LAWDOG BANKRUPTCY: CHAPTER 13
Conversion, Dicharge & Dismissal
LAWDOG is intended to assist in the understanding of basic concepts. See
Disclaimer. Always obtain legal advice from legal professionals.
Conversion
Discharge In A Chapter 13 Case
Dismissal
Conversion
Conversion is the process whereby a bankruptcy case is converted from one chapter to
another. It may be voluntary, such as where the debtor converts from
a Chapter 7 to a Chapter 13. The conversion may also be involuntary, such as
where the court converts from a Chapter 13 to a Chapter 7 because the debtor has not
complied with certain requirements of a Chapter 13 case.
A Chapter 13 debtor has a right to convert from a Chapter 13 to a Chapter 7 at any
time. This statutory right cannot be waived. There may be many reasons for a conversion,
but commonly, this right is exercised because the debtor is unable to fulfill the
requirements under the plan, or circumstances change which make completion of the plan not
feasible, and the debtor chooses to liquidate property instead. See Section 1307 (a),
reproduced here for
illustration purposes only.
Top Of Page
Discharge
A discharge is provided under Chapter 13 where the debtor has completely performed
under the plan. A Chapter 13 discharge relieves the debtor of all obligations provided for
in the plan except certain long term debts, certain support obligations, nondischargeable
student loans, or liability arising from an automobile accident involving drugs or
alcohol, or for restitution, or a criminal fine,
included in a sentence on the debtor's conviction of a crime. Certain consumer
debts incurred after filing without approval of the Trustee may not be dischargeable. See
Section 1328(a), reproduced here
for illustration purposes only.
A "hardship discharge" may be granted under
Section 1328(b) even if a debtor has failed to complete payments under the plan. The
failure to complete the plan payments must be due to circumstances for which the debtor
should not justly be held accountable. The value of property
received by creditors under the plan must not be less than the creditors would have
received in a Chapter 7, and it is impractical to modify the plan. This discharge
is the same as the debtor would have received in a Chapter 7. The
Bankruptcy Court may award a hardship discharge, after notice and a hearing, only if these
conditions listed in Section 1328(b) are present. See Section 1328(b), reproduced here for illustration purposes
only.
Top Of Page
Dismissal
A debtor's Chapter 13 may be dismissed either voluntarily, at
the request of a debtor, or involuntarily by the Court for failure to comply with the
requirements set forth in the Bankruptcy Code. Reasons for dismissal may include
unreasonable delays by a debtor which are prejudicial to creditors, non-payment of fees
and costs required under the bankruptcy, failure to timely file a plan, or seek
confirmation, material default in the performance of the plan, termination, or revocation
of the confirmed plan. See Section 1307 (c), reproduced here for illustration purposes only.
Top Of Page
Copyright 1996, 1997, 1998 by LAWDOG.COM
Publishing, Inc.
