Can I Change from One Type of Bankruptcy to Another?

TRI Writer • October 28, 2019

If you already filed bankruptcy in Tennessee or Georgia, and you suspect that you might benefit from changing to another type of bankruptcy, get in touch with your bankruptcy attorney immediately to discuss your options.

If You Filed Chapter 13, but are Unable to Complete Your Repayment Plan:

Unfortunately, some petitioners who file Chapter13 bankruptcy are unable to complete their repayment plan as agreed. During a Chapter 13 bankruptcy, petitioners have to repay specific debts in full. A couple of examples of obligations that would require full payment include child support owed and back taxes. The filer’s disposable income (as defined by the law) is paid into the repayment plan as a monthly payment.

In some cases, the monthly payment required to fulfill the terms of the Chapter 13 bankruptcy repayment plan is too large for filers to meet while still paying their other bills. Sometimes circumstances change months into the plan. For instance, the bankruptcy filer may lose their job or become disabled, etc. and experience a significant decrease in income. In this type of situation, it would be a good idea to consider whether or not converting the Chapter 13 bankruptcy case to a Chapter 7 bankruptcy case would be a good idea. Discuss the process of converting from a Chapter 13 to a Chapter 7 with your bankruptcy attorney. Sometimes folks change attorneys to convert from Chapter 13 to Chapter 7.

If You Filed Chapter 7 Bankruptcy , but Need to Convert to Chapter 13 Bankruptcy:

Most filers prefer the benefits of Chapter 7 bankruptcy because it quickly discharges all qualifying debt and does not require a repayment plan like the Chapter 13 bankruptcy, but it can sometimes be beneficial or necessary to convert from Chapter 7 bankruptcy to Chapter 13 bankruptcy. A bankruptcy petitioner may decide after filing for Chapter 7 bankruptcy that Chapter 13 is a better option. In other cases, the court may require a petitioner to convert to a Chapter 13 bankruptcy. A petitioner may decide voluntarily to convert from a Chapter 7 bankruptcy to a Chapter 13 bankruptcy for a number of reasons: due to a change in financial circumstances that occurred since they filed their bankruptcy petition, because they forgot to disclose a valuable asset, they realized they won’t be able to discharge a certain significant debt, or they realized they run the risk of losing valuable property they aren’t willing to lose if filing for Chapter 7 bankruptcy.

The court may order a bankruptcy petitioner to convert from Chapter 7 to Chapter 13 bankruptcy. When this occurs, it is usually due to a mistake on the Chapter 7 means test used to determine eligibility. Failing the Chapter 7 means test means that after analyzing the information, the court determined you can afford a reasonable monthly payment towards your debt through a repayment plan. In this situation, petitioners have the option to convert to Chapter 13 bankruptcy.

If you need to discuss converting from one type of bankruptcy to another or if you need answers about the benefits of filing different types of bankruptcy, please don’t hesitate to get in touch with the law offices of Kenneth C. Rannick P.C. Our Tennessee and Georgia Bankruptcy Lawyers have the knowledge and experience to help you get on the road to recovery.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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