Converting Chapter 13 to Chapter 7

A Chapter 13 debtor has the right to convert the case to Chapter 7 at almost any time, by filing a short notice and paying a small court fee. The plan stops, a Chapter 7 trustee takes over, and the case moves toward a discharge in about three to four months. The property you're keeping still has to fit inside the exemptions, and the debts a plan was curing come due again.

Why people convert

The plan was built to save a house. Two years in, the house isn't worth saving, or the marriage that was carrying the mortgage ended, or the income that funded the payment went away for good. Whatever the reason, the monthly payment can't be made and the goals that justified five years of it no longer exist. That's the classic conversion.

The other common one is the debtor who filed Chapter 13 only because they failed the means test at the time, then lost a job a year later. With no income, the means test is no longer an obstacle, and Chapter 7 gets them to the same discharge in a fraction of the time.

Conversion versus dismissal

Both end the plan. Only one gets you a discharge. If the case is dismissed, every creditor is back where they were the day before you filed, with all the interest and fees that accrued during the plan added on. If the case converts, the Chapter 7 discharge wipes out the unsecured debt, and the stay continues without interruption while the Chapter 7 runs.

There are situations where dismissal is the right choice, mainly when you need to refile a new Chapter 13 later and don't want to burn a Chapter 7 discharge (which starts an eight-year clock). But for someone whose finances have simply collapsed, conversion is nearly always the better door.

What happens to your property

The Chapter 7 estate is generally measured as of the original Chapter 13 filing date, not the conversion date. Property you acquired during the plan (a raise, an inheritance after the first 180 days, the equity built by two years of mortgage payments) mostly stays yours, as long as the conversion wasn't in bad faith. Property you owned at the start is evaluated by the Chapter 7 trustee against the exemptions you claimed, with one exception: if the value of your house rose during the plan, courts in the Ninth Circuit have disagreed about whether the trustee gets the appreciation. We look at that before advising a conversion in a rising market.

Money the Chapter 13 trustee is holding and hasn't yet paid out comes back to you, not to creditors. The Supreme Court decided that in 2015. Depending on timing, that can be a couple of thousand dollars.

The means test, the second time

The Chapter 7 trustee and the U.S. Trustee's office in Los Angeles will look at whether you'd pass the means test. Courts disagree on whether the test formally applies to a converted case, and the Central District practice is to file the Chapter 7 form and let the numbers speak. If your income has dropped since the Chapter 13 was filed, this is rarely a problem. If it hasn't, and you're converting simply because you'd rather not pay the plan, expect questions about whether the conversion is an abuse.

The Chapter 13 overview describes the plan you'd be leaving. The side-by-side comparison is a decent refresher on what the Chapter 7 you'd be entering looks like.

The new trustee, and a second 341 meeting

Conversion means a new trustee from the Chapter 7 panel, a new 341 meeting on Zoom, and a fresh set of questions. The Chapter 7 trustee is paid to find assets, which is a different job than the Chapter 13 trustee had. They'll want current bank statements, your most recent tax return, and an explanation of anything that changed since the original schedules. We file amended schedules and a conversion statement listing debts incurred during the plan, since those get discharged too, along with the unsecured debts from the original case.

Debts that were being paid through the plan and aren't dischargeable, like priority taxes and support arrears, survive and come due. So do mortgage arrears: the lender's cure disappears and the foreclosure clock restarts, which is why conversion nearly always means the house is going.

The cost, and the timing

Conversion isn't covered by the Chapter 13 no-look fee. It's quoted separately, in writing, and the court charges a small conversion fee as well. The Chapter 7 runs about three to four months from the conversion date to discharge, and you'll need the second required course, debtor education, before the discharge issues.

Timing matters more than people expect. Converting before a large tax refund arrives, or after, changes whether the Chapter 7 trustee can claim it. Converting the month before a bonus is different from the month after. Book a video consultation and we'll look at the calendar before anything is filed.

From Naomi

conversion is the honest ending for a lot of plans, and I wish more people saw it that way instead of as a failure. A plan that cured two years of arrears and then hit a permanent income loss still bought two years in the house, two years without collection calls, and a discharge at the end of it. What I watch for is the client converting in a hurry without looking at what the Chapter 7 trustee will see. The bank balance, the refund that's about to land, the appreciation on the condo. A month of planning around those is usually worth it.

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Written and reviewed by Naomi Reyes-Ashford, Certified Specialist in Bankruptcy Law, State Bar of California Board of Legal Specialization. Last reviewed September 2026.