Conversion: Moving a Bankruptcy Case to Another Chapter

What does conversion mean in a bankruptcy case?

Conversion moves a case that is already pending from one chapter to another. The case number, the docket and, under 11 U.S.C. § 348(a), the original filing date generally carry over; what changes is the set of rules the case runs under. A different Code section governs each direction. A Chapter 7 debtor may convert to Chapter 11, 12, or 13 at any time if the case has not already been converted under 11 U.S.C. § 1112, 11 U.S.C. § 1208, or 11 U.S.C. § 1307, and any waiver of that right is unenforceable (11 U.S.C. § 706(a)). A Chapter 13 debtor has a parallel unwaivable right to convert to Chapter 7 at any time (11 U.S.C. § 1307(a)). Chapter 11 and Chapter 12 debtors have their own provisions (11 U.S.C. § 1112, 11 U.S.C. § 1208). Conversion is not dismissal: a dismissed case ends, while a converted case continues.

Why does conversion matter in a bankruptcy case?

Conversion changes who administers the case and what the estate contains, so its effects are practical rather than formal. It operates as an order for relief under the new chapter and terminates the service of any trustee or examiner serving beforehand (11 U.S.C. § 348(a), (e)); a successor trustee takes over the records and property of the estate (Executive Office for United States Trustees, Handbook for Chapter 7 Trustees). When a Chapter 13 case converts, 11 U.S.C. § 348(f) defines the converted estate as the property of the estate as of the petition date that the debtor still holds or controls on the conversion date, and treats a creditor's security interest as continuing. Deadlines also move: on conversion to Chapter 7, Fed. R. Bankr. P. 1019 starts new times to file proofs of claim, to object to discharge or to dischargeability, and, in most situations, to object to a claimed exemption.

How does conversion work in practice?

How conversion is requested depends on the direction and on local rules. Where the debtor has a statutory right to convert — Chapter 13 to Chapter 7 under 11 U.S.C. § 1307(a), for example — many courts accept a notice of conversion rather than a motion, and publish a form and a docketing path for it (CANB official page — Notice of Voluntary Conversion 13 to 7). Other directions require a motion, notice to parties, and a hearing. A fee may be due depending on which chapters are involved; several directions carry none, and courts publish conversion fee charts (Bankr. M.D. Fla. Procedure Manual — Conversion and Reconversion). Paperwork usually follows: converting from Chapter 13 to Chapter 7 commonly calls for a statement of intention, a Chapter 7 statement of current monthly income, and a new disclosure of attorney compensation (U.S. Bankr. Ct. M.D. Ala., Procedures for Case Conversion). Practice varies by district, so check your own court's rules and forms.

What do people get wrong about conversion?

Conversion is often confused with dismissal: a converted case stays open under a different chapter, while a dismissed case ends. The debtor's right to convert is also not unlimited — under 11 U.S.C. § 706(a) it exists only if the case has not already been converted under 11 U.S.C. § 1112, 11 U.S.C. § 1208, or 11 U.S.C. § 1307, and 11 U.S.C. § 706(d) bars conversion to a chapter the debtor is not eligible for. Nor is conversion always the debtor's choice: a party in interest or the United States trustee may move to convert or dismiss a Chapter 13 case for cause (11 U.S.C. § 1307(c)), and on a finding of abuse a Chapter 7 case may be dismissed or, with the debtor's consent, converted to Chapter 11 or 13 (11 U.S.C. § 707(b)(1)). Conversion also does not disturb valid liens; a mortgage or car loan remains enforceable against the collateral.

Frequently asked questions

Is conversion the same as dismissal?

No. Conversion keeps the case alive under a different chapter of the Bankruptcy Code, while dismissal ends it. Some Code sections address both together — 11 U.S.C. § 1307 and 11 U.S.C. § 1112 are each titled conversion or dismissal — which is why the two are easy to confuse. A single motion may ask for either, and the court decides which, if any, is appropriate.

Does converting a case start it over?

Generally not. Conversion is an order for relief under the new chapter, but it does not change the date the petition was filed or the date the case commenced (11 U.S.C. § 348(a)). Some things do restart: the trustee serving before conversion stops serving (11 U.S.C. § 348(e)), and conversion to Chapter 7 opens new times to file claims and objections under Fed. R. Bankr. P. 1019.

Can a court move a Chapter 7 case to Chapter 13 without the debtor's agreement?

The Code does not permit it. A court may not convert a case under Chapter 7 to a case under Chapter 12 or Chapter 13 unless the debtor requests or consents to the conversion (11 U.S.C. § 706(c)). A party in interest may ask the court to convert a Chapter 7 case to Chapter 11 after notice and a hearing (11 U.S.C. § 706(b)), and a Chapter 7 case may be dismissed for abuse under 11 U.S.C. § 707(b).

Sources

• 11 U.S.C. § 706 — Conversion · official source
• 11 U.S.C. § 1307 — Conversion or dismissal (Chapter 13) · official source
• 11 U.S.C. § 1112 — Conversion or dismissal (Chapter 11)
• 11 U.S.C. § 1208 — Conversion or dismissal (Chapter 12)
• 11 U.S.C. § 348 — Effect of conversion · official source
• 11 U.S.C. § 707 — Dismissal of a case or conversion to a case under chapter 11 or 13 · official source
• Fed. R. Bankr. P. 1019 — Converting or Reconverting a Chapter 11, 12, or 13 Case to Chapter 7 · official source
• Executive Office for United States Trustees, Handbook for Chapter 7 Trustees
• Bankr. M.D. Fla. Procedure Manual — Conversion and Reconversion
• U.S. Bankr. Ct. M.D. Ala., Procedures for Case Conversion
• CANB official page — Notice of Voluntary Conversion 13 to 7 | United States Bankruptcy Court

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