Reconversion Fails, No Discharge Bankruptcy Dismissed

CONVERSION CONFUSION
In re Fry, Case No. 04-16887
October 2008 Judge Nugent

Debtor converted from 13 to 7 and then learned she was not eligible for a 7 and attempted to converted back to 13. Case dismissed as an “end run” around 7 discharge.

Digest by:  Jan Hamilton, Trustee

Debtor May Be Converted to 7 with No Discharge

DEBTORS MAY BE CONVERTED TO 7 EVEN THOUGH NOT ELIGIBLE FOR
7 DISCHARGE
In re Rogers, Case No. 08-21487
January 2009, Judge Somers

In a case in which assets may be liquidated, a 13 may be converted to a 7 even though debtors may not be eligible for a 7 discharge.

Digest by:  Jan Hamilton, Trustee

No Credit Counseling Certificate, No Bankruptcy

109(h) CREDIT COUNSELING NOT OBTAINED WITHIN 180 DAYS IS FATAL
In re Gaddis, Case No. 07-40476
June 2007, Judge Karlin
Chapter 7 case dismissed for failure to comply with 109(h), in that the credit counseling was not obtained within 180 days of the date of filing. No statutory exception was alleged. Debtor is simply not eligible to obtain title 11 relief if 109(h) is not complied with.

Digest by:  Jan Hamilton, Trustee

What Happens to Divorce Debts in Bankruptcy?

Debts in the nature of support of child or former spouse are not discharged in either chapter 7 or 13 bankruptcy.

What about property settlement debts?  If the divorce decree contains a hold harmless obligation that makes one spouse indemnify the other spouse, then the hold harmess oglibation is a separate debt to the spouse and is not dischargeable in chapter 7 bankruptcy 523(a)(5) or 523(a)(15).

The hold harmless obligations can be discharged in chapter 13 bankruptcy as long as the debt to the former spouse not a Domestic Support Obligation (DSO).  This is possible because property settlement debts under 523(a)(15) are not excepted from discharge in chapter 13 cases.  See Schuett v. Finkey, 2008 Bankr. Lexis 1555 (Bankr. D. Neb. May 21, 2008).

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