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"Bad Faith" Limits Bankruptcy Rights: Supreme Court

Law360 (February 22, 2007, 12:00 AM EST) -- The U.S. Supreme Court has ruled that debtors cannot convert a bankruptcy case from one chapter of the Bankruptcy Code to another if they show “bad faith” in their initial filing.

Robert Louis Marrama, who owned RLM Flooring in Massachusetts, filed for bankruptcy in March 2003 after his flooring business ran into financial problems. He initially filed a petition under Chapter 7, but then attempted to convert the filing to Chapter 13 after his trustee stated his intention to take Marrama’s vacation home in Maine as...
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