Those who are struggling to repay their debts may want to file for bankruptcy protection. However, there are certain criteria that must be met to do so. For instance, those who have filed for Chapter 7 bankruptcy protection in the past must wait eight years to file another such case. To convert a Chapter 7 case to a Chapter 13 case, four years must have passed from the date in which the Chapter 7 case was filed.
Individuals who are in the middle of a Chapter 13 proceeding may have their case converted to a Chapter 7 proceeding. This is done by filing a notice of conversion, paying a conversion fee and then taking the means test. The means test compares a debtor's income to the median in the state. In some cases, the need to take such a test will be waived.
Debtors who have had a Chapter 13 case discharged in the past must wait six years before they can file again under Chapter 7. The length of time that a person must wait prior to filing for bankruptcy may be extended if a bankruptcy proceeding is dismissed. A dismissal could occur because a person committed fraud or failed to comply with orders given by the court. Individuals may also ask to end a proceeding voluntarily.
A Chapter 7 bankruptcy may also be referred to as a liquidation bankruptcy. It involves a trustee inventorying and liquidating assets that are not exempt under state law. If the amount raised is not enough to pay the entire debt, the balance will likely be discharged. During a Chapter 7 case, an automatic stay will likely be granted. This prohibits creditors from having written or phone contact with a debtor for as long as the case remains open. An attorney may be able to fully explain the process and answer any questions a debtor has.