Expert: Terry Leeders - 4/16/2009

Question
My husband and I are currently in C13.  His income has gone down and we lost our house.  We cannot afford to pay the trustee payments.  We live in Illinois and our income is below $68,000.  Can we convert to C7?  Also, since the house is gone, the trustee is holding over $5,000 in escrow.  Can we claim that back with the C7?

Answer
Converting is always an option if you haven't filed a chapter 7 in the last 8 years.  If your budget is tight, and you don't have any assets that the court can go after, then it could be a good option to convert, discharge the remaining unsecured debts and get a fresh start in a couple months.  The money held by the trustee is usually disbursed a few times a month, so that will normally still be sent to creditors.