Convert, Don’t Dismiss, That Bankruptcy Case

Young lawyers just learning bankruptcy practice seem to have missed the portions of the Bankruptcy Code that allow a debtor to convert a case under one chapter of the Code to a case under a different chapter.  When it looks like the client is in the wrong chapter, they propose to dismiss and refile under the new chapter.

Not necessary.  The Code provides, in  sections 706, 1112, and 1307, that a case can be converted, retaining the same date for the order for relief.  No new filing fee is required, though the debtor will have to pay the difference between the fee paid to initiate the case and the fee for the chapter the case is converted to.

This is even more important in the days after bankruptcy “reform” , when the duration of the automatic stay is limited in a second case to 30 days.

Related Posts Plugin for WordPress, Blogger...
  • Angie

    i understand that converting from ch. 13 to ch. 7 is much easier than the other way around. why is that?

  • The short answer is a Supreme Court case of a couple of years ago called Marama, which found that there was no absolute right to convert to 13. Marama was a bad actor and the court made a broad rule to get at this narrow slice of behavior. It’s rooted in tradition that 13 is a privilege (keeping your stuff and a slightly broader discharge).

  • gegates

    Are you charging the client for the conversion from 13 to7? If so, how much?