Minnesota Bankruptcy Case: Means Test Does Not Apply to a Case Converted from Chapter 13 to Chapter 7

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

In re Chapman, 431 B.R. 216 (Bankr. D. Minn. 6/10/10) (Kishel, J.).

Case Summary:

Means Test Does Not Apply to a Case Converted from Chapter 13 to Chapter 7

The debtors filed a joint chapter 13 petition. They confirmed a plan, but later converted to chapter 7. The UST filed a motion to dismiss under § 707(b)(1), (2), and (3). The debtors questioned whether § 707(b)(1) even applied to their case, which had been commenced under chapter 13 and was converted to chapter 7. This order addressed only the § 707(b)(1) issue. The bankruptcy court denied the trustee’s 707(b)(1) motion and held that the plain language of the statute limited the applicability of § 707(b)(1) to cases filed under chapter 7, not those converted to chapter 7. (“After notice and a hearing, the court, . . . on a motion by the United States trustee, . . . may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, . . . if it finds that the granting of relief would be an abuse of the provisions of [chapter 7].” 11 U.S.C. § 707(b)(1).) The result was not absurd because the debtors already attempted repayment under chapter 13 but their efforts were not successful.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.

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