Dismissal of a Bankruptcy Chapter 13 Filing: A Debtor’s Unconditional Right or Subject to the Court’s Discretion Based on Bad Faith?

Abstract

Section 1307(b) of the United States Bankruptcy Code (the "Code") commands courts to dismiss chapter 13 cases upon request of the debtor. This provision currently conflicts with Code § 1307(c), which gives the court the discretion to convert a debtor's chapter 13 case to a chapter 7 bankruptcy case for specifically enumerated debtor misdeeds. Specifically, must the court dismiss a chapter 13 case upon the debtor's request even when there is a pending motion to convert the same? Bankruptcy courts are noticeably split on this question, with a slight majority holding that the court must dismiss even if a motion to convert is pending. The minority approach to this issue, holding that the court does not have to grant a debtor's motion to dismiss when there is a pending motion to convert, arouses the need to investigate how courts should resolve this issue. The plain meaning doctrine and its application to the wording of Code § 1307(b) and (c), Congress's stated intent that chapter 13 be completely voluntary, and the existence of other remedies to cure the debtor's abuse of the bankruptcy process point to a sensible resolution to the problem. When courts are faced with a debtor's motion to dismiss pursuant to Code § 1307(b), they must grant the motion even if there is a pending motion to convert under Code § 1307(c).