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In re Knott (Case No. 21-50423) 06/24/2022

The debtors converted their chapter 7 case to one under chapter 13. The chapter 13 trustee filed a motion to dismiss or reconvert arguing that the debtors were not eligible to be debtors in chapter 13 because the amount of their debt as of the petition date exceeded the statutory limits based on the debtors’ schedules. The debtors asserted that the amount of their debt as of the petition date was not the proper inquiry for eligibility. Instead, the debtors argued that the Court should not rely on the debtors’ schedules but a combination of the debtors’ schedules, the proofs of claims filed, and potential objections to some of those claims. The Court disagreed, holding that the eligibility limits of section 109(e) are based on the amount of debt as of the petition date. The Court relied on the debtors’ sworn schedules in determining that they were ineligible and thus reconverted the case back to chapter 7.

Friday, June 24, 2022
Chapter 13 Issues