In re Fox, Case No. 06-12410 (Bankr. N.J. June 1, 2007)(GMB) .
The debtor filed a Chapter 13 petition, including the required Form B22C for means testing in a Chapter 13 case. The debtor subsequently lost her job and converted to a Chapter 7 case, but did not file Form B22A, Statement of Monthly Income and Means Test required for Chapter 7 cases. The debtor filed a motion for determination that means testing does not apply to conversions to Chapter 7 and the United States Trustee opposed.
The holding —
This Court holds that the Debtor, having converted her case from one under chapter 13 to
one under chapter 7, is not subject to the means test under the plain language of § 707(b)(1) and is, thus, not required to file a Form B22A under Rule 1007(b)(4).
Some excerpts –
Section § 707(b)(1) provides authority for courts to dismiss a case, “filed by an individual
debtor under this chapter . . . or, with the debtor’s consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter.” 11 U.S.C. § 707(b)(1) (emphasis added). The language is explicit that the authority of the courts to dismiss or convert extends to debtors who “file” cases under “this chapter,” which plainly means chapter 7. This Court cannot find ambiguity in such clear and explicit language. There is nothing in the language of § 707(b)(1) that indicates that this section was meant to apply to debtors who convert a case under either chapter 13 or chapter 11 to chapter 7.
Section 707(b) is plain in its mandate that a debtor “filing” in chapter 7 be subject to the
means test computations. Throughout § 707, reference is made to a debtor’s “filing” of a case under chapter 7. Never does the language make reference to a debtor’s conversion of a case under another chapter to chapter 7 or subject the debtor to the means test if the debtor is “in” a chapter 7 case. The language is unambiguous that the means test computation required under § 707(b)(2) is required for debtors who have “filed” a case under chapter 7.
The fact that the section provides for the dismissal or conversion to chapter 13 or 11
where the court finds abuse is an indication that the drafters were contemplating the effect of conversion specifically in this subsection. If the drafters intended for cases converted to chapter 7 to be subject to this new requirement, they did not say so in the clear language of the section. Moreover, it would also seem counterintuitive to read the section to apply to those cases converted from chapter 13 where the section provides for conversion to chapter 13 as a possible consequence of a finding of “abuse.”
Section 707(b) is replete with references to the “filing” of a case under chapter 7. Section
707(b)(2), the subsection which provides the complicated calculation which constitutes the “means test,” supports this reading. While § 707(b)(2) does not make reference to a debtor’s filing, it does provide in § 707(b)(2)(A)(ii)(I) that the debtor’s monthly expenses shall be determined by IRS standards, “as in effect on the date of the order for relief. . . .” The commencement of a case under a chapter in the Bankruptcy Code, the filing date under § 301(a), constitutes the order for relief under that chapter pursuant to § 301(b). A logical and plain reading of § 707(b)(2)(A)(ii)(I) would make the point of reference for the determination of the debtor’s monthly expenses the date the petition was filed, not the date of conversion.
Rules do not create substantive law. The fact that Interim Rule 1007(b)(4) indicates that
it applies to debtors “in” a chapter 7 case does not enhance the position of the UST. This Court will not apply the words of a rule to contradict and supercede the unambiguous words of a statute.