Bankruptcy Court Highlights Broader Discharge Provisions in Chapter 13 and Finds that Converting a Case from 7 to 13 to Utilize the Broader Discharge is Not Bad Faith.

Bankruptcy Court Highlights Broader Discharge Provisions in Chapter 13 and Finds that Converting a Case from 7 to 13 to Utilize the Broader Discharge is Not Bad Faith.

The United States Bankruptcy Court for the Northern District of Georgia recently denied an objection to confirmation concerning the debtors’ conversion to a chapter 13 to take advantage of the broader discharge under 11 U.S.C. § 1328.

Prepetition the debtors were counter-sued by Dale Recycling & Used Auto Parts, Inc.’s (“DRUAP”) for defamation, tortious interference with business relations, and conspiracy. The jury entered an award against the debtors for $20,000.00. The debtors originally filed a chapter 7 bankruptcy. They moved to convert their case to a chapter 13 approximately one week before the deadline for DRUAP to file an adversary proceeding to declare the debt non-dischargeable under 11 U.S.C. § 523(a)(6).

The court found distinct differences between a chapter 7 and 13 discharge for debts involving willful or malicious injury.

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