In light of the ruling of the U.S. Supreme Court in In Re Marrama, 127 S.Ct. 1105 (2007) that a debtor may forfeit the "absolute" right to convert a case from chapter 7 to another chapter pursuant to 11 U.S.C. § 706(a), such motions may be granted after consideration by the court or may be set for a hearing. Counsel should therefore not expect the immediate entry of an order of conversion. Motions to convert pursuant to § 706(a) should be served on the chapter 7 trustee, the debtor, and all parties in interest. If a hearing is set, 20 days notice is required pursuant to Bankruptcy Rule 2002.

[Conversions from chapter 13 to chapter 7 pursuant to section 1307(a) are unaffected by this announcement and remain effective upon the filing of a notice pursuant to Bankruptcy Rule 1017.]

John E. Waites

At a recent meeting the Judges discussed consistent procedures related to reaffirmation agreements and offer the following information to assist the bar and parties:

A hearing will be set to consider a reaffirmation agreement in the following circumstances:
1. Debtor is pro se or is not represented by counsel during the negotiation of the agreement. ( Local Rule 9010-1(d) includes such services in the duties of counsel for a debtor).
2. Debtor is represented by counsel but counsel will not sign the agreement recommending its approval. (Counsel may be asked to attend the hearing).
3. The reaffirmation agreement (an official form) is incomplete or important information is missing. In particular, if there is no marking indicating whether a presumption of undue hardship exists or not (box on top of first page of the form), or debtor does not complete the form, including all signatures, or state specific reasons that he can afford payments to overcome the presumption. If counsel has not properly completed the form or there appears to be a presumption but none is indicated.
4. If the judge has questions or concerns regarding the reaffirmation agreement.

If a presumption is triggered due to a shortfall in the debtors ability to pay according to Schedules I and J, and the debtor proposes to change his spending in order to create an ability to pay, a complete and full explanation should be included in Part D to avoid the necessity of a hearing. Before signing and stating that the debtor has the ability to make the payments at Part C, counsel should ensure the form is sufficiently detailed and thorough to indicate no undue hardship.

If a hearing is scheduled due to an incorrect or incomplete agreement (including the indication of a presumption when none exists) and if a corrected, amended agreement is filed before the scheduled hearing and chambers is advised, the judge may consider cancelling the hearing.

Note that exceptions apply when the creditor is a credit union or the debt is a consumer debt secured by real property. In addition, agreements must be timely filed with the court to be effective.

In instances where the debtor is not represented, an order approving or disapproving the agreement after a hearing will be entered. In instances where the debtor is represented by counsel, an order approving the reaffirmation agreement may not be necessary for the agreement to be effective. However, depending on the judge's preference, a judge may enter an order approving the agreement whether or not there is a hearing.

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