Supreme Court Reviewing Bankruptcy Law

Monday The Supreme Court heard oral arguments [transcript, PDF] in Marrama v. Citizens Bank of Massachusetts [Duke Law case backgrounder; merit briefs], 05-996, a case concerning Section 706(a) [text] of the bankruptcy code and the question of when a debtor may convert a Chapter 7 bankruptcy to a case under Chapter 13 [texts]. Marrama initially filed a bankruptcy petition under Chapter 7 but then attempted to convert his case to a Chapter 13 petition in order to preserve his interest in an $85,000 piece of property. Citizens Bank challenged the conversion, and the bankruptcy court refused to allow the conversion due to Marrama’s bad faith. This decision was upheld on appeal and was also affirmed [PDF text] by the US Court of Appeals for the First Circuit, which ruled that the bankruptcy court properly denied conversion for bad faith.

Source: Jurist

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