Converting Between Bankruptcy Chapters: Process and Consequences

Debtors who file bankruptcy under one chapter of Title 11 of the United States Code retain the right, under defined conditions, to convert their case to a different chapter before the original case concludes. Conversion reshapes the legal framework governing the estate, alters creditor rights, changes the timeline to discharge, and can significantly affect which assets a debtor must surrender or retain. Understanding the procedural mechanics and consequences is essential because a mistimed or improper conversion can result in dismissal, loss of exemptions, or administrative complications that extend the case.

Definition and scope

Conversion in bankruptcy law is the formal transfer of a pending case from one chapter of Title 11 of the United States Code to another, without the requirement to refile. The debtor's original petition date is preserved, meaning the automatic stay and the commencement date carry forward — a detail that affects the look-back periods for preferential transfers and fraudulent transfers.

The primary statutory authority for conversion rights appears in 11 U.S.C. §§ 706, 1112, 1208, and 1307, which govern conversion from Chapter 7, Chapter 11, Chapter 12, and Chapter 13, respectively. The United States Supreme Court addressed the scope of conversion rights in Harris v. Viegelahn (2015), holding that wages earned after a Chapter 13 petition date but before conversion to Chapter 7 belong to the debtor, not the Chapter 7 estate — a ruling with direct consequences for debtors who convert mid-plan.

Conversion is distinct from dismissal. Dismissal terminates the bankruptcy case entirely and restores all parties to their pre-petition positions. Conversion transfers the case to a new chapter while preserving the bankruptcy estate and the debtor's discharge eligibility (subject to chapter-specific rules).

How it works

The conversion process follows a structured sequence governed by the Federal Rules of Bankruptcy Procedure (FRBP) and local court rules.

1. File a motion or notice of conversion. Depending on the direction of conversion and the applicable statute, the debtor either files a motion (requiring court approval) or a notice (a matter of right). A Chapter 7 debtor converting to Chapter 11, 12, or 13 must file a motion. A Chapter 13 debtor converting to Chapter 7 has a statutory right to convert at any time under 11 U.S.C. § 1307(a), requiring only a notice.

2. Pay the conversion fee. The United States Courts fee schedule sets the conversion fee. As of the schedule in effect under 28 U.S.C. § 1930, converting to Chapter 7 carries a fee of $25, while converting to Chapter 11 carries a $922 fee. Debtors should verify current amounts with the clerk of court, as these figures are subject to periodic adjustment.

3. Submit updated schedules. The debtor must file updated schedules reflecting the current state of assets, liabilities, income, and expenses. Property acquired between the original filing date and the conversion date may or may not enter the new chapter's estate depending on the direction of conversion.

4. Trustee reassignment. A new trustee may be appointed. In a conversion from Chapter 13 to Chapter 7, a Chapter 7 panel trustee replaces the Chapter 13 standing trustee. The new trustee reviews the updated schedules and administers the converted case under the rules of the new chapter.

5. Creditor notification. The court issues a new notice to creditors identifying the converted chapter, the new trustee, and any new deadlines — including, in some cases, a new deadline to file proofs of claim.

The automatic stay generally continues through conversion unless the court has already lifted it or a serial filer restriction applies.

Common scenarios

Chapter 13 to Chapter 7. This is the most frequent conversion path. A debtor who entered Chapter 13 with a confirmed repayment plan may lose income, making plan payments impossible. Converting to Chapter 7 allows a liquidation discharge, though the debtor must satisfy the means test as of the conversion date. The Chapter 7 estate in a converted case includes property the debtor acquired between the petition date and the conversion date that would have been plan property — a point clarified by Harris v. Viegelahn.

Chapter 7 to Chapter 13. A debtor may seek this conversion when a Chapter 7 trustee identifies nonexempt assets the debtor prefers to protect through a reorganization plan. This conversion requires court approval under 11 U.S.C. § 706(a), and the debtor must be eligible for Chapter 13 (subject to debt limits set by 11 U.S.C. § 109(e)).

Chapter 11 to Chapter 7. Businesses whose reorganization plan fails or whose cash flow cannot sustain operations may convert to Chapter 7 for an orderly liquidation administered by a trustee. The bankruptcy trustee in the converted Chapter 7 case liquidates remaining assets and distributes proceeds to creditors in statutory priority order.

Chapter 12 to Chapter 7. Family farmers and family fishermen operating under Chapter 12 may convert to Chapter 7 if reorganization becomes impractical, subject to the provisions of 11 U.S.C. § 1208.

Decision boundaries

Several thresholds determine whether conversion is available and strategic.

Eligibility constraints. Conversion to Chapter 13 requires the debtor to have regular income and to fall within the unsecured and secured debt ceilings set by 11 U.S.C. § 109(e). As adjusted by the Judicial Conference of the United States, the limits as of April 2022 were $465,275 in noncontingent, liquidated, unsecured debt and $1,395,875 in noncontingent, liquidated, secured debt — figures subject to triennial adjustment.

Good faith requirement. Courts examine whether conversion is sought in good faith. Conversion filed solely to frustrate creditors, delay enforcement, or manipulate exemption timing may be denied or result in dismissal with a 180-day bar on refiling under 11 U.S.C. § 109(g), a restriction examined in detail at multiple bankruptcy filings rules.

Exemption reselection. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA, Pub. L. 109-8) restricts exemption reselection upon conversion. Under 11 U.S.C. § 348(f)(2), if conversion is sought in bad faith, the estate includes all property as of the conversion date, not just property as of the original petition date — a critical distinction explored further at bankruptcy exemptions by state.

Impact on discharge. Converting from Chapter 7 to Chapter 13 after a Chapter 7 discharge creates a "Chapter 20" scenario (7 + 13 = 20). In this structure, the debtor cannot receive a Chapter 13 discharge for four years following the Chapter 7 discharge date (11 U.S.C. § 1328(f)(1)), but may still use Chapter 13 to cure mortgage arrears or address nondischargeable debts through a plan. The bankruptcy timeline shifts materially in each scenario.

Trustee and creditor rights on conversion. The direction of conversion affects whether creditors must re-file proofs of claim. Claims filed in the original case generally carry over, but the creditor claims process resets in specific circumstances under FRBP Rule 1019.

References

• Title 11, United States Code (Bankruptcy Code) — U.S. House of Representatives Office of the Law Revision Counsel
• Federal Rules of Bankruptcy Procedure — United States Courts
• Bankruptcy Court Miscellaneous Fee Schedule (28 U.S.C. § 1930) — United States Courts
• Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8 — U.S. Congress
• Judicial Conference of the United States — Debt Adjustment Figures — United States Courts
• Harris v. Viegelahn, 575 U.S. 510 (2015) — Supreme Court of the United States