§ 53.14 — Seek Conversion or Dismissal
Revised: April 30, 2004
The Chapter 13 trustee has standing to move for conversion or dismissal of a Chapter 13 case.1 Prior to confirmation, the trustee is likely to seek conversion or dismissal if the debtor has failed to commence making timely payments required by § 1326,2 if the debtor fails to appear at the meeting of creditors3 or if the debtor has failed to file a plan.4
Based on no obvious logic, the Chapter 13 trustee probably lacks standing to seek conversion or dismissal when the ground is the failure of the debtor to file the schedules, statements and lists required to maintain the Chapter 13 case. 11 U.S.C. § 1307(c) provides that a “party in interest” may seek conversion or dismissal “for cause, including . . . .” There follows a nonexclusive list of 10 causes for conversion or dismissal. The cause in subparagraph (9) reads: “(9) only on request of the United States trustee, failure of the debtor to file . . . the information required by paragraph (1) of section 521.”5 11 U.S.C. § 521(1) requires the debtor to “file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities, a schedule of current income and current expenditures and a statement of the debtor’s financial affairs.”6 In a Chapter 13 case, the debtor satisfies § 521(1) by filing Official Bankruptcy Forms 6 and 7.7
11 U.S.C. § 1307(c)(9) was added to the Code in 1986 at the time of the nationwide expansion of the U.S. trustee program. The peculiar language seems to preclude any party in interest except the U.S. trustee from filing a motion to convert or dismiss a Chapter 13 case based on the debtor’s failure to file the creditor list, statement or schedules required by 11 U.S.C. § 521(1).8 The Chapter 13 trustee is best positioned to know when a debtor has not filed the necessary documents. The standing trustee is the party most interested in forcing conversion or dismissal when administration of the case is stalled by the debtor’s failure to perform the duty in § 521(1). There is no logic to the wording of § 1307(c)(9).
Similarly, if not in some respects more bizarre, 11 U.S.C. § 1307(c)(10) states, “only on request of the United States trustee” a Chapter 13 debtor’s failure to timely file the information required by 11 U.S.C. § 521(2) is a ground for conversion or dismissal. Section 521(2) is the provision of the Code that requires a debtor, within 30 days after the filing of a Chapter 7 petition, to file a statement of what the Chapter 7 debtor intends to do with respect to property subject to liens. Chapter 13 debtors obviously aren’t debtors under Chapter 7. Section 521(2) has no application whatsoever in a Chapter 13 case. Why Congress included in § 1307(c)(10) that (only) the U.S. trustee has standing to seek conversion or dismissal of a Chapter 13 case for the debtor’s failure to fulfill a duty that only applies in Chapter 7 cases is beyond the scope of this book.
1 11 U.S.C. § 1307(c). See In re Gillion, 36 B.R. 901 (E.D. Ark. 1983); In re White, 126 B.R. 542 (Bankr. N.D. Ill. 1991); In re McFadden, 37 B.R. 520 (Bankr. M.D. Pa. 1984); In re Faaland, 37 B.R. 407 (Bankr. D.N.D. 1984); In re Kelsey, 6 B.R. 114 (Bankr. S.D. Tex. 1980). See also § 311.2 [ Conversion on Request of Creditor or Trustee ] § 141.2 Conversion on Request of Creditor or Trustee.
2 See §§ 43.4 [ Consequences of Failure to Commence Payments ] § 44.4 Consequences of Failure to Commence Payments and 58.8 [ Ensure Debtor Commences Making Timely Payments ] § 53.9 Ensure Debtor Commences Making Timely Payments.
3 See § 42.4 [ Consequences of Failure to Attend Meeting of Creditors ] § 43.5 Consequences of Failure to Attend Meeting of Creditors.
4 See § 55.1 [ Debtor Must File a Plan ] § 51.2 Debtor Must File a Plan.
5 11 U.S.C. § 1307(c)(9) (emphasis added).
6 11 U.S.C. § 521(1).
7 See discussion of forms beginning at § 36.4 List of Creditors and Addresses.
8 See In re Slaughter, 191 B.R. 135 (Bankr. W.D. Wis. 1995) (Although there is ambiguity whether a Chapter 13 trustee has standing to move to dismiss a Chapter 13 case for failure of the debtor to file a plan under § 1307(c)(9), the trustee does have standing to seek dismissal for failure of the debtor to timely file a plan under § 1307(c)(3). “Party in interest” for § 1307(c)(3) purposes includes the Chapter 13 trustee.). But see In re Green, 141 B.R. 440, 442 (Bankr. M.D. Fla. 1992) (Although § 1307(c)(9) provides for dismissal only on the request of the U.S. trustee, “this Court is satisfied that a Chapter 13 case may be dismissed for the Debtor’s failure to comply with § 521(1) upon either the Motion of a creditor or the Court’s own Motion.”).