Beware when you Convert from 13 to 7

One of the benefits of filing a chapter 13 bankruptcy is that it can be dismissed or converted to a chapter 7 bankruptcy at any time. However, care needs to be taken to insure that a bankruptcy filer or debtor does not lose assets in the process. In the recent case of In re Goins, Judge Brian Kenney of the United States Bankruptcy Court for the Eastern District of Virginia ruled that, when a case was converted to a chapter 7 from a chapter 13, any increase in the value of a house during the course of a chapter 13 case was property of the estate which would not be kept by the debtors, but would instead go to pay creditors. The court held that the debtors were entitled only to the amount of principal which they were able to pay off during the time that that the 13 case was pending.

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