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cannot convert case if bad faith is found

Marrama v. Citizens Bank of Massachusetts (02/21/07 – No. 05-996)
Due to Chapter 7 Debtor’s “bad faith conduct” — failure to reveal all assets and misrepresentation of the value of assets — Bankruptcy Court denied the Debtor’s motion to convert to Chapter 13, This ruling sets up the issue of whehter a debtor’s right to convert to Chapter 13 is “absolute” under 706(a) of the Code. The Bankruptcy Court ruled, and the Appellate and United States Supreme Courts agreed, that 706(d) of the Code conditions the right to convert on whether that Debtor would have qualified as a Chapter 13 debtor in the first placewhere bad faith is found, the answer is “no.” The Supreme Court did not define “bad faith” conduct precisely in this context except to indicate the debtor’s conduct must be atypical.

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