Central District Consumer Bankruptcy Attorney's Association

1. Yes
2. Yes
3. Requires motion to reconvert.
Mark Jessee
Sent from my iPhone
On Aug 26, 2013, at 6:15 PM, "Manny3vee" wrote:
> Listmates,
>
> I'd very much appreciate feedback on the below scenario.
>
> Debtor currently in a Chapter 13 can longer afford payments. Conversion to Chapter 7 is desired. However, value of principal residence has apparently increased since the time of Chapter 13 filing. At the time of Chapter 13 filing, 703 exemptions were sufficient to protect equity.
>
> Three Questions:
>
> 1) Is the purported increase in equity property of a newly created Chapter 7 estate?
> 2) If so, can the Debtor amend exemptions to protect purported equity?
> 3) Finally, if necessary, could the debtor convert back to Chapter 13 as a last resort?
>
> My Take:
>
> As to question one (1): Taken together, my reading of Section 348(f)(1)(A)&(B) leads me to concluded that the increase in equity is property of the Chapter 7 estate. Since the Code does not explicitly answer my question, I draw my inference from 348(f)(1)(B), which states that valuations of property shall only apply in case converted to Chapter 11 and 12, but not in a case under chapter 7.
>
> As to question two (2): F.R.B.P 1009(a) leads me to conclude that if the debtor has not acted in bad faith, there would be no reasonable objection by the Chapter 7 Trustee to amended exemptions.
>
> As to question three (3): Again, so long as the Debtor is acting in good faith, I don't see a reasonable objection to conversion.
>
> Any and all feedback will be greatly appreciated.
>
> Emmanuel S. Vargas
> Attorney at Law
> (818) 243-7745
>
>

The post was migrated from Yahoo.

Listmates,
I'd very much appreciate feedback on the below scenario.
Debtor currently in a Chapter 13 can longer afford payments. Conversion to Chapter 7 is desired. However, value of principal residence has apparently increased since the time of Chapter 13 filing. At the time of Chapter 13 filing, 703 exemptions were sufficient to protect equity.
Three Questions:
1) Is the purported increase in equity property of a newly created Chapter 7 estate?
2) If so, can the Debtor amend exemptions to protect purported equity?
3) Finally, if necessary, could the debtor convert back to Chapter 13 as a last resort?
My Take:
As to question one (1): Taken together, my reading of Section 348(f)(1)(A)&(B) leads me to concluded that the increase in equity is property of the Chapter 7 estate. Since the Code does not explicitly answer my question, I draw my inference from 348(f)(1)(B), which states that valuations of property shall only apply in case converted to Chapter 11 and 12, but not in a case under chapter 7.
As to question two (2): F.R.B.P 1009(a) leads me to conclude that if the debtor has not acted in bad faith, there would be no reasonable objection by the Chapter 7 Trustee to amended exemptions.
As to question three (3): Again, so long as the Debtor is acting in good faith, I don't see a reasonable objection to conversion.
Any and all feedback will be greatly appreciated.
Emmanuel S. Vargas
Attorney at Law
(818) 243-7745

The post was migrated from Yahoo.