Tag Archives: dismissal

Does a Motion To Dismiss Trump Motion to Convert

Does a Motion To Dismiss trump a Motion to ConvertDoes a Motion To Dismiss trump Motion to Convert?  After being served with the Chapter 13 Trustee’s Motion To Convert the case to Chapter 7, the Debtor filed a Motion To Voluntarily Dismiss the case.

In a recent case, the Trustee opposed the dismissal motion filed by the Debtor, noting that there appeared to be substantial undisclosed, non-exempt assets in his estate. The Debtor asserted that 1307(b) provided him an absolute right to dismiss prior to adjudication of the conversion motion. The Trustee argued that 1307(c) limited the Debtor’s right to dismiss. In re Jacobsen, 378 B.R. 805 (Bkrtcy. E.D. Tex. 2007).

Judge Rhoades noted a split of authority on this issue, with some courts holding that 1307(b) trumps subsection (c) “even where cause exits to convert the case under subsection (c).”

However, the Court found that both the language and policy of the Code require a different finding. If Congress had intended subsection (b) to prevail over subsection (c) it could have included language that the court could convert or dismiss a case “except” as provided in subsections (b) and (e).” Further, the Court found that its 105(a) powers support this reading of 1307. Mandating conversion, rather than dismissal, was in the best interest of the bankruptcy estate. Therefore, a conversion order was necessary to further the purpose of this substantive provision of the Bankruptcy Code.

Does a Motion To Dismiss trump a Motion to Convert – for more information about Bankruptcy and whether you have an option to dismiss your chapter 13 case when the trustee files a motion to convert the case to chapter 7  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

 

Dismissal of Chapter 7 Case

Dismissal of Chapter 7 CaseDismissal of Chapter 7 Case. Can the Court reject a debtor’s request to dismiss his case? The answer is yes! Here’s an example.

After a Debtor’s case was converted from Chapter 13, the Chapter 7 Trustee proposed settlement of a discrimination suit which the Debtors had belatedly disclosed in a second amendment to their schedules. The Debtors did not agree with the settlement; and moved to dismiss their case for failure to file payment advices and a statement of monthly net income within the requisite 45 days under 521. The Trustee objected and the Bankruptcy Court “excused” the Debtors’ failure to file under these circumstances. The District court reversed, finding no authority to do anything other than dismiss after the 45-day deadline. Appeal was taken to the First Circuit. In re Acosta Rivera, 557 F.3d 8 (1st Cir. 2009).

The Circuit Court noted the two opposing views. On one side, In re Parker, 351 B.R. 790 (Bkrtcy, N.D. Ga. 2006); In re Jackson, 348 B.R. 487 (Bkrtcy. S.D. Iowa 2006); In re Bonner; 374 B.R. 62 (Bkrtcy, W.D. NY 2007), finding that special circumstances can warrant nunc pro tunc relief.

On the other side, Warren v. Wirem, 378 B.R. 640, (Bkrtcy, N.D. Cal. 2007) and In re Hall, 368 B.R. 640 (Bkrtcy, W.D. Tex 2007), holding that the Court must dismiss the case after expiration of the 45 days.

The First Circuit found that neither approach “satisfies both the head and heart in equal measure.” Acknowledging that the stricter reading might appear to address a congressional effort to reduce the escalation of bankruptcy filings, the Court also found that Congress, through the enactment of BAPCPA, “was not bent on placing additional weapons in the hands of abusive debtors.”

Thus, the Court held that “where…there is no continuing need for the information or a waiver is needed to prevent automatic dismissal from furthering a debtor’s abusive conduct, the Court has discretion to take such action…The great divide in 521 is between information that is required and information that is not. The Act allows courts to do the sifting suggested by that divide without rigid adherence to the 45-day deadline.

Dismissal of Chapter 7 Case – for more information about Bankruptcy and if you are able to dismiss a chapter 7 case after you file it  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.