Converting Between Chapters in Newark

A bankruptcy conversion changes your case from one chapter to another -- typically from Chapter 7 to Chapter 13 or vice versa. The original filing date is preserved, which matters for preference periods, exemption valuations, and the discharge eligibility timeline.

Conversion is governed by 11 U.S.C. sections 706 (Chapter 7 to 13) and 1307 (Chapter 13 to 7).

When It Makes Sense

• Saving your home: If behind on your mortgage, Chapter 13 lets you catch up through the plan
• Non-exempt property: If property exceeds New Jersey's exemptions ($27,900 (federal) homestead, $4,450 (federal) vehicle), Chapter 13 lets you keep it
• Means test failure: If you do not qualify for Chapter 7, converting to Chapter 13 avoids dismissal

Requirements

• Absolute right to convert under section 706(a) -- the court cannot deny it
• Must have regular income for a Chapter 13 plan
• Case must not have been previously converted from Chapter 13
• Must be eligible for Chapter 13 (debts within $2,750,000 limit)

When It Makes Sense

• Income loss: Job loss or reduced income makes plan payments impossible
• Changed circumstances: Divorce, medical emergency, or other life changes
• Property no longer worth saving: If surrendering your home or vehicle, Chapter 7 may be faster

Requirements

• Absolute right to convert under section 1307(a) if not previously converted
• Must qualify for Chapter 7, including the means test (New Jersey median: $68,047 for 1 person)
• Conversion may trigger trustee review of non-exempt assets

• Filing date preserved -- affects preference periods and exemption valuations
• New trustee assigned for the new chapter
• New 341 meeting under the new chapter
• Automatic stay continues through conversion
• Additional fees may apply

• Exemptions: New Jersey does not have its own bankruptcy exemptions -- filers must use the federal exemption system under 11 U.S.C. section 522(d). Conversion may change which property is at risk.
• Homestead ($27,900 (federal)): If home equity exceeds the exemption, converting to Chapter 13 may be necessary to keep it.
• Court location: Cases in the District of New Jersey are heard at 50 Walnut St., Newark, NJ 07102.
• Foreclosure: New Jersey uses judicial, typically taking 12-18 months (the slowest in the United States). Timing matters if converting to Chapter 13 to save your home.