Can a chapter 7 debtor voluntarily dismiss her own case?

amount of equity in the house to unsecured creditors over three to five years. The

Bankruptcy Code allows a debtor to convert a case from Chapter 7 to Chapter 11, 12, or 13

at any time as long as the case was not previously converted from another chapter. 11

U.S.C. § 706(a). A debtor’s right to convert is absolute in the absence of extreme

circumstances “amounting to bad faith, imposition on the Court’s jurisdiction, abuse of

process, or other gross inequity. . . .” 

In re Spencer

, 137 B.R. 506, 514-15 (Bankr. N.D.

Okla. 1992). Significantly, no such conversion was sought here by the Debtor.

bankruptcy process. 

The Trustee objects to the dismissal on the basis that a Chapter 7 

A Chapter 7 case can only be dismissed for “cause” under 11 U.S.C. § 707(a).  

In re  Watkins

 , 229 B.R. 907, 908 (Bankr. N.D. Ill. 1999). A Chapter 7 debtor does not have an

absolute statutory right to voluntarily dismiss a Chapter 7 bankruptcy petition like a Chapter

13 debtor has under 11 U.S.C. § 1307(b). Section 707(a) provides as follows:

(a) The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including–

(1) unreasonable delay by the debtor that is prejudicial to creditors;

(2) nonpayment of any fees and charges required under chapter 123 of title 28 [28 U.S.C. §§ 1911 et seq.]; and

(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional

time as the court may allow after the filing of the petition commencing such case, the

information required by paragraph (1) of section 521, but only on a motion by the

United States trustee. 

11 U.S.C. § 707(a). Thus, a debtor does not have an absolute right to dismiss a Chapter 7

case even if begun on a voluntary petition.  

Turpen v. Eide (In re Turpen) , 244 B.R. 431, 434 (B.A.P. 8th Cir. 2000);Leach v. United States (In re Leach) , 130 B.R. 855, 857 n.5 (B.A.P. 9th Cir. 1991); Watkins, 229 B.R. at 908; In re Haney , 241 B.R. 430, 432 (Bankr. E.D. Ark. 1999). Schwartz v. Geltzer (In re Smith) , 507 F.3d 64, 72 (2d Cir. 2007);  Turpen, 244 B.R. at 434; Watkins , 229 B.R. at 909. Federal Rule of Bankruptcy Procedure 1017(a) mandates that a motion for dismissal by a debtor must be predicated on cause and may only be granted after notice and a hearing. FED. R. BANKR . P. 1017(a).Indus. Ins. Servs., Inc. v. Zick (In re Zick) , 931 F.2d 1124, 1126 (6th Cir. 

1991); 

Watkins, 229 B.R. at 908; Kirby v. Spatz (In re Spatz) , 221 B.R. 992, 994 (Bankr. M.D. Fla. 1998). The decision whether to grant a motion to dismiss a Chapter 7 case lies within the discretion of the bankruptcy court.   Peterson v. Atlas Supply Corp. (In re Atlas Supply Corp.) , 857 F.2d 1061, 1063 (5th Cir. 1988); Eastman v. Eastman (In re Eastman), 188 B.R. 621, 624 (B.A.P. 9th Cir. 1995); Turpen, 244 B.R. at 433. A Chapter 7 trustee has standing to oppose a debtor’s request for dismissal.   In re Stephenson , 262 B.R. 871, 873 n.1 -7-  

The Debtor urges the Court to adopt the test for voluntary dismissal set forth in

should generally be granted “in all but extraordinary situations” unless a creditor shows that

“plain legal prejudice” to creditors would result. 74 B.R. 685, 690 (Bankr. E.D. Pa. 1987).

The 

Geller case, which reviewed dismissal motions under both §§ 707 and 1112(b), has been 

criticized by courts in several subsequent decisions. 

See Jabarin , 395 B.R. at 340 n.18 (continued…)Watkins , 229 B.R. at 908. 

In construing § 707(a), courts have refused to dismiss a Chapter 7 case where the

dismissal would cause some plain legal prejudice to the creditors. 

In re Higbee,

ordinarily be denied.” 

 The debtor has the burden of proving cause for voluntary dismissal of the Chapter 7 petition.  

 In re Jabarin , 395 B.R. 330, 337 (Bankr. E.D. Pa. 2008). Even if the debtor can show cause, 

 the court may deny the motion if there is a showing of prejudice to creditors.   Turpen , 244  B.R. at 435. Thus, in order for a debtor’s motion to dismiss to be granted, the debtor must Geller plain legal prejudice test is “not consistent with the substantial body of case law that has developed under § 707(a) for assessing voluntary motions to dismiss chapter 7 bankruptcy cases. . . .”);  In re Mech. Maint., Inc., 128 B.R. 382, 388 (Bankr. E.D. Pa. 1991) (finding that the Geller court’s interpretation requiring the creditor to demonstrate “plain legal prejudice” was in error). This Court declines to follow Geller’s authority for the proposition that a debtor’s request for a voluntary dismissal of the Chapter 7 case should be granted “in all but extraordinary situations.” 74 B.R. at 690. constitute such cause, nor does debtor’s right to convert to Chapter 13 of the Bankruptcy Code.”  requires a balancing of the interests of the debtor and the creditors. Id.; see also Hickmanv. Hana (In re Hickman), 384 B.R. 832, 841 (B.A.P. 9th Cir. 2008) (stating that “the totality of the circumstances” should be considered in evaluating cause for dismissal and plain legal prejudice). Courts have considered the following general factors when determining whether there is sufficient cause to justify dismissal: (1) whether dismissal is in the best interest of the debtor; (2) whether dismissal is in the best interest of the creditors; (3) whether dismissal would result in an abuse or manipulation of the system; and (4) whether dismissal is justified by compelling equitable principles.  , 58 B.R.  923, 925-26 (Bankr. S.D.N.Y. 1986).Turpen , 244 B.R. at 434. “While these questions may inform the § 707(a) inquiry into whether ‘cause’ exists for voluntary dismissal, they are questions that are not best answered in the abstract. Rather, they should be resolved on a case-by-case basis in the context of the specific facts presented.”  Jabarin, 395 B.R. at 341. “In its simplest terms, the test turns on whether or not the dismissal is in the best interests of the debtor and the creditors of the estate, . . . with particular emphasis on whether the dismissal would be prejudicial to creditors.”  In re Aupperle , 352 B.R. 43, 46 (Bankr. D.N.J. 2005). “In deciding whether to 

exercise its discretion and grant a Chapter 7 debtor’s motion to dismiss the debtor’s case, the

court’s primary consideration is whether dismissal is in the best interest of the creditors and

 also if those interests will be protected outside bankruptcy.”

 Courts are not impressed with complaints of attorney negligence, lack of representation, or errors in judgment by debtors when considering motions for voluntarily dismissal. 

In re Haque , 256 B.R. 352, 354 (Bankr. D. Mass. 2000).See In re Klein, 39 B.R. 530 (Bankr. E.D.N.Y. 1984) (denying motion to dismiss 

In re Martin, 30 B.R. 24 (Bankr. E.D.N.C. 1983) (denying motion to 

 221 B.R. at 994.  

That position is based upon the House and Senate Reports on this provision which state:

The section does not contemplate, however, that the ability of the debtor to repay his debts in whole or in part constitutes adequate cause for dismissal. To permit dismissal on that ground would be to enact a non-uniform mandatory chapter 13 in lieu of the remedy of bankruptcy.

 H.R.R EP.NO. 95-595, at 380 (1977), as reprinted in 1978 U.S.C.C.A.N. 5963, 6336; S.REP. NO. 95-989, at 94 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787, 5880. Thus, “[i]t is well 

 Spatz, 221 B.R. at 994. 

established and supported by the [l]egislative [h]istory that the fact that a debtor is willing and able to pay his debts outside of bankruptcy does not constitute adequate cause for dismissal under section 707(a)[.]”

Some courts have held that the legislative history of § 707(a) does not apply when

it is the debtor, as opposed to the creditor or another party who seeks dismissal on the

 grounds of ability of the debtor to repay debts outside the bankruptcy process.  

Smith , 507 F.3d at 73;  Aupperle , 352 B.R. at 47 (“[T]he entire excerpt [of legislative history] refers to circumstances justifying cause for involuntary dismissal sought by a party other than theSmith, this does not mean that a debtor’s 

ability to repay debts is per se grounds for dismissal; rather, the significance of the debtor’s

ability to pay is merely a part of the required inquiry into whether dismissal would be in the

best interest of all parties in interest. 507 F.3d at 74.

To succeed on her motion, the Debtor must show cause and demonstrate whydismissal is justified. 

See Turpen, 244 B.R. at 434. The Debtor seeks to dismiss because of 

a mistaken belief that her residence would be completely exempt. The Debtor additionally

claims to have the ability and intent to pay her creditors outside the context of the

bankruptcy case. The Court does not find these arguments persuasive. First, the Debtor’s

mistaken belief that she could retain her residence and a receive a discharge of all her

 dischargeable debts does not constitute “cause” within the meaning of § 707(a).  See St. 

jurisdiction of the Bankruptcy Court, the [Debtor’s] regret over that decision . . . does not

 constitute ‘cause’ justifying dismissal of her case.”

 Second, the ability of the Debtor to pay her debts does not constitute cause for dismissal.

 In re Taylor, No. 01-84995, 2002 WL 32001700, at *2 (Bankr. C.D. Ill. Mar. 27, 2002).

was unable to pay her debts. The Debtor’s Schedules do not show that she has the ability

to pay her debts outside of bankruptcy. Significantly, this is not a case where the Debtor has

 established an additional source of income to assist with her debts.

at 46, 48 (finding sufficient cause to warrant dismissal where it was the debtor’s first

bankruptcy filing, there were no pre-petition collection efforts, the debtor was unaware that

she might lose her residence through the Chapter 7 bankruptcy filing, the debtor had

established an additional source of income to assist with her debts, and there was an

insufficient basis in the record to conclude that creditors would be prejudiced by the

dismissal). It is not at all clear that any sources of funding alleged by the Debtor (i.e., family

gifts) will allow her to pay her debts outside of bankruptcy. The Debtor’s allegations that

she has “sought employment” and “contacted family members” are not reliable evidence of

any additional income or a change in her circumstances. The Debtor has not presented a

concrete or viable plan for paying her creditors outside of bankruptcy. 

 324 B.R. at 29 (reversing the bankruptcy court’s decision granting the motion to dismiss where debtor In re Hull, 339 B.R. 304 (Bankr.

failed to present a detailed plan concerning how she would use her non-exempt settlement

annuity to pay creditors outside of bankruptcy).

Finally, the Debtor’s reasons for dismissal do not outweigh the prejudice that would

 result to her creditors. The Debtor, citing the case

 E.D.N.Y. 2006), argues that creditors are generally not prejudiced by dismissal because theyId. at 309. Hull  involved a pro se debtor who had a potential personal injury claim

will no longer be stayed from resorting to the state courts to enforce and realize upon their

 claims. 

 that she had not scheduled as an asset. Id. at 306. The potential claim was the bankruptcy

 estate’s only asset and if successful may have provided a distribution to the debtor’sd. However, the value of the claim had not been determined and it was unknown

 creditors. I

 whether an action on the claim had been commenced.Id at 309. The debtor also had

 concerns for her personal safety which required her to relocate outside the district. 

Id. at 308. The court considered the “reasonable pre-petition legal expectations and entitlementsId. at 309.

of a debtor’s creditors” and found that under the circumstances, the interests of the creditors

would not be prejudiced by dismissal despite the loss of an opportunity to receive a

distribution that only existed because of the bankruptcy process. 

 In this case, the Debtor’s residence was not an unscheduled, speculative asset. TheSee id.  It is the perceived non-exempt portion of the equity in the Debtor’s residence that the Trustee seeksSee In re Baumgarten, 154 B.R. 66, 69 (Bankr. S.D. Ohio 1993). One consummated sale by the Trustee using the bankruptcyFulton, 339 B.R. at 701; see also In re Cink, No. 06-40019, 2007 WL 601585, at *3 (Bankr. D.S.D. Feb. 21, 2007) (stating

value of the property was listed, and the Debtor was represented by counsel at the time the

petition was filed. The Trustee’s arguments and objections are based on the “ reasonable

 pre-petition legal expectations and entitlements” of the Debtor’s creditors.

to realize through a sale and pay the creditors’ allowed claims.

According to the Debtor, if the case is dismissed and each creditor obtained a

judgment against her, which later would result in liens against her residence, each creditor

may be satisfied in full from a sale of the property outside of the bankruptcy process. Here,

however, the sale of the Debtor’s residence outside of the bankruptcy process is not

guaranteed to occur. There is no assurance that if a sale occurs, the proceeds will be used

for the benefit of the Debtor’s unsecured creditors. If a dismissal is granted, the Debtor will

remain subject to all creditors’ individual collection remedies that exist under nonbankruptcy

law. This may result in a reordering of priorities or delays in payments. This is not cause

to dismiss the case, but is grounds for retaining jurisdiction so the creditors may be assured

 of an equitable distribution of the Debtor’s assets.

process is certainly more efficient than multiple separate creditor execution sales.

“Absent court oversight of payment [of creditors by the debtor], creditors are

prejudiced. They bear the risk of not being paid, a very unlikely risk in a chapter 7 case.

The method for insuring payment of creditors out of any non-exempt portion of the estate’s

 assets is through administration under the trustee system.” 

 that creditors are “entitled to full payment of their allowed claims to the extent estate fundsSee Turpen, 244 B.R. at 434.Maixner v. Surratt-States (In re Maixner), 288 B.R. 815, 818 (B.A.P 8th Cir. 2003). The Trustee’s proposed sale of the Debtor’sSee In re Szekely, 936 F.2d 897 (7th Cir. 1991). The Debtor seeks to terminate the potential bankruptcySee Jabarin, 395 B.R. at 343.

are available. Anything less is prejudicial to creditors. The statutory duty to insure an

appropriate distribution lies with Trustee. . . .”). The Debtor’s creditors will be prejudiced

by dismissal of this case, and they have already been stayed in their collection remedies via

11 U.S.C. § 362(a). The Debtor has limited income and resources and there is no guarantee

that creditors will receive payment outside of the bankruptcy process. The Debtor’s vow

 to pay her creditors in the future does not dispel such prejudice. 

Moreover, the Debtor’s desire to save the equity in her home to the detriment of her creditors is not grounds for a voluntary dismissal.

residence appears to represent the creditors’ best opportunity for obtaining satisfaction of

their claims. The cause asserted by the Debtor for dismissing her case is the fear that she

will lose her residence if the case is not dismissed and the Trustee is permitted to pursue the

sale of the property. She is only entitled to her homestead exemption, not the residence

itself, which is part of the bankruptcy estate under 11 U.S.C. § 541. It is the equity that may

be realized from the potential sale of the residence, after satisfaction of the homestead

exemption claim and unavoidable liens encumbering the residence, with which the Trustee

seeks to pay administrative priority and other allowed unsecured claims.

administration of the estate’s assets, but she has not presented any credible source for paying

her creditors outside of bankruptcy. In these circumstances, the balance of competing 

interests tips in favor of the creditors.

 IV. CONCLUSIONFor the foregoing reasons, the Debtor’s motion is insufficient in light of the Trustee’s

objection. However, she has waived her discharge and the Trustee has consented to the

dismissal of the case on the condition of payment of the agreed administrative expenses.

This Opinion constitutes the Court’s findings of fact and conclusions of law in

accordance with Federal Rule of Bankruptcy Procedure 7052. 

See Cohara,

See Aupperle, 352 B.R.  

See Cohara

even though debtor asserted he was not fully advised of the implications of commencing a bankruptcy case);  dismiss because the debtor was represented by counsel despite her assertion that counsel failed to explain the effects of filing a bankruptcy petition);   

Watkins, 229 B.R. at 909. Determining whether cause exists to dismiss a case 

See Watkins, 229 B.R. at 909; In re Schwartz

show adequate “cause” per § 707(a) and that such dismissal will cause no prejudice to

 creditors.   at 434-35.  

Sicherman v. Cohara (In re Cohara), 324 B.R. 24, 28 (B.A.P. 6th Cir. 2005);