Post-Marrama: Allowing Chapter 13 Trustees to Unwind a Debtor’s Conversion to Chapter 7

By Brian T. Cumings, Graves, Dougherty, Hearon and Moody (Austin, TX)

For Chapter 13 trustees, the “notice conversion” permitted under Bankruptcy Rule 1017(f) can be frustrating. In a typical situation, notice conversion is an understandable and reasonable mechanism by which debtors who have tried and failed to pay their creditors through a Chapter 13 bankruptcy can shift course and proceed through Chapter 7 liquidation. In certain instances, however, notice conversion is a litigation strategy by which debtors who have acted in bad faith attempt to either lose themselves in the cracks or escape the (usually) more aggressive . . .

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