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In re Wiggins

April 13, 2006

IN RE: JUNIOUS J. WIGGINS AND LULA MAE WIGGINS, DEBTORS
JUNIOUS L. WIGGINS, AND LULA MAE WIGGINS, APPELLANTS
v.
LAWRENCE G, FRANK, ESQUIRE CHAPTER 7 TRUSTEE, APPELLEE



The opinion of the court was delivered by: William W. Caldwell United States District Judge

Bk. No. 1-02-05942

MEMORANDUM

I. Introduction

Before the court is an appeal by Junious L. Wiggins and Lula Mae Wiggins, the Debtors, from the March 28, 2005, order of the bankruptcy court. That order permitted the Chapter 7 Trustee a new thirty-day period to object to Debtors' exemptions after Debtors had converted their Chapter 13 case to a Chapter 7 one. The question presented is whether bankruptcy law gives the Chapter 7 Trustee the right to do so when the Chapter 13 trustee had allowed the thirty-day period to lapse without filing objections.

II. Jurisdiction and Standard of Review

We have jurisdiction to hear the appeal pursuant to 28 U.S.C. § 158(a). The appeal presents a purely legal issue, so our standard of review is plenary. See Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999).

III. Background

On October 30, 2002, Debtors filed a Chapter 13 Petition, and on December 30, 2002, their Chapter 13 plan was confirmed. On February 17, 2004, Debtors converted their case to a Chapter 7 one. On April 6, 2004, the Chapter 7 Trustee filed objections to Debtors' exemptions, objections Debtors admit were timely if a Chapter 7 trustee is entitled to a new thirty-day period for filing objections in a converted case.

In their response to the objections, Debtors argued that the Chapter 7 Trustee's objections were untimely because the Chapter 13 Trustee should have filed the objections and there was no opportunity for the Chapter 7 Trustee to do so. On March 28, 2005, the bankruptcy court rejected Debtors' argument. A hearing was held on the merits of the Trustee's objections, and on November 1, 2005, the bankruptcy court overruled all of the Trustee's objections except to the extent of $8,408.42 of Debtors' property.

IV. Discussion

There is a split of authority on whether conversion restarts the thirty-day period in which objections to a debtor's exemptions may be made. Some courts hold that there is no authority for allowing a Chapter 7 trustee in a converted case to file objections, that the time period for doing so expires when the Chapter 13 trustee fails to file objections. See, e.g., In re Bell, 225 F.3d 203 (2d Cir. 2000)*fn1 ; In re Rogers, 278 B.R. 201 (Bankr. D. Nev. 2002); In re Beshirs, 236 B.R. 42 (Bankr. D. Kan. 1999); In re Page, 240 B.R. 548 (W.D. Mich. 1999); In re Ferretti, 230 B.R. 883 (Bankr. S.D. Fla. 1999); In re Brown, 178 B.R. 722 (Bankr. E.D. Tenn. 1995). Other courts hold that the Chapter 7 trustee may file objections, that the time period for doing so restarts after conversion. See, e.g., In re Campbell, 313 B.R. 313 (B.A.P. 10th Cir. 2004); In re Hopkins, 317 B.R. 726 (Bankr. E.D. Mich. 2004); In re Mims, 249 B.R. 378 (Bankr. D.N.J. 2000); Weissman v. Carr, 173 B.R. 235 (M.D. Fla. 1994). See also In re Wolf, 244 B.R. 754 (Bank. E.D. Mich. 2000)(conversion of Chapter 11 to Chapter 7); In re Alexander, 236 F.3d 431, 432 (8th Cir. 2001)(Chapter 7 trustee's objections timely, although court noted that Chapter 13 trustee had also filed objections).

The analysis centers on the interpretation and interplay of the following statutory provisions and rules, which provide as follows. The commencement of a case under Chapter 13 constitutes an order for relief. See 11 U.S.C. § 301 ("The commencement of a voluntary case under a chapter of this title constitutes an order for relief under such chapter."). Under 11 U.S.C. § 341(a), the United States trustee must convene a meeting of creditors "[w]ithin a reasonable time after the order for relief" is entered. Fed. R. Bank. P. 2003(a) specifies for a Chapter 13 case that the meeting must take place "no fewer than 20 and no more than 50 days after the order for relief."

The conversion of a case from Chapter 13 to Chapter 7 also "constitutes an order for relief under the chapter to which the case is converted," 11 U.S.C. § 348(a), but as relevant here, the conversion "does not effect a change in the date of . . . the order for relief." Id. In pertinent part, Fed. R. Bank. P. 1019(2) provides that in a case converted from Chapter 13 to Chapter 7, there will be a new time period for filing the following: (1) a claim pursuant to Fed. R. Bank. P. 3002, (2) a complaint objecting to discharge pursuant to Fed. R. Bank. P. 4004, and (3) a complaint to obtain a determination of dischargeability of any debt pursuant to Fed. R. Bank. P. 4007.*fn2

When debtors petition for bankruptcy, they are entitled to claim certain property as exempt ...


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