MARRAMA v. CITIZENS BANK OF MASSACHUSETTS et al.

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365 OCTOBER TERM, 2006
Syllabus
MARRAMA v. CITIZENS BANK OF MASSACHUSETTS
et al.
certiorari to the united states court of appeals for
the first circuit
No. 05–996. Argued November 6, 2006—Decided February 21, 2007
In filing his petition under Chapter 7 of the Bankruptcy Code, petitioner
Marrama misrepresented the value of his Maine property and that
he had not transferred it during the preceding year. Respondent
DeGiacomo, the trustee of Marrama’s estate, stated his intention to re
cover the Maine property as an estate asset. Thereafter, Marrama
sought to convert the proceeding to Chapter 13, but the trustee and
respondent bank, Marrama’s principal creditor, objected, contending
that the request to convert was made in bad faith and would constitute
an abuse of the bankruptcy process. The Bankruptcy Judge denied
Marrama’s request, finding bad faith. Affirming, the First Circuit’s
Bankruptcy Appellate Panel rejected Marrama’s argument that he had
an absolute right to convert under § 706(a) of the Bankruptcy Code,
which provides that a Chapter 7 debtor “may convert a case” so long as
it has not been converted previously, and that a waiver of the right to
convert is unenforceable. The First Circuit also rejected that argu
ment, emphasizing, inter alia, that a bankruptcy court has the authority
to dismiss a Chapter 13 petition based on a debtor’s bad faith, and that
a first-time motion to convert a Chapter 7 case to Chapter 13 should not
be treated differently from the filing of a Chapter 13 petition in the
first instance.
Held: Marrama forfeited his right to proceed under Chapter 13. The
broad description of the right to convert as “absolute” in Senate and
House Committee Reports fails to give full effect to the express limi
tation of § 706(d), which provides that “a case may not be converted to
a case under another chapter of this title unless the debtor may
be a debtor under such chapter.” That text expressly conditioned
Marrama’s right to convert on his ability to qualify as a Chapter 13
“debtor.” Marrama does not qualify as such a debtor under § 1307(c),
which provides that a Chapter 13 proceeding may be either dismissed
or converted to a Chapter 7 proceeding “for cause.” Bankruptcy courts
routinely treat dismissal for prepetition bad-faith conduct as implicitly
authorized by the words “for cause,” and a ruling that an individual’s
Chapter 13 case should be dismissed or converted to Chapter 7 because

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366 MARRAMA v. CITIZENS BANK OF MASS.
Syllabus
of bad faith is tantamount to a ruling that the individual does not qualify
as a Chapter 13 debtor. Congress gave “ ‘honest but unfortunate debt
or[s],’ ” Grogan v. Garner, 498 U. S. 279, 287, the chance to repay their
debts should they acquire the means to do so, and § 706(a) protects a
debtor from being forced to waive that right. However, a provision
protecting a borrower from waiver is not a shield against forfeiture.
Neither § 706 nor § 1307(c) limits a court’s authority to take appropriate
action in response to fraudulent conduct by the atypical litigant who has
demonstrated that he is not entitled to the relief available to the typical
debtor. On the contrary, bankruptcy judges’ broad authority to take
necessary or appropriate action “to prevent an abuse of process” de
scribed in Code § 105(a) is adequate to authorize an immediate denial of
a § 706 motion to convert in lieu of a conversion order that merely post
pones the allowance of equivalent relief and may give a debtor an oppor
tunity to take action prejudicial to creditors. Pp. 371–376.
430 F. 3d 474, affirmed.
Stevens, J., delivered the opinion of the Court, in which Kennedy,
Souter, Ginsburg, and Breyer, JJ., joined. Alito, J., filed a dissenting
opinion, in which Roberts, C. J., and Scalia and Thomas, JJ., joined,
post, p. 376.
David G. Baker argued the cause for petitioner. With
him on the briefs was Jeffrey A. Kitaeff.
G. Eric Brunstad, Jr., argued the cause for respondents.
With him on the brief for respondent Citizens Bank of Mas
sachusetts were Rheba Rutkowski and William C. Heuer.
Respondent Mark G. DeGiacomo filed a brief pro se. With
him on the brief were Olga L. Bogdanov and Taruna Garg.
Lisa S. Blatt argued the cause for the United States as
amicus curiae urging affirmance. With her on the brief
were Solicitor General Clement, Deputy Solicitor General
Hungar, P. Matthew Sutko, and Knight Elsberry.*
*Seth P. Waxman and Craig Goldblatt filed a brief for the National
Association of Consumer Bankruptcy Attorneys as amicus curiae urging
reversal.
Lynne F. Riley filed a brief for the National Association of Bankruptcy
Trustees as amicus curiae urging affirmance.

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367 Cite as: 549 U. S. 365 (2007)
Opinion of the Court
Justice Stevens delivered the opinion of the Court.
The principal purpose of the Bankruptcy Code is to grant
a “ ‘fresh start’ ” to the “ ‘honest but unfortunate debtor.’ ”
Grogan v. Garner, 498 U. S. 279, 286, 287 (1991). Both Chap
ter 7 and Chapter 13 of the Code permit an insolvent individ
ual to discharge certain unpaid debts toward that end.
Chapter 7 authorizes a discharge of prepetition debts follow
ing the liquidation of the debtor’s assets by a bankruptcy
trustee, who then distributes the proceeds to creditors.
Chapter 13 authorizes an individual with regular income to
obtain a discharge after the successful completion of a pay
ment plan approved by the bankruptcy court. Under Chap
ter 7 the debtor’s nonexempt assets are controlled by the
bankruptcy trustee; under Chapter 13 the debtor retains
possession of his property. A proceeding that is commenced
under Chapter 7 may be converted to a Chapter 13 proceed
ing and vice versa. 11 U. S. C. §§ 706(a), 1307(a) and (c).
An issue that has arisen with disturbing frequency is
whether a debtor who acts in bad faith prior to, or in the
course of, filing a Chapter 13 petition by, for example, fraudu
lently concealing significant assets, thereby forfeits his right
to obtain Chapter 13 relief. The issue may arise at the out
set of a Chapter 13 case in response to a motion by creditors
or by the United States trustee either to dismiss the case or
to convert it to Chapter 7, see § 1307(c). It also may arise
in a Chapter 7 case when a debtor files a motion under
§ 706(a) to convert to Chapter 13. In the former context,
despite the absence of any statutory provision specifically
addressing the issue, the federal courts are virtually unani
mous that prepetition bad-faith conduct may cause a forfeit
ure of any right to proceed with a Chapter 13 case.1 In the
1 See, e. g., In re Alt, 305 F. 3d 413, 418–419 (CA6 2002); In re Leavitt,
171 F. 3d 1219, 1224 (CA9 1999); In re Kestell, 99 F. 3d 146, 148 (CA4 1996);
In re Molitor, 76 F. 3d 218, 220 (CA8 1996); In re Gier, 986 F. 2d 1326,
1329–1330 (CA10 1993); In re Love, 957 F. 2d 1350, 1354 (CA7 1992); In re
Sullivan, 326 B. R. 204, 211 (Bkrtcy. App. Panel CA1 2005) (per curiam).

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368 MARRAMA v. CITIZENS BANK OF MASS.
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latter context, however, some courts have suggested that
even a bad-faith debtor has an absolute right to convert at
least one Chapter 7 proceeding into a Chapter 13 case even
though the case will thereafter be dismissed or immediately
returned to Chapter 7.2 We granted certiorari to decide
whether the Code mandates that procedural anomaly. 547
U. S. 1191 (2006).
I
On March 11, 2003, petitioner, Robert Marrama, filed a vol
untary petition under Chapter 7, thereby creating an estate
consisting of all his property “wherever located and by
whomever held.” 11 U. S. C. § 541(a). Respondent Mark
DeGiacomo is the trustee of that estate. Respondent Citi
zens Bank of Massachusetts (hereinafter Bank) is the princi
pal creditor.
In verified schedules attached to his petition, Marrama
made a number of statements about his principal asset, a
house in Maine, that were misleading or inaccurate. For in
stance, while he disclosed that he was the sole beneficiary of
the trust that owned the property, he listed its value as zero.
He also denied that he had transferred any property other
than in the ordinary course of business during the year pre
ceding the filing of his petition. Neither statement was
true. In fact, the Maine property had substantial value, and
Marrama had transferred it into the newly created trust for
no consideration seven months prior to filing his Chapter 7
petition. Marrama later admitted that the purpose of the
transfer was to protect the property from his creditors.
After Marrama’s examination at the meeting of creditors,
see 11 U. S. C. § 341, the trustee advised Marrama’s counsel
that he intended to recover the Maine property as an asset
of the estate. Thereafter, Marrama filed a “Verified Notice
2 See, e. g., In re Martin, 880 F. 2d 857, 859 (CA5 1989); In re Croston,
313 B. R. 447 (Bkrtcy. App. Panel CA9 2004); In re Miller, 303 B. R. 471
(Bkrtcy. App. Panel CA10 2003).

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Opinion of the Court
of Conversion to Chapter 13.” Pursuant to Federal Rule of
Bankruptcy Procedure 1017(f)(2), the notice of conversion
was treated as a motion to convert, to which both the trustee
and the Bank filed objecti ons. Rely ing primarily on
Marrama’s attempt to conceal the Maine property from his
creditors,3 the trustee contended that the request to convert
was made in bad faith and would constitute an abuse of the
bankruptcy process. The Bank opposed the conversion on
similar grounds.
At the hearing on the conversion issue, Marrama explained
through counsel that his misstatements about the Maine
property were attributable to “scrivener’s error,” that he
had originally filed under Chapter 7 rather than Chapter 13
because he was then unemployed, and that he had recently
become employed and was therefore eligible to proceed
under Chapter 13.4 The Bankruptcy Judge rejected these
3 The trustee also noted that in his original verified schedules Marrama
had claimed a property in Gloucester, Mass., as a homestead exemption,
see 11 U. S. C. § 522(b)(2); Mass. Gen. Laws, ch. 188, § 1 (West 2005), but
testified at the meeting of creditors that he did not reside at the property
and was receiving rental income from it, App. 71a–72a. Moreover, when
asked at the meeting whether anyone owed him any money, Marrama re
sponded “No,” id., at 50a, and in response to a similar question on Schedule
B to his petition, which specifically requested a description of any “tax
refunds,” Marrama indicated that he had “none,” Supp. App. 6. In fact,
Marrama had filed an amended tax return in July 2002 in which he claimed
the right to a refund, and shortly before the hearing on the motion to
convert, the Internal Revenue Service informed the trustee that Marrama
was entitled to a refund of $8,745.86, App. 30a–31a.
4 The parties dispute the accuracy of this representation. The trustee’s
brief notes that Schedule I to Marrama’s original petition indicates that
he had been employed by a flooring company at the time the case was
filed. See Brief for Respondent Mark G. DeGiacomo 10, n. 7 (citing Supp.
App. 18, 30). Marrama’s counsel stated during oral argument, however,
that the income listed in Schedule I represented an estimate based on
employment that had not yet begun. Tr. of Oral Arg. 24. Since the suf
ficiency of the evidence of bad faith is not at issue, we may assume that
Marrama did have more income available when he sought to convert than
when he commenced the Chapter 7 case.

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370 MARRAMA v. CITIZENS BANK OF MASS.
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arguments, ruling that there is no “Oops” defense to the con
cealment of assets and that the facts established a “bad faith”
case. App. 34a–35a. The judge denied the request for
conversion.
Marrama’s principal argument on appeal to the Bank
ruptcy Appellate Panel for the First Circuit 5 was that he
had an absolute right to convert his case from Chapter 7 to
Chapter 13 under the plain language of § 706(a) of the Code.
The panel affirmed the decision of the Bankruptcy Court.
It construed § 706(a), when read in connection with other
provisions of the Code and the Bankruptcy Rules, as creating
a right to convert a case from Chapter 7 to Chapter 13 that
“is absolute only in the absence of extreme circumstances.”
In re Marrama, 313 B. R. 525, 531 (2004). In concluding
that the record disclosed such circumstances, the panel relied
on Marrama’s failure to describe the transfer of the Maine
residence into the revocable trust, his attempt to obtain a
homestead exemption on rental property in Massachusetts,
and his nondisclosure of an anticipated tax refund.
On appeal from the panel, the Court of Appeals for the
First Circuit also rejected the argument that § 706(a) gives
a Chapter 7 debtor an absolute right to convert to Chapter
13. In addition to emphasizing that the statute uses the
word “may” rather than “shall,” the court added:
“In construing subsection 706(a), it is important to bear
in mind that the bankruptcy court has unquestioned au
thority to dismiss a chapter 13 petition—as distin
guished from converting the case to chapter 13—based
upon a showing of ‘bad faith’ on the part of the debtor.
We can discern neither a theoretical nor a practical rea
son that Congress would have chosen to treat a first
5 The judicial council of any circuit is authorized by statute to establish
a bankruptcy appellate panel service, comprising bankruptcy judges, to
hear appeals from the bankruptcy courts with the consent of the parties.
See 28 U. S. C. § 158(b); Connecticut Nat. Bank v. Germain, 503 U. S. 249,
252 (1992). The First Circuit has established this service.

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time motion to convert a chapter 7 case to chapter 13
under subsection 706(a) differently from the filing of a
chapter 13 petition in the first instance.” In re
Marrama, 430 F. 3d 474, 479 (2005) (citations omitted).
While other Courts of Appeals and Bankruptcy Appellate
Panels have refused to recognize any “bad faith” exception
to the conversion right created by § 706(a), see n. 2, supra,
we conclude that the courts in this case correctly held that
Marrama forfeited his right to proceed under Chapter 13.
II
The two provisions of the Bankruptcy Code most relevant
to our resolution of the issue are subsections (a) and (d) of 11
U. S. C. § 706, which provide:
“(a) The debtor may convert a case under this chapter
to a case under chapter 11, 12, or 13 of this title at any
time, if the case has not been converted under section
1112, 1208, or 1307 of this title. Any waiver of the right
to convert a case under this subsection is unenforceable.
. . . . .
“(d) Notwithstanding any other provision of this sec
tion, a case may not be converted to a case under an
other chapter of this title unless the debtor may be a
debtor under such chapter.”
Petitioner contends that subsection (a) creates an unquali
fied right of conversion. He seeks support from language in
both the House and Senate Committee Reports on the provi
sion. The Senate Report stated:
“Subsection (a) of this section gives the debtor the one
time absolute right of conversion of a liquidation case to
a reorganization or individual repayment plan case. If
the case has already once been converted from chapter
11 or 13 to chapter 7, then the debtor does not have that
right. The policy of the provision is that the debtor

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372 MARRAMA v. CITIZENS BANK OF MASS.
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should always be given the opportunity to repay his
debts, and a waiver of the right to convert a case is
unenforceable.” S. Rep. No. 95–989, p. 94 (1978); see
also H. R. Rep. No. 95–595, p. 380 (1977) (using nearly
identical language).
The Committee Reports’ reference to an “absolute right”
of conversion is more equivocal than petitioner suggests.
Assuming that the described debtor’s “opportunity to repay
his debts” is a shorthand reference to a right to proceed
under Chapter 13, the statement that he should “always”
have that right is inconsistent with the earlier recognition
that it is only a one-time right that does not survive a previ
ous conversion to, or filing under, Chapter 13. More impor
tantly, the broad description of the right as “absolute” fails
to give full effect to the express limitation in subsection (d).
The words “unless the debtor may be a debtor under such
chapter” expressly conditioned Marrama’s right to convert
on his ability to qualify as a “debtor” under Chapter 13.
There are at least two possible reasons why Marrama may
not qualify as such a debtor, one arising under § 109(e) of the
Code, and the other turning on the construction of the word
“cause” in § 1307(c). The former provision imposes a limit
on the amount of indebtedness that an individual may have
in order to qualify for Chapter 13 relief.6 More pertinently,7
6 Subsection (e) of 11 U. S. C. § 109 provides:
“Only an individual with regular income that owes, on the date of the
filing of the petition, noncontingent, liquidated, unsecured debts of less
than $250,000 and noncontingent, liquidated, secured debts of less than
$750,000, or an individual with regular income and such individual’s
spouse, except a stockbroker or a commodity broker, that owe, on the date
of the filing of the petition, noncontingent, liquidated, unsecured debts that
aggregate less than $250,000 and noncontingent, liquidated, secured debts
of less than $750,000 may be a debtor under chapter 13 of this title.”
These dollar limits are subject to adjustment for inflation every three
years. See § 104(b).
7 Marrama initiated a new Chapter 13 case the day after we granted
certiorari in the present case. The new case was dismissed on the

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Opinion of the Court
the latter provision, § 1307(c), provides that a Chapter 13 pro
ceeding may be either dismissed or converted to a Chapter
7 proceeding “for cause” and includes a nonexclusive list
of 10 causes justifying that relief.8 None of the specified
causes mentions prepetition bad-faith conduct (although
paragraph (10) does identify one form of Chapter 7 error—
which is necessarily prepetition conduct—that would justify
dismissal of a Chapter 13 case).9 Bankruptcy courts never
theless routinely treat dismissal for prepetition bad-faith
conduct as implicitly authorized by the words “for cause.”
See n. 1, supra. In practical effect, a ruling that an individ
grounds that, under § 109(e), he was ineligible to be a Chapter 13
debtor. See In re Marrama, 345 B. R. 458, 463–464, and n. 10 (Bkrtcy.
Ct. Mass. 2006). As the Bankruptcy Judge made no such determination
on the record before us in this case, and as it is not necessary to our
decision that such a determination be made, we do not consider whether
Marrama fails to meet the § 109(e) debt limit.
8 Title 11 U. S. C. § 1307(c) provides, in relevant part:
“Except as provided in subsection (e) of this section, on request of a
party in interest or the United States trustee and after notice and a hear
ing, the court may convert a case under this chapter to a case under chap
ter 7 of this title, or may dismiss a case under this chapter, whichever is
in the best interests of creditors and the estate, 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;
“(3) failure to file a plan timely under section 1321 of this title;
. . . . .
“(10) only on request of the United States trustee, failure to timely file
the information required by paragraph (2) of section 521.”
Section 521(2), which has since been amended and redesignated as
§ 521(a)(2), see 119 Stat. 38, imposes a duty on a debtor in a Chapter 7
proceeding to file within a certain time period a statement of intent with
respect to the retention or surrender of property being used to secure
debts. See 11 U. S. C. § 521(a)(2) (2000 ed., Supp. V).
9 Indeed, because § 521(a)(2) by its terms applies only to Chapter 7 debt
ors, at least one prominent treatise has assumed that this subsection could
only apply to a debtor who has converted a case from Chapter 7 to Chapter
13. See 8 Collier on Bankruptcy ¶ 1307.04[9] (rev. 15th ed. 2006).

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374 MARRAMA v. CITIZENS BANK OF MASS.
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ual’s Chapter 13 case should be dismissed or converted to
Chapter 7 because of prepetition bad-faith conduct, including
fraudulent acts committed in an earlier Chapter 7 proceed
ing, is tantamount to a ruling that the individual does not
qualify as a debtor under Chapter 13. That individual, in
other words, is not a member of the class of “ ‘honest but
unfortunate debtor[s]’ ” that the bankruptcy laws were en
acted to protect. See Grogan v. Garner, 498 U. S., at 287.
The text of § 706(d) therefore provides adequate authority
for the denial of his motion to convert.
The class of honest but unfortunate debtors who do pos
sess an absolute right to convert their cases from Chapter
7 to Chapter 13 includes the vast majority of the hundreds
of thousands of individuals who file Chapter 7 petitions each
year.10 Congress sought to give these individuals the
chance to repay their debts should they acquire the means
to do so. Moreover, as the Court of Appeals observed, the
reference in § 706(a) to the unenforceability of a waiver of
the right to convert functions “as a consumer protection
provision against adhesion contracts, whereby a debtor’s
creditors might be precluded from attempting to prescribe
a waiver of the debtor’s right to convert to chapter 13 as
a non-negotiable condition of its contractual agreements.”
430 F. 3d, at 479.
A statutory provision protecting a borrower from waiver
is not a shield against forfeiture. Nothing in the text of
either § 706 or § 1307(c) (or the legislative history of either
provision) limits the authority of the court to take appro
priate action in response to fraudulent conduct by the atypi
cal litigant who has demonstrated that he is not entitled to
10 We are advised by the Administrative Office of the United States
Courts that 833,148 Chapter 7 cases were filed in fiscal year 2006. Memo
randum from Steven R. Schlesinger, Administrative Office of the United
States Courts, to Supreme Court Library (Dec. 13, 2006) (available in
Clerk of Court’s case file).

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Opinion of the Court
the relief available to the typical debtor.11 On the contrary,
the broad authority granted to bankruptcy judges to take
any action that is necessary or appropriate “to prevent an
abuse of process” described in § 105(a) of the Code,12 is surely
adequate to authorize an immediate denial of a motion to
convert filed under § 706 in lieu of a conversion order that
merely postpones the allowance of equivalent relief and may
provide a debtor with an opportunity to take action prejudi
cial to creditors.13
Indeed, as the Solicitor General has argued in his brief
amicus curiae, even if § 105(a) had not been enacted, the
11 We have no occasion here to articulate with precision what conduct
qualifies as “bad faith” sufficient to permit a bankruptcy judge to dismiss
a Chapter 13 case or to deny conversion from Chapter 7. It suffices to
emphasize that the debtor’s conduct must, in fact, be atypical. Limiting
dismissal or denial of conversion to extraordinary cases is particularly ap
propriate in light of the fact that lack of good faith in proposing a Chapter
13 plan is an express statutory ground for denying plan confirmation. 11
U. S. C. § 1325(a)(3); see In re Love, 957 F. 2d, at 1356 (“Because dismissal
is harsh . . . the bankruptcy court should be more reluctant to dismiss a
petition . . . for lack of good faith than to reject a plan for lack of good
faith under Section 1325(a)”).
12 Title 11 U. S. C. § 105(a) provides:
“The court may issue any order, process, or judgment that is necessary
or appropriate to carry out the provisions of this title. No provision of
this title providing for the raising of an issue by a party in interest shall
be construed to preclude the court from, sua sponte, taking any action or
making any determination necessary or appropriate to enforce or imple
ment court orders or rules, or to prevent an abuse of process.”
13 Both the Chapter 7 trustee and the United States as amicus curiae
argue in their briefs that in the interval between the allowance of a motion
to convert under § 706(a) and the subsequent granting of a motion to dis
miss under § 1307(c), the fact that the debtor would have possession of
the property formerly under the control of the trustee would create an
opportunity for the debtor to take actions that would impair the rights of
creditors. Whether or not that risk is significant, under our understand
ing of the Code, the debtor’s prior misconduct may provide a sufficient
justification for a denial of his motion to convert.

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376 MARRAMA v. CITIZENS BANK OF MASS.
Alito, J., dissenting
inherent power of every federal court to sanction “abusive
litigation practices,” see Roadway Express, Inc. v. Piper, 447
U. S. 752, 765 (1980), might well provide an adequate justifi
cation for a prompt, rather than a delayed, ruling on an un
meritorious attempt to qualify as a debtor under Chapter 13.
Accordingly, the judgment of the Court of Appeals is
affirmed.
It is so ordered.
Justice Alito, with whom The Chief Justice, Justice
Scalia, and Justice Thomas join, dissenting.
Under the clear terms of the Bankruptcy Code, a debtor
who initially files a petition under Chapter 7 has the right to
convert the case to another chapter under which the case is
eligible to proceed. The Court, however, holds that a debt
or’s conversion right is conditioned upon a bankruptcy
judge’s finding of “good faith.” Because the imposition of
this condition is inconsistent with the Bankruptcy Code,
I respectfully dissent.
I
The Bankruptcy Code unambiguously provides that a
debtor who has filed a bankruptcy petition under Chapter 7
has a broad right to convert the case to another chapter.
Title 11 U. S. C. § 706(a) states:
“[A] debtor may convert a case under this chapter to a
case under chapter 11, 12, or 13 of this title at any time,
if the case has not been converted under section 1112,
1208, or 1307 of this title.”
The Code restricts a Chapter 7 debtor’s conversion right
in two—and only two—ways. First, § 706(a) makes clear
that the right to convert is available only once: A debtor may
convert so long as “the case has not been converted [to Chap
ter 7] under section 1112, 1208, or 1307 of this title.” Sec
ond, § 706(d) provides that a debtor wishing to convert to
another chapter must meet the conditions that are needed in

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377 Cite as: 549 U. S. 365 (2007)
Alito, J., dissenting
order to “be a debtor under such chapter.” Nothing in
§ 706(a) or any other provision of the Code suggests that a
bankruptcy judge has the discretion to override a debtor’s
exercise of the § 706(a) conversion right on a ground not set
out in the Code. Thus, a straightforward reading of the
Code suggests that a Chapter 7 debtor has the right to con
vert the debtor’s case to Chapter 13 (or another chapter)
provided that the two express statutory conditions contained
in § 706 are satisfied.
This reading of the Code is buttressed by the contrast be
tween the terms of § 706 and the language employed in other
Code provisions that give bankruptcy judges the discretion
to deny conversion requests. As noted, § 706(a) says that a
Chapter 7 debtor “may convert” the debtor’s case to another
chapter. Chapters 11, 12, and 13 contain similar provisions
stating that debtors under those chapters “may convert”
their cases to other chapters. See §§ 1112(a), 1208(a), and
1307(a) (2000 ed. and Supp. IV). Chapters 11, 12, and 13
also contain separate provisions governing conversion re
quests by other parties in interest. For example, the appli
cable provision in Chapter 11 provides:
“On request of a party in interest and after notice and
a hearing, the court may convert a case under this chap
ter to a case under chapter 11 of this title at any time.”
§ 706(b) (emphasis added).
See also §§ 1112(b), 1208(b), (d), and 1307(c).
In these sections, parties in interest are not given a right
to convert. Rather, parties in interest are authorized to re
quest conversion. And the authority to convert, after notice
and a hearing, is expressly left to the discretion of the bank
ruptcy court, which “may convert” the case if the general
standard of “cause” is found to have been met. If the Code
had been meant to give a bankruptcy court similar authority
when a Chapter 7 debtor wishes to convert, the Code would
have used language similar to that in §§ 1112(b), 1208(b), (d),

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378 MARRAMA v. CITIZENS BANK OF MASS.
Alito, J., dissenting
and 1307(c). Congress knew how to limit conversion author
ity in this way, and it did not do so in § 706(a).
In Chapter 7, Congress did directly address the conse
quences of the sort of conduct complained of in this case. In
§ 727(a)(3), Congress specified that a debtor may be denied a
discharge of debts if “the debtor has concealed . . . records,
and papers, from which the debtor’s financial condition or
business transactions might be ascertained.” The Code fur
ther provides that discharge may be denied if the debtor has
“made a false oath or account” or “presented or used a false
claim.” § 727(a)(4). In addition to blocking discharge, Con
gress could easily have deemed such conduct sufficient to bar
conversion to another chapter, but Congress did not do so.
Instead of taking that approach, Congress included in the
statutory scheme several express means to redress a debt
or’s bad faith. First, if a bankruptcy court finds that there
is “cause,” the court may convert or reconvert a Chapter
11 or Chapter 13 restructuring to a Chapter 7 liquidation.
§§ 1112(b), 1307(c). Second, a Chapter 13 debtor must pro
pose a repayment plan to satisfy the debtor’s creditors—a
plan that is subject to court approval and must be proposed
in good faith. §§ 1325(a)(3), (4); accord, § 1328(b)(2). Third,
a debtor’s asset schedules are filed under penalty of perjury.
28 U. S. C. § 1746; Fed. Rule Bkrtcy. Proc. 1008. Fourth, a
Chapter 13 case is overseen by a trustee who is empowered
to investigate the debtor’s financial affairs, to furnish infor
mation regarding the bankruptcy estate to parties in in
terest, and to oppose discharge if necessary. 11 U. S. C.
§§ 704(4), (6), and (9). See also § 1302(b) (defining the powers
of a Chapter 13 trustee in part by reference to the powers
of a Chapter 7 trustee). These measures, as opposed to the
“good faith” requirement crafted by the Court, represent the
Code’s strategy for dealing with debtors who engage in the
type of abusive tactics that the Court’s opinion targets.1
1 And as noted above, 11 U. S. C. § 727(a)(4) also addresses such conduct,
making it a bar to discharge, but not to conversion.

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379 Cite as: 549 U. S. 365 (2007)
Alito, J., dissenting
In sum, the Code expressly gives a debtor who initially
files under Chapter 7 the right to convert the case to another
chapter so long as the debtor satisfies the requirements of
the destination chapter. By contrast, the Code pointedly
does not give the bankruptcy courts the authority to deny
conversion based on a finding of “bad faith.” There is no
justification for disregarding the Code’s scheme.
II
In reaching the conclusion that a bankruptcy judge may
override a Chapter 7 debtor’s conversion right based on a
finding of “bad faith,” the Court reasons as follows. Under
§ 706(d), a Chapter 7 debtor may not convert to another chap
ter “unless the debtor may be a debtor under such chapter.”
Under § 1307(c), a Chapter 13 proceeding may be dismissed
or converted to Chapter 7 “for cause.” One such “cause”
recognized by bankruptcy courts is “bad faith.” Therefore,
a Chapter 7 debtor who has proceeded in “bad faith” and
wishes to convert his or her case to Chapter 13 is not eligible
to “be a debtor” under Chapter 13 because the debtor’s case
would be subject to dismissal or reconversion to Chapter 7
pursuant to § 1307(c). I cannot agree with this strained
reading of the Code.
The requirements that must be met in order to “be a
debtor” under Chapter 13 are set forth in 11 U. S. C. § 109
(2000 ed. and Supp. V), which is appropriately titled “Who
may be a debtor.” The two requirements that are specific
to Chapter 13 appear in subsection (e). First, Chapter 13 is
restricted to individuals, with or without their spouses, with
regular income. Second, a debtor may not proceed under
Chapter 13 if specified debt limits are exceeded.2
2 “Only an individual with regular income that owes, on the date of the
filing of the petition, noncontingent, liquidated, unsecured debts of less
than $307,675 and noncontingent, liquidated, secured debts of less than
$922,975, or an individual with regular income and such individual’s
spouse, except a stockbroker or a commodity broker, that owe, on the date

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380 MARRAMA v. CITIZENS BANK OF MASS.
Alito, J., dissenting
As the Court of Appeals below correctly understood,
§ 706(d)’s requirement that a debtor may convert only if “the
debtor may be a debtor under such chapter” obviously refers
to the chapter-specific requirements of § 109. In re Mar
rama, 430 F. 3d 474, 479, n. 3 (CA1 2005).
Rather than reading §§ 109(e) and 706(d) together, the
Court puts § 109(e) aside and treats § 706(d) as a separate
repository of additional requirements (namely, the absence of
the grounds for dismissal or reconversion under § 1307(c))
that a Chapter 7 debtor must satisfy before conversion to
Chapter 13. But § 1307(c) plainly does not set out require
ments that an individual must meet in order to “be a debtor”
under Chapter 13. Instead, § 1307(c) sets out the standard
(“cause”) that a bankruptcy court must apply in deciding
whether, in its discretion, an already filed Chapter 13 case
should be dismissed or converted to Chapter 7. Thus, the
Court’s holding in this case finds no support in the terms of
the Bankruptcy Code.
In holding that a bankruptcy judge may deny conversion
based on “bad faith,” the Court of Appeals appears to have
been influenced by the belief that following the literal terms
of the Code would be pointless. Id., at 479–481. Specifi
cally, the Court of Appeals observed that if a debtor who
wishes to convert from Chapter 7 to Chapter 13 has exhib
ited such “bad faith” that the bankruptcy court would imme
diately convert the case back to Chapter 7 under § 1307(c),
then no purpose would be served by requiring the parties
and the court to go through the process of conversion and
prompt reconversion. Id., at 481.
It is by no means clear, however, that conversion under
§ 706(a) followed by a reconversion proceeding under
§ 1307(c) would be an empty exercise. The immediate prac
of the filing of the petition, noncontingent, liquidated, unsecured debts that
aggregate less than $307,675 and noncontingent, liquidated, secured debts
of less than $922,975 may be a debtor under chapter 13 of this title.”
§ 109(e) (footnote omitted).

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381 Cite as: 549 U. S. 365 (2007)
Alito, J., dissenting
tical effect of following the statutory scheme is compliance
with Bankruptcy Rule 1017(f), which applies Bankruptcy
Rule 9014 to the reconversion. Fed. Rule Bkrtcy. Proc.
1017(f)(1). Rule 9014(a), in turn, requires that the request
be made by motion and that “reasonable notice and opportu
nity for hearing . . . be afforded the party against whom
relief is sought.” The Court’s decision circumvents this
process and forecloses the right that a Chapter 13 debtor
would otherwise possess to file a Chapter 13 repayment and
reorganization plan, 11 U. S. C. § 1321, which must be filed in
good faith and which must demonstrate that creditors will
receive no less than they would under an immediate Chap
ter 7 liquidation, §§ 1325(a)(3) and (4); accord, § 1328(b)(2).
While the plan must be filed no later than 15 days after filing
the petition or conversion, the debtor may file the plan at
the time of conversion, i. e., before the reconversion hearing.
Fed. Rule Bkrtcy. Proc. 3015(b).
Moreover, it is not clear whether, in converting a case “for
cause” under § 1307(c), a bankruptcy court must consider the
debtor’s plan (if already filed) and, if the plan must be con
sidered, whether the court must take into account whether
the plan was filed in good faith, whether it honestly discloses
the debtor’s assets, whether it demonstrates that creditors
would in fact fare better under the plan than under a liquida
tion, and whether the plan in some sense “cures” prior bad
faith. Today’s opinion renders these questions academic,
and little is left to guide what a bankruptcy court must con
sider, or may disregard, in blocking a § 706(a) conversion.3
The Court notes that the Bankruptcy Code is intended to
give a “ ‘ “fresh start” ’ ” to the “ ‘ “honest but unfortunate
debtor.” ’ ” Ante, at 367, 374 (quoting Grogan v. Garner, 498
U. S. 279, 286, 287 (1991)). But compliance with the statu
tory scheme—conversion to Chapter 13 followed by notice
3 Indeed, the only procedural guidance for such a situation is Federal
Rule of Bankruptcy Procedure 1017(f)(2), which requires the filing of a
motion to convert by the debtor and service thereof.

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382 MARRAMA v. CITIZENS BANK OF MASS.
Alito, J., dissenting
and a hearing on the question of reconversion—would at
least provide some structure to the process of identifying
those debtors whose “ ‘bad faith’ ” meets the Court’s stand
ard for consignment to liquidation, i. e., “ ‘bad faith’ ” conduct
that is “atypical” and “extraordinary.” Ante, at 375, n. 11.
III
Finally, the Court notes two alternative bases for its hold
ing. First, the Court points to 11 U. S. C. § 105(a), which
governs a bankruptcy court’s general powers.4 Second, the
Court suggests that even without a textual basis, a bank
ruptcy court’s inherent power may empower it to deny a
§ 706(a) conversion request for bad faith. Obviously, how
ever, neither of these sources of authority authorizes a bank
ruptcy court to contravene the Code. On the contrary, a
bankruptcy court’s general and equitable powers “must and
can only be exercised within the confines of the Bankruptcy
Code.” Norwest Bank Worthington v. Ahlers, 485 U. S. 197,
206 (1988); accord, SEC v. United States Realty & Improve
ment Co., 310 U. S. 434, 455 (1940) (“A bankruptcy court . . .
is guided by equitable doctrines and principles except in so
far as they are inconsistent with the Act”).
Ultimately, § 105(a) and a bankruptcy court’s inherent
powers may have a role to play in a case such as this. The
problem the Court identifies is a real one. A debtor who is
convinced that he or she can successfully conceal assets has
a significant incentive to pursue Chapter 7 liquidation in lieu
of a Chapter 13 restructuring. If successful, the debtor pre
serves wealth; if unsuccessful, the debtor can convert to
Chapter 13 and land largely where the debtor would have
4 “The court may issue any order, process, or judgment that is necessary
or appropriate to carry out the provisions of this title. No provision of
this title providing for the raising of an issue by a party in interest shall
be construed to preclude the court from, sua sponte, taking any action or
making any determination necessary or appropriate to enforce or imple
ment court orders or rules, or to prevent an abuse of process.” § 105(a).

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383 Cite as: 549 U. S. 365 (2007)
Alito, J., dissenting
been if he or she had fully disclosed all assets and proceeded
in Chapter 13 in the first instance.
Bankruptcy courts have used their statutory and equitable
authority to craft various remedies for a range of bad faith
conduct: requiring accountings or reporting of assets; 5 en
joining debtors from alienating estate property; 6 penalizing
counsel; 7 assessing costs and fees; 8 or holding the debtor in
contempt. 9 But whatever steps a bankruptcy court may
take pursuant to § 105(a) or its general equitable powers, a
bankruptcy court cannot contravene the provisions of the
Code.
Because the provisions of the Code rule out the procedure
that was followed in this case by the Bankruptcy Court,
I would reverse the judgment of the Court of Appeals.
5 See, e. g., In re All Denominational New Church, 268 B. R. 536
(Bkrtcy. App. Panel CA8 2001) (affirming dismissal for failure to comply
with required monthly reporting); In re Martin’s Aquarium, Inc., 225
B. R. 868, 880 (Bkrtcy. Ct. ED Pa. 1998) (“[A] debtor may, in an appropriate
case, be required to produce an accounting, and . . . a bankruptcy court
does indeed have the power to so order [this equitable remedy]”).
6 See, e. g., In re Bartmann, 320 B. R. 725, 732–733 (Bkrtcy. Ct. ND Okla.
2004); In re Newport Creamery, Inc., 293 B. R. 293 (Bkrtcy. Ct. RI 2003);
In re Peklo, 201 B. R. 331 (Bkrtcy. Ct. Conn. 1996).
7 See, e. g., In re Everly, 346 B. R. 791, 797 (Bkrtcy. App. Panel CA8
2006) (bankruptcy court’s § 105 powers include authority to sanction coun
sel); In re Brooks-Hamilton, 329 B. R. 270 (Bkrtcy. App. Panel CA9 2005)
(upholding sanction and suspension of debtor’s counsel); In re Washington,
297 B. R. 662 (Bkrtcy. Ct. SD Fla. 2003).
8 See, e. g., In re Deville, 280 B. R. 483 (Bkrtcy. App. Panel CA9 2002);
In re Johnson, 336 B. R. 568, 573 (Bkrtcy. Ct. SD Fla. 2006); In re Couch-
Russell, No. 00–02226, 2003 WL 25273863 (Bkrtcy. Ct. Idaho, Apr. 2, 2003);
In re Gorshtein, 285 B. R. 118 (Bkrtcy. Ct. SDNY 2002).
9 See, e. g., In re Sekendur, 334 B. R. 609 (Bkrtcy. Ct. ND Ill. 2005) (im
posing contempt sanction for serial and vexatious bankruptcy filing); In re
Tolbert, 258 B. R. 387 (Bkrtcy. Ct. WD Mo. 2001) (same); In re Swanson,
207 B. R. 76 (Bkrtcy. Ct. NJ 1997) (imposing civil contempt under § 105
for failure to vacate property).