Legal Question in Bankruptcy in Indiana
Chapter 13 conversion to Chapter 7
In order to lend unsecured money to someone in Chapter 13 you must get the court's approval. What protection does this offer a creditor if the chapter 13 is converted to a Chapter 7?
3 Answers from Attorneys
Re: Chapter 13 conversion to Chapter 7
Obtaining court approval for an unsecured loan to a Chapter 13 debtor will give that creditor administrative priority if the case is converted to a Chapter 7. That puts you on about the same level as unpaid laborers. It's ahead of other unsecured creditors, but behind the trustee and attorneys. It's not a very secure position.
Re: Chapter 13 conversion to Chapter 7
Most likely nothing. Someone in a chapter 13 can convert to a chapter 7 at any time, and any debts incurred after the 13 was filed can be included in the converted chapter 7.
Re: Chapter 13 conversion to Chapter 7
There is a possibility that by the Court approving the new debt it could be treated as an administrative expense if there were a conversion and assets.
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