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NJ Bankruptcy Attorney Explains Why Converting a Chapter 13 To A 7 May Be Beneficial

In general, any debt that is incurred after the filing of a chapter 7 or 13 is not included in the bankruptcy case. In other words, if a person obtains a personal loan after the filing of a chapter 7, the lender may pursue the debtor for the debt and the debt is not discharged through the case. Also, if a chapter 13 debtor incurs a personal loan after the filing and during the case, the debt to the lender is not eliminated by the bankruptcy filing. Whether or not the lender may collect on the debt, during the chapter 13, is outside the scope of this blog.

However, if a chapter 13 debtor converts the case to a chapter 7, the debt that was incurred after the chapter 13 filing and prior to the conversion is included in the chapter 7 case. Under such a scenario, the debtor may be able to discharge such debt, assuming the debt is dischargeable.

Another example are medical bills incurred during a chapter 13 case and before the conversion.

Please note that there are certain criteria that must be met and a number of issues that a debtor must consider when converting the case. A chapter 7 case may not provide the necessary benefits that is provided by a chapter 13.

Attorney Robert Manchel will answer your questions at (866) 503-5655.

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