two hours online. File the certificate with the court before your discharge deadline.

Step 5: Wait for Your Discharge

If no creditor objects and you have no nonexempt assets to liquidate, the court issues your Chapter 7 discharge about 60 days after the 341 meeting. Unsecured debts like credit cards, medical bills, and personal loans are wiped out.

What Happens to Your Property

This is where conversion gets tricky. Chapter 13 lets you keep nonexempt property as long as you pay its value through your plan. Chapter 7 does not. The Chapter 7 trustee can seize and sell nonexempt assets to pay creditors.

Exemptions Determine What You Keep

Bankruptcy exemptions protect certain property from liquidation. Common exemptions cover your home equity (up to a limit), car equity, retirement accounts, household goods, and clothing. Exemption limits vary by state. In California, the homestead exemption ranges from $31,950 to $637,000 depending on which exemption system you choose. In Texas, homestead protection is unlimited.

If your property was exempt in Chapter 13, it stays exempt in Chapter 7. But if you acquired new property during your Chapter 13 case, like an inheritance or a tax refund, that property might not be protected.

The Trustee's Role

The Chapter 7 trustee reviews your assets and exemptions. If you own nonexempt property worth selling, the trustee can take it. In practice, most Chapter 7 cases are "no-asset" cases, meaning the trustee finds nothing worth liquidating. But if you have significant equity in a second home, valuable collectibles, or a business, conversion could cost you those assets.

What Happens to Your Debts

Unsecured Debts

Credit card balances, medical bills, personal loans, and old utility bills get discharged in Chapter 7. You won't owe anything after discharge, even if you paid nothing through your Chapter 13 plan.

Secured Debts

Chapter 7 doesn't eliminate liens. If you owe money on your car or house, you must keep paying or surrender the collateral. Many people convert because they're surrendering their home anyway. Conversion lets them discharge the deficiency balance, the amount still owed after the lender sells the house.

If you were catching up on mortgage arrears in Chapter 13, conversion means you lose that chance. The lender can resume foreclosure once the automatic stay lifts.

Priority Debts

Child support, alimony, recent taxes, and criminal restitution survive Chapter 7 discharge. If your Chapter 13 plan was paying these debts, conversion doesn't erase them. You'll still owe the balance.

Potential Downsides of Converting

Conversion isn't always the right move. Consider these risks before filing your notice.

You Could Lose Property

If you have nonexempt assets, the Chapter 7 trustee can liquidate them. That's not an issue in Chapter 13, where you keep property as long as you complete your plan.

You Lose the Chance to Catch Up on Secured Debts

Chapter 13's biggest advantage is the ability to cure mortgage or car loan arrears over time. Once you convert, that option disappears. If you're behind on your mortgage and you want to keep your house, conversion probably isn't smart.

Creditors Can Object

Creditors rarely object to conversions, but it happens. A creditor might argue you're abusing the system or that you have enough income to continue Chapter 13. If a creditor objects, the court holds a hearing. You'd need to show good faith and genuine hardship.

You Might Not Get a Discharge

If you filed Chapter 7 too recently, or if you fail the means test, conversion won't result in a discharge. Your case could be dismissed instead, leaving you with no bankruptcy protection at all.

Alternatives to Converting

Before you convert, consider whether modifying your Chapter 13 plan makes more sense.

Plan Modification

If your income dropped but you still want to keep your house or car, ask the court to modify your plan. You can request lower monthly payments, an extended plan term, or a change in how debts are treated. Creditors sometimes object, but courts approve modifications when circumstances change involuntarily.

Hardship Discharge

If you can't complete your plan due to circumstances beyond your control, like disability or serious illness, you might qualify for a hardship discharge. This discharges your debts without converting to Chapter 7, but it's hard to get. You must prove you paid creditors at least as much as they would've received in a Chapter 7 liquidation.

Dismissal and Refiling

Dismissing your Chapter 13 case and filing a new Chapter 7 case is an option, but it has drawbacks. You lose the benefit of your original filing date for purposes of the automatic stay and discharge timing. And if you've already converted once, courts scrutinize repeat filings.

Working With a Bankruptcy Attorney

Conversion is usually simple, but mistakes can be costly. An attorney can review your exemptions, calculate whether you'll pass the means test, and advise you on whether conversion or modification is the better strategy. If you have significant nonexempt property or complex secured debts, legal help is worth the cost.

If you can't afford an attorney, see if you qualify for free bankruptcy filing through Talk About Debt's screener. For Chapter 7 conversions, some attorneys offer flat-fee services at a reduced rate since much of the case groundwork is already done.

What Happens After Your Discharge

Once the court issues your Chapter 7 discharge, creditors can't collect discharged debts. Calls stop. Lawsuits end. Wage garnishments cease. You still owe secured debts if you kept the collateral, and you still owe priority debts like child support and recent taxes. But unsecured debt is gone.

Your credit report will show both the Chapter 13 filing and the Chapter 7 discharge. The Chapter 7 stays on your report for 10 years from the filing date. That sounds harsh, but many people see their credit scores improve within two years because their debt-to-income ratio drops.

Should You Convert?

Convert if your income dropped, you can't afford your plan payment, and you're willing to surrender nonexempt property. Don't convert if you need Chapter 13's protections to catch up on your mortgage or car loan, or if you have significant nonexempt assets you want to keep.

Run the numbers. Calculate your state's exemptions. Check whether you qualify for a Chapter 7 discharge. If conversion makes sense, file your notice and move forward. If it doesn't, explore plan modification or hardship discharge instead.

The worst outcome is staying stuck in a Chapter 13 plan you can't afford until your case gets dismissed and creditors restart collection. If that's where you're headed, conversion might be your best way out.