Each state (and every trustee) is different in what they will and will not allow. That's the not-so-fun part, but before you go straight to your trustee, my advice would be to run the idea by your bankruptcy attorney.
The 4 Most Important Actions to Take During Your Chapter 13 BankruptcyEven if you're not discharged yet, there are steps you can take now to improve your credit rating. The four most important things you can do are:
5. Dispute inaccurate information appearing on your credit reports. Do this yourself or hire someone to do it for you.
6. Learn how to manage your credit differently to increase your credit scores. These are actions that you must do yourself.
7. Continue to make your Chapter 13 bankruptcy payments on time. Here's why...lenders can use your trustee payments to show a good payment history.
8. If possible, pay off your Chapter 13 bankruptcy sooner. You'll recover faster.These are the things I'd consider if I was thinking about converting to a Chapter 7 bankruptcy:
7. How much longer do I have until I finish my Chapter 13 payment plan?
8. Can I afford the monthly payment as it is now?
9. Can I finish my payment plan?
10. What does my bankruptcy attorney advise me to do?
11. What will I lose by converting to a Chapter 7 bankruptcy?
12. What will I gain by converting to a Chapter 7 bankruptcy?
You see, from a credit scoring perspective, having one bankruptcy appear on your credit reports is the equivalent of an atomic bomb. Converting to a Chapter 7 bankruptcy could be the equivalent of two atomic bombs.
However, having said that, time can heal most things. And depending on your specific circumstances, it can sometimes make sense to convert— especially if you're very proactive about your recovery.
Here are the credit guidelines of the secured bankcard program recommended for Chapter 13 Filers:• They don't care if your bankruptcy is discharged. That means, if you have an open Chapter 13 bankruptcy it doesn't matter. As long as your check clears...and they can verify you're a U.S. citizen...your approval is guaranteed.
• The annual percentage rate (APR) is 21.60% and is a competitive APR for a secured card.• Their annual fee of $20 is better than some unsecured card programs.
• There is no universal default clause. A universal default clause means that a lender can raise your rates simply because you missed payments with some other lender. This bank will not do this.
• Their minimum deposit is $500. A little higher than I would prefer, but not out of reach for most people who file Chapter 13.• Their maximum deposit is $5,000. This is great because with most secured card programs you can't efficiently use the card because you tend to get too close to the credit limit (maxing it out), which lowers your FICO credit scores.
• They will pay you .5% interest on your security deposit. This means that when your card converts to an unsecured card, you will get a check for more than you started with. Sweet!
• They do review your credit reports, so there will be a credit inquiry.