![]() ![]() The prior leading case on this subject was Marrama v. In comparison, Section 1307 (c) of the Code states:Įxcept as provided in subsection (f) of this section, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause, including. ![]() Any waiver of the right to dismiss under this subsection is unenforceable. On request of the Debtor at any time, if the case has not been converted under section 706, 1112, or 1208 of this title, the court shall dismiss a case under this chapter. Section 1307 (b) states in pertinent part: The relevant statutes are Sections 1307 (b) and (c) of the Bankruptcy Code. In Re Nichols is a significant and impactful holding in the Ninth Circuit because it informs all bankruptcy practitioners and creditors that even when a debtor has abused the bankruptcy process and engaged in bad faith, the debtor may escape the consequences of his actions by filing a motion to dismiss, which, according to In re Nichols, the court must grant. In reaching its holding, the Ninth Circuit departed from an established precedent that when the bankruptcy court is confronted with a debtor’s motion to dismiss under Section 1307 (b) on the one hand, and a creditor’s motion to convert under Section 1307 (c) on the other, the court may convert the case from Chapter 13 to a Chapter 7 proceeding if there is evidence of bad faith or abuse of the bankruptcy process by the debtor. The Circuit Court held that a debtor has an absolute right-without exception-to dismiss his Chapter 13 bankruptcy case under Section 1307 (b) of the Bankruptcy Code. ![]() On September 1, 2021, the Ninth Circuit issued its ruling in the case of In Re Nichols. ![]()
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