ABI Poll Dishonest Chapter 7 Debtors Do Not Have an Absolute Right to Convert Their Bankruptcy Cases to Chapter 13

ABI Poll Dishonest Chapter 7 Debtors Do Not Have an Absolute Right to Convert Their Bankruptcy Cases to Chapter 13

Contact: John Hartgen
             703-739-0800
             [email protected]

ABI POLL: DISHONEST CHAPTER 7 DEBTORS DO NOT HAVE AN ABSOLUTE RIGHT TO CONVERT
THEIR BANKRUPTCY CASES TO CHAPTER 13

May 29, 2007, Alexandria, Va. —A majority of respondents to ABI’s latest online poll agreed (72 percent) that chapter 7 debtors do not have an absolute right under §706(a) to convert to chapter 13 bankruptcy proceedings if there is pre-petition bad faith conduct. Fifty-three percent “agreed strongly,” while 19 percent “somewhat agreed” that chapter 7 debtors do not have an absolute right to convert to chapter 13 if they acted in bad faith during the pre-petition process.

Eighteen percent of respondents, however, thought that chapter 7 debtors did have an absolute right under §706(a) to convert to a chapter 13 proceeding, even if there was pre-petition bad faith conduct.  Seventeen percent “strongly disagreed” that chapter 7 debtors do not have an absolute right to convert to chapter 13 if they acted in bad faith during the pre-petition process, while 1 percent “disagreed somewhat.” Eight percent of the respondents did not know or had no opinion on the issue.

The poll is based on Marrama v. Citizens Bank of Massachusetts, No. 05-996, 549 U.S. ___ (2007), in which the Supreme Court held in a 5-4 decision that a misbehaving chapter 7 debtor does not have an absolute right to convert his case to chapter 13. The Supreme Court stated that a debtor whose case could be converted or dismissed for cause under 11 U.S.C. Sec. 1307(c) had forfeited the right to proceed under chapter 13 and was not a eligible to convert to chapter 13.

ABI members and members of the public were welcome to submit their response to the statement: “Chapter 7 debtors do not have an absolute right under §706(a) to convert to chapter 13 if there is pre-petition bad faith conduct. (Marrama v. Citizens Bank and In re Euro-American Lodging).” The latest ABI Quick Poll was open to the public for voting from May 10-24.

ABI’s weekly Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

###

ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.