Conversion from Chapter 13 to 7 Occurs Automatically Upon Filing a Notice or Motion, by Operation of Law

Conversion from Chapter 13 to 7 Occurs Automatically Upon Filing a Notice or Motion, by Operation of Law

Debtor’s counsel announced that he had filed a Motion to Convert Case to Chapter 7 under Section 1307(a). He also announced that he had filed an Application for Compensation for his firm, seeking $3,578.16.

Counsel for the Debtor argued that, although this Court’s General Order 18-2015 (the “General Order”) expressly provides that a maximum of $2,000 of the funds on hand with the Chapter 13 trustee in a case that is converted from Chapter 13 to Chapter 7 may be paid to debtor’s counsel for its fees upon conversion, if a fee application is filed timely and prior to conversion, additional fees beyond $2,000 can be requested.

Counsel for the Chapter 13 Trustee  argued at the General Order does not allow for any compensation above $2,000 in a converted case, even upon the timely filing of a fee application. The Trustee also argued that the conversion to Chapter 7 cannot be delayed by setting a motion to convert for hearing.

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