In re Tabert, Case No. 15-13805 EEB

The Debtor initially filed a chapter 7 case, but immediately converted to chapter 13 when the chapter 7 trustee expressed interest in selling the Debtor's home due to the existence of non-exempt equity. The Debtor did not file a chapter 13 plan within fourteen days after the conversion date and, as a result, the Court entered an order dismissing the case. The chapter 7 trustee and the chapter 13 trustee moved to vacate the order dismissing the case and to re-convert the case to chapter 7. The trustees asserted that the Debtor could take advantage of a larger homestead exemption by allowing his case to be dismissed and then re-filing it under chapter 7 after the effective date of an amendment to the homestead exemption statute. The Court found that its local rules were ambiguous as to whether the failure to file a chapter 13 plan may result in the dismissal of a case pursuant to the United States Trustee's Standing Motion to Dismiss Deficient Cases and that its procedures governing dismissal for failure to timely file a plan failed to satisfy the due process requirements of notice and a hearing for dismissal under § 1307(c). The Court contrasted the Bankruptcy Code's provision for automatic dismissal for the failure to file certain case commencement documents, found in § 521(i), with § 1307(c), which requires "notice and a hearing" prior to dismissal for failure to timely file a chapter 13 plan. The purpose for requiring a notice and opportunity for hearing prior to the dismissal under § 1307(c) is to allow any party who wishes to provide the court with input as to whether dismissal or conversion is in the best interests of creditors to have the opportunity to do so. Here, the only notice regarding the potential dismissal of the case was certain language in the Court's 341 meeting notice. This language failed to satisfy the minimal due process requirements of § 1307(c), therefore the Court vacated the order of dismissal pursuant to Fed. R. Civ. P. 60(b)(4) and reinstated the case.