Many people seeking bankruptcy undergo changes to their income or debt levels during their case. While this isn’t typically a problem it could result in a bankruptcy conversion, meaning switching to a different type of bankruptcy proceeding. In personal bankruptcy, there are two types of conversions: voluntary and involuntary.
A voluntary conversion occurs when you, the debtor, file a motion to have your case changed. This is most common with Chapter 7 into Chapter 13 conversions. People request to have a case converted into Chapter 13 for a number of reasons such as you decide you want to protect your home and repay your mortgage debts, you want to minimize the negative effect on your future credit or you anticipate an increase in your income.
An involuntary conversion occurs when the court decides to change the chapter of bankruptcy code for which you are filing under. Again, the most common is from a Chapter 7 into a Chapter 13 case. While there is no law that says you must accept the conversion, the alternative is usually having your Chapter 7 case dismissed. The main reason for an involuntary conversion is an increase in income or the failing of the means test after the initial filing. If the court feels you have sufficient income or assets to allow for debt repayment, they may convert your filing into a Chapter 13 case.
Although conversions of either type aren’t very common, it is advised that you seek bankruptcy under the guidance of a Fort Worth bankruptcy attorney in order to minimize the chances of this occurrence in the future.