Keywords: means test . Chapter 13 . conversion .
Means test required on conversion from Chapter 13.
Means Test > Not required for cases converting from Chapter 13? Chapter 7: Is Ch 7 Means Test Applicable to conversions from failed Chapter 13?13 Cases , IssueID 25 |
||||||
Ch 7 Means Test |
Ch 13 Means Test |
|||||
Topic Description:The new law can pose a catch 22 for debtors if the means test forces them into Chapter 13 although their actual disposable income is inadequate to fund a Chapter 13 plan. Some courts have held that this Catch 22 is avoided by ruling that the Chapter 7 means test is not applicable to cases "Filed under" chapter 13 and then converted to Chapter 7 Lines of Cases:
|
No Seventh Circuit cases in database on this topic
After considering the very well-reasoned arguments on both sides of this issue, the Court is ultimately persuaded by the decision of Judge Burns in In re Fox, 370 B.R. 639 (D. N.J. 2007), where, after a thorough examination of the question, the bankruptcy court found that the means test does not apply to converted debtors. In so ruling, the Court respectfully disagrees with his learned colleague from Rhode Island, whose decision in In re Perfetto articulates the arguments in favor of applying the means test to converted debtors. See generally 361 B.R. 27 (D. R.I. 2007).
"When the basis for an attack on an individual's status as a Chapter 7 debtor is the ability to pay unsecured creditors in a hypothetical Chapter 13 case, it only makes sense that the analysis involve a realistic estimation of what the debtor would be required to pay in such a case under current law."
"[I]f the Bankruptcy Code excludes certain retirement funds and loan repayments from a Chapter 13 debtor's 'disposable income', thereby protecting those funds from payment to unsecured creditors, the court can see no logical basis for including those funds in 'disposable income' when conducting a hypothetical Chapter 12 analysis unde Section 707(b)(3)."
Debtor filed for Chapter 13 relief, then won $100,000 in the state lottery four days after filing. Her case was converted to Chapter 7 at the Trustee's request, but the court refused Trustee's request to deny debtor's discharge. The court found that the lottery winnings were excluded from the bankruptcy estate because the Trustee (not the debtor) had requested the conversion to a Chapter 7, and thus Section 348 said the property was measured as of the date of the (original Chapter 13) petition.
Means test required on conversion from Chapter 13.
Debtor need not file 22A upon conversion
Means test required on conversion from Chapter 13.
After considering the very well-reasoned arguments on both sides of this issue, the Court is ultimately persuaded by the decision of Judge Burns in In re Fox, 370 B.R. 639 (D. N.J. 2007), where, after a thorough examination of the question, the bankruptcy court found that the means test does not apply to converted debtors. In so ruling, the Court respectfully disagrees with his learned colleague from Rhode Island, whose decision in In re Perfetto articulates the arguments in favor of applying the means test to converted debtors. See generally 361 B.R. 27 (D. R.I. 2007).
"When the basis for an attack on an individual's status as a Chapter 7 debtor is the ability to pay unsecured creditors in a hypothetical Chapter 13 case, it only makes sense that the analysis involve a realistic estimation of what the debtor would be required to pay in such a case under current law."
"[I]f the Bankruptcy Code excludes certain retirement funds and loan repayments from a Chapter 13 debtor's 'disposable income', thereby protecting those funds from payment to unsecured creditors, the court can see no logical basis for including those funds in 'disposable income' when conducting a hypothetical Chapter 12 analysis unde Section 707(b)(3)."
Debtor filed for Chapter 13 relief, then won $100,000 in the state lottery four days after filing. Her case was converted to Chapter 7 at the Trustee's request, but the court refused Trustee's request to deny debtor's discharge. The court found that the lottery winnings were excluded from the bankruptcy estate because the Trustee (not the debtor) had requested the conversion to a Chapter 7, and thus Section 348 said the property was measured as of the date of the (original Chapter 13) petition.
Means test required on conversion from Chapter 13.
Debtor need not file 22A upon conversion
Means test required on conversion from Chapter 13.
All Cases A to Z
If you're not familiar with what "case law" is, and how to use it, check out Chapter 7 of Nolo's LegalResearch: How to Find and Understand the Law for a guide to how to read through a case to get the parts that matter.
Also, you need to be familiar with the concept of "jurisdiction." Here are some helpful links:
When you read a case, check to make sure that the case's decision applies to your local district. Do this by looking at which court has decided the case -- either the U.S. Supreme Court, a court of appeal (listed here in large type), or a district court (listed in small type). Your local district court judge is not bound to follow the opinion of judges from other district courts, but often they look to these cases for advice. Your local district, however, is bound to follow decisions in cases from it governing circuit court. You'll see fairly few Supreme Court case here, but those cases are also binding on all districts."
NO! NO! NO! This is a start for your research. New cases are constantly being decided. I update this when I have time. This is only a fraction of the actual published opinions out there. Dozens of cases are handed down nationwide every week. I catalog interesting ones when I have time. They are meant to serve as a starting point for your research -- NOT as a comprehensive listing of the current state of the law.