This paper discusses the conversion of a Chapter 7 bankruptcy case to Chapter 13.
According to the language of § 706, the debtor has a one time, unwaivable right to convert his or her petition from Chapter 7 to Chapter 13, as long as the debtor's Chapter 7 case is not the result of a prior conversion from a Chapter 11, 12 or 13 case. The debtor must also give notice on his or her motion to convert to a Chapter 13 case in accordance with Rule 2002(a)(5). After the notice period, the conversion takes place when the court enters an order. "Legislative history indicates a clear Congressional preference for allowance of conversion by a debtor for debt repayment." In re Kuntz, 233 B.R. 580, 582 (1st Cir.1999). The conversion can take place at any time, even after the entry of a Chapter 7 discharge.
Many conversions from Chapter 7 to 13 take place because of the operation of § 707(b). Under that code section, the debtor's Chapter 7 case is involuntarily dismissed by motion of the court or U.S. Trustee. A dismissal will occur where the debtor's debts are primarily consumer debts and the granting of Chapter 7 relief would be a substantial abuse. However, debtors have the option of conversion post-discharge, where a Chapter 7 discharge was granted. Also important to note is that a claim against the estate or the debtor which arises after the order for relief, but before conversion, will be characterized as a Chapter 13 post-petition claim.
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