If you started a Chapter 13 repayment plan in Mankato but your financial situation has taken a turn for the worse, you may be wondering whether you're locked in — or whether there's a way out. The good news is that switching from Chapter 13 to Chapter 7 bankruptcy is not only possible, it's a legally recognized option that many debtors in Minnesota pursue when circumstances change. At Behm Law Group, we help residents throughout the Mankato area understand their options and make informed decisions about their
bankruptcy cases at every stage.
Why Someone Would Want to Convert Their Case?
Life doesn't pause for a bankruptcy repayment plan. Job losses, medical emergencies, divorce, or a sudden reduction in income can make it impossible to keep up with a Chapter 13 plan that once seemed manageable. Chapter 13 requires a three-to-five-year commitment where you make regular payments to a trustee who distributes funds to creditors. If your income drops significantly or your expenses spike without warning, continuing that plan may simply no longer be realistic.
Chapter 7, by contrast, is a liquidation bankruptcy that typically wraps up in three to six months. It doesn't require a repayment plan — instead, a trustee reviews your assets, discharges eligible debts, and closes the case relatively quickly. For someone who has hit a financial wall mid-case, switching from Chapter 13 to Chapter 7 bankruptcy can provide the clean slate they need without years of continued payments.
The Legal Right to Convert:
Under federal bankruptcy law — specifically 11 U.S.C. § 1307(a) — a debtor has an absolute right to convert a Chapter 13 case to Chapter 7 at any time, as long as the case was not previously converted from another chapter. This is a significant protection. You don't need the court's permission, and your creditors cannot block the conversion. You simply file a Notice of Conversion with the bankruptcy court and pay the required conversion fee.
However, having the legal right to convert doesn't mean conversion is automatically the right move. There are important eligibility requirements and strategic considerations that anyone in Mankato or the surrounding Blue Earth County area should fully understand before taking action. If you're unsure whether you even
qualify for Chapter 7, that's the right place to start.
Eligibility Requirements for Chapter 7 After Conversion
| Requirement |
What It Means |
| Means Test |
Your income must fall below Minnesota's median income, or your disposable income must pass the means test calculation |
| No Prior Chapter 7 Discharge |
You cannot have received a Chapter 7 discharge within the past 8 years |
| Good Faith |
The conversion must not be filed in bad faith or as a litigation tactic |
| Non-Exempt Assets |
Any non-exempt assets you acquired during the Chapter 13 plan may be subject to liquidation under Chapter 7 |
The means test is typically the biggest hurdle. If your income has dropped since you originally filed Chapter 13, you may now qualify for Chapter 7 where you didn't before. A Mankato bankruptcy attorney at Behm Law Group can run through the numbers with you.
What Happens to Your Assets When You Convert
One of the most important — and often misunderstood — aspects of converting from Chapter 13 to Chapter 7 is what happens to assets you've accumulated during your repayment plan. In a standard Chapter 7 case, property you owned on the date of filing is what's at risk. But when you convert, there's additional consideration: property you acquired after your Chapter 13 filing but before the conversion date may also be included in the Chapter 7 bankruptcy estate.
This can include:
- Tax refunds received during the Chapter 13 plan period
- Inheritances or gifts received after filing
- Increases in the value of existing assets
- Income tax refunds you were required to turn over under your plan
This doesn't mean conversion is a bad idea — it just means the timing and structure of your conversion needs to be handled carefully. Rushing into a conversion without reviewing your current asset picture could expose property you weren't expecting to lose.
What Debts Are Affected by the Switch
Most unsecured debts — credit cards, medical bills, personal loans — that remained unpaid through your Chapter 13 plan will still be eligible for discharge under Chapter 7. However, certain debts are never dischargeable regardless of which chapter you're under, including:
- Most student loans
- Alimony and child support arrears
- Recent income tax debts
- Debts arising from fraud or willful misconduct
If your Chapter 13 plan was specifically structured to handle priority debts like back taxes or domestic support arrears, converting to Chapter 7 won't eliminate those obligations. You'll still owe them after conversion. For a full breakdown, see
what debts can and can't be discharged in bankruptcy. Understanding exactly which debts survive is a critical part of the conversion conversation.
Comparing Chapter 13 vs. Chapter 7 at a Glance
| Feature |
Chapter 13 |
Chapter 7 |
| Duration |
3–5 years |
3–6 months |
| Repayment Plan |
Required |
Not Required |
| Asset Protection |
Generally stronger |
Some non-exempt assets may be liquidated |
| Income Requirement |
No means test to qualify |
Must pass means test |
| Good for |
Saving a home, catching up on secured debts |
Quick discharge, lower ongoing income |
For a broader side-by-side view, our
Chapter 7 vs. Chapter 13 breakdown is a helpful read before making any decisions.
The Conversion Process Step by Step
Converting your case in Minnesota is a formal legal process, not just a decision you make informally. The general steps include filing a Notice of Conversion with the bankruptcy court, paying the applicable conversion fee, submitting updated financial schedules reflecting your current income and expenses, attending a new meeting of creditors with the Chapter 7 trustee, and cooperating with the trustee's review of your assets.
Your existing Chapter 13 trustee will close out that case and hand it off to a Chapter 7 trustee. Creditors will be notified of the conversion and given the opportunity to file new claims if appropriate. The entire process, from filing the notice to receiving your discharge, can often be completed within a few months.
Serving Mankato and Southern Minnesota
Behm Law Group is proud to serve individuals and families facing financial hardship throughout southern Minnesota. Whether you're located in
Mankato,
North Mankato,
St. Peter,
Waseca,
Owatonna,
Fairmont,
Albert Lea,
New Ulm,
Marshall, or
Worthington, our team is here to help you navigate your switching from Chapter 13 to Chapter 7 bankruptcy options with clarity and confidence. We understand the financial pressures facing people in this region and work to find the right path forward for each client's unique situation.
Frequently Asked Questions
Q1. Can I convert my Chapter 13 to Chapter 7 if I'm behind on my plan payments?
Yes. Being behind on your plan payments is actually one of the most common reasons people seek conversion. Falling behind can also lead to dismissal of your case, which is why acting quickly and converting before dismissal occurs is often the smarter legal move.
Q2. Will I lose my home if I convert to Chapter 7?
Not automatically. If you're current on your mortgage payments, you can often reaffirm the mortgage debt and keep your home. However, if you had significant mortgage arrears you were catching up on through your Chapter 13 plan, those arrears could become immediately due again under Chapter 7.
Q3. How long does it take to complete a Chapter 7 after converting?
In most cases, a converted Chapter 7 case reaches discharge within three to four months of the conversion filing, depending on the complexity of the estate and any issues the trustee needs to resolve.
Q4. Does conversion affect my credit differently than simply completing Chapter 13?
Both Chapter 7 and Chapter 13 appear on your credit report. A converted case will typically reflect as a Chapter 7 bankruptcy, which remains on your report for 10 years. However, if the alternative is a dismissed Chapter 13 with no discharge and ongoing debt collection, conversion often results in a better long-term financial outcome.
Q5. Can my creditors object to my conversion?
Creditors cannot block a conversion you initiate under 11 U.S.C. § 1307(a). However, they can file motions with the court arguing that the conversion was made in bad faith or that you don't meet Chapter 7 eligibility requirements.
Q6 . Is there a fee to convert my case?
Yes. The current federal court fee for converting from Chapter 13 to Chapter 7 is $25. Your attorney will also need to prepare and file updated schedules, which involves additional legal work.
If your Chapter 13 plan has become unmanageable and you're wondering whether switching chapters makes sense for your situation, the team at
Behm Law Group is ready to help. We've guided countless southern Minnesota residents through exactly this process, and we'll give you a straight, honest assessment of your options.
Reach out today to schedule your free consultation:
Call us at
(507) 387-7200 or email
stephen@mankatobankruptcy.com — we're here when you need us most.
