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Advanced Control Solutions, Inc v. Orin Bret Justice

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Submitted: March 29, 2011

Before RILEY, Chief Judge, MELLOY and SHEPHERD, Circuit Judges.

Chapter 13 of the Bankruptcy Code permits an individual to discharge his debts if he “pays his creditors a portion of his monthly income in accordance with a court-approved plan.” Ransom v. FIA Card Servs., N.A., 131 S. Ct. 716, 721 (2011). By contrast, Chapter 7 of the Bankruptcy Code permits an individual to discharge his debts “following the liquidation of [his] assets by a bankruptcy trustee, who then distributes the proceeds to creditors.” Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007). In this case, Orin Justice (“Justice”) initially filed for bankruptcy protection under Chapter 13. After one of his creditors, Advanced Controls Solutions, filed objections to Justice’s Chapter 13 plan, Justice converted the case to a Chapter 7 proceeding. Following Justice’s failure to rebut a presumption of abuse arising from the means test under 11 U.S.C. § 706(b)(2), the bankruptcy court*fn1 ordered him to convert his case back to a Chapter 13 proceeding or face dismissal of his case. Justice moved to convert his case to a Chapter 13 proceeding, and the bankruptcy court granted the motion over the objection of Advanced Control Solutions. Advanced Control Solutions appealed this decision to the district court,*fn2 arguing that 11 U.S.C. § 706(a) prevents a debtor from converting his Chapter 7 proceeding back to a Chapter 13 proceeding. The district court affirmed the bankruptcy court, and Advanced Control Solutions brought this appeal. We affirm.

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