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Time Machine defaults to formatting a new drive to Journaled HFS+ (case-sensitive), if you set up the drive from within Time Machine itself. However, my main drive (the one Time Machine will be backing up) is case-insensitive.

Firstly, will this ever become a problem? I've seen answers which discuss the pros and cons of using case-sensitivity, and which discuss problems using a case-sensitive Time Machine disk. However, if my source disk is case--insensitive, is it ever possible for the case-sensitive Time Machine backup to get into a state where it can't copy files back to the case-insensitive drive?

If it could become a problem, what is the best way to change my drive to case-insensitive -- With the added twist that the partition is encrypted? The answers I've seen seem to imply that the only way is to create a new case-insensitive partition, and copy all the file over to it. However, because the drive contains an encrypted partition, Disk Utility limits me to only splitting the drive into 2 partitions, or merging those partitions back together; I can't delete the encrypted, case-sensitive partition without completely formatting the drive.

I don't have the space to temporarily copy my backup drive's contents over while I erase the external drive (internal drive is too small, and I don't have a third drive.)

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