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The bank got permission to take my house and/or I just lost my job: Should I convert to a Chapter 7 bankruptcy?

If you are in a chapter 13 bankruptcy, you usually are trying to save a house from foreclosure or you made too much income to file a chapter 7 bankruptcy. If your income is reduced or interrupted, or if you don’t make your house payments and the bank has obtained relief from the stay and is going to foreclose on your house, then you may find that you cannot make the chapter 13 plan payment, or that it is a waste to keep making the chapter 13 plan payments because you have lost your house anyway.

In that situation you should contact your attorney regarding filing a notice of conversion whereby you turn your chapter 13 bankruptcy into a chapter 7 bankruptcy. This way you at least wipe out all of your unsecured debts and obtain something from having filed bankruptcy.

However, you should talk with your attorney first because there are a number of issues such as whether your budget shows excess income, whether you can work out an arrangement with the bank financing your car when you are no longer in a chapter 13 bankruptcy, and whether you have assets the chapter 7 bankruptcy trustee would sell if you converted to a chapter 7 bankruptcy.

Normally, there is an extra charge for your attorney to convert a case.

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