Court Opinion

ID: 6104579
Source: CourtListenerOpinion
Date Created: 2022-01-19 17:01:29.798941+00
Date Added: 2024-06-11T08:53:44.884304
License: Public Domain

Appellate Case: 20-1376      Document: 010110633794     Date Filed: 01/19/2022   Page: 1
                                                                              FILED
                                                                  United States Court of Appeals
                                          PUBLISH                         Tenth Circuit

                       UNITED STATES COURT OF APPEALS                  January 19, 2022

                                                                     Christopher M. Wolpert
                                        TENTH CIRCUIT                    Clerk of Court

  In Re: JULIO CESAR BARRERA;
  MARIA DE LA LUZ MORO,

                Debtors.
  -----------------------------------                      No. 20-1376
  SIMON E. RODRIGUEZ, Chapter 7
  Trustee,

                Appellant,
  v.
  JULIO CESAR BARRERA; MARIA
  DE LA LUZ MORO,

                Appellees.
  -----------------------------------
  NATIONAL CONSUMER
  BANKRUPTCY RIGHTS CENTER;
  NATIONAL ASSOCIATION OF
  CONSUMER BANKRUPTCY
  ATTORNEYS,

                Amici Curiae.

       APPEAL FROM THE UNITED STATES BANKRUPTCY APPELLATE
                   PANEL OF THE TENTH CIRCUIT
                        (BAP No. 20-003-CO)
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 David V. Wadsworth (Lindsay S. Riley, Wadsworth Garber Warner Conrady,
 Littleton, Colorado, with him on the briefs), Sender Wasserman Wadsworth,
 Denver, Colorado, for Appellant.

 Erik B. Atzbach, Englewood, Colorado, for Appellees.

 Before TYMKOVICH, Chief Judge, HOLMES, and McHUGH, Circuit Judges.

 TYMKOVICH, Chief Judge.

       Julio Cesar Barrera and Maria de La Luz Moro filed for bankruptcy under

 Chapter 13 of the Bankruptcy Code hoping to reorganize their assets and

 finances. Instead of selling most of their assets to obtain an immediate discharge

 of their debts, they opted to keep their assets, try a reorganization plan to repay

 creditors, and receive a discharge later. For some time they continued to meet the

 terms of their reorganization plan. But they changed their minds following the

 sale of their home, which had appreciated in value significantly since they filed

 for bankruptcy.

       Instead, Barrera and Moro converted their Chapter 13 bankruptcy to a

 liquidation of their estate under Chapter 7. The Chapter 7 trustee (Trustee)

 claimed a right to a portion of the proceeds from the sale of the home, including

 the appreciation that occurred after their Chapter 13 petition was filed. This case

 is about who is entitled to the proceeds from the sale of the home. Specifically,

 do the sale proceeds from the real property of the estate belong to the Chapter 7

 estate or to the debtors?

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       To answer this question, we must analyze 11 U.S.C. § 348(f)(1)(A), which

 states that “property of the estate in the converted case shall consist of property

 of the estate, as of the date of filing of the petition, that remains in the possession

 of or is under the control of the debtor on the date of conversion[.]” We conclude

 this statutory language directs that the sale proceeds from the home belong to the

 debtors. We therefore AFFIRM the Bankruptcy Appellate Panel.

                                   I. Background

       We first discuss background bankruptcy principles and then turn to the

 relevant facts.

       A. The Bankruptcy Code

       An understanding of a few bankruptcy mechanics is necessary to

 comprehend this case and our conclusions. Bankruptcy provides “a fresh

 [financial] start to the honest but unfortunate debtor.” Marrama v. Citizens Bank

 of Mass., 549 U.S. 365, 367 (2007) (internal quotations omitted). Debtors can

 liquidate their assets or promise future income to repay their creditors in

 exchange for a discharge of their debts. Individuals have two common paths to

 discharge in the Bankruptcy Code: Chapter 7 and Chapter 13.

       In Chapter 7 bankruptcies, debtors give up their property that is not entitled

 to an exemption in exchange for a discharge of their debts. A trustee liquidates

 the debtor’s pre-petition, non-exempt property and then distributes the proceeds

 to the debtor’s creditors. See 11 U.S.C. § 704(a)(1). The debtor receives an

 immediate discharge and is therefore entitled to keep his future income and any
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 assets acquired post-discharge. Id. § 727. But this often comes at a cost, as the

 debtor may lose a home and all other non-exempt assets. See Harris v.

 Viegelahn, 575 U.S. 510, 513–14 (2015) (recognizing the “steep price” of

 Chapter 7’s immediate discharge, which is that a debtor “must forfeit virtually all

 his prepetition property”).

       In Chapter 13 bankruptcies, debtors reorganize their finances and commit

 future disposable earnings to the repayment of creditors instead of liquidating

 assets. 11 U.S.C. § 1322(a)(1). The debtor’s existing assets—like a house or

 car—are generally not liquidated; instead, the debtor keeps them. Id. § 1325(b).

 Distribution of the debtor’s future disposable earnings to creditors is dictated by a

 court-approved plan, which typically lasts three to five years. Upon confirmation

 of the plan, “all of the property of the estate” vests “in the debtor.” Id. § 1327(b).

 A discharge is granted only after the debtor successfully completes the plan. Id.

 § 1328. A reorganization is beneficial to both debtors and creditors. Debtors can

 protect existing assets from liquidation, and creditors are assured they will

 receive at least as much repayment—and often more—as they would have under

 Chapter 7. See id. § 1325(a)(4), (5); see also Harris, 575 U.S. at 514.

       Because of the benefits to debtors and creditors stemming from Chapter 13

 bankruptcies, Congress has enacted statutes to incentivize debtors to opt for

 reorganization over liquidation. See In re Dewsnup, 908 F.2d 588, 591–92 (10th

 Cir. 1990). One of these incentives is the non-waivable right of debtors to

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 convert a Chapter 13 bankruptcy to another chapter at any time. See 11 U.S.C.

 § 1307(a).

       Before the Bankruptcy Reform Act of 1994, circuit courts disagreed about

 whether a debtor’s converted Chapter 7 estate included property interests

 acquired after the Chapter 13 filing but before conversion to another chapter.

 Compare In re Bobroff, 766 F.2d 797 (3d Cir. 1985) (holding Chapter 13 debtor’s

 tort claims that accrued post-petition, pre-conversion were not part of the

 converted Chapter 7 estate), with In re Lybrook, 951 F.2d 136 (7th Cir. 1991)

 (holding real estate inherited by Chapter 13 debtor post-petition, pre-conversion

 was part of the converted Chapter 7 estate).

       Congress resolved this pre-Bankruptcy Reform Act circuit split by enacting

 11 U.S.C. § 348(f) in 1994. This statute provides that conversion from one

 chapter to another does not start a new bankruptcy case, but instead it transforms

 the nature of the existing bankruptcy case. See 11 U.S.C. § 348(a) (explaining

 conversion “does not effect a change in the date of the filing of the petition, the

 commencement of the case, or the order for relief”).

       The statute also specifically addresses conversions from Chapter 13 to

 Chapter 7. When a case is converted from Chapter 13 to Chapter 7, “property of

 the estate in the converted case shall consist of the property of the estate, as of

 the date of filing of the petition, that remains in the possession of or is under the

 control of the debtor on the date of conversion[.]” Id. § 348(f)(1)(A) (emphasis

 added). In other words, after conversion, the Chapter 7 estate generally consists

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 of the same interests in property that would have been included in the estate had

 the debtor originally filed under Chapter 7, so long as the debtor has possession

 or control of those interests at conversion. But if a debtor converts in bad faith—

 broadly defined, as we explain below—more of the debtor’s interests are included

 in the converted estate: “[T]he property of the estate in the converted case shall

 consist of the property of the estate as of the date of conversion.” Id. § 348(f)(2)

 (emphasis added); see also Harris, 575 U.S. at 518.

       Those debtors who try a repayment plan, but ultimately fail, are generally

 no worse off upon a good-faith conversion than if they had originally filed under

 Chapter 7. And those debtors who convert from Chapter 13 to Chapter 7 in bad

 faith are punished because their otherwise immune post-petition property

 interests are available for liquidation and distribution to creditors.

       Notwithstanding Congress’s apparent attempt to clarify the proper makeup

 of a converted estate with the enactment of 11 U.S.C. § 348(f), courts have since

 split on whether property interests acquired post-petition, but pre-conversion are

 property of the converted estate or of the debtor. This interpretive conflict

 underlies this appeal.

       B. The Bankruptcy

       Julio Cesar Barrera and Maria de La Luz Moro (Debtors) filed for

 bankruptcy on April 5, 2016. Instead of liquidating their assets in exchange for

 an immediate discharge via a Chapter 7 bankruptcy, they opted for a Chapter 13

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 reorganization plan, committing to a long-term repayment plan using future

 income to pay creditors.

       On the petition date, the property of the Chapter 13 bankruptcy estate

 included real property jointly owned by the Debtors in Highlands Ranch,

 Colorado. The Debtors included the following information in their schedules:

              Value of the Property:            $396,606.00

              Liens on the Property:            (1) lien in favor of
                                                CitiMortgage, Inc. and
                                                (2) lien in favor of the
                                                U.S. Department of
                                                Housing and Urban
                                                Development, totaling
                                                $336,209.62

              Exempt Equity in                  $60,396.38 per the
              the Property:                     Colorado Homestead
                                                Exemption (can claim up
                                                to $75,000)

       Because the combination of the liens and the homestead exemption

 exceeded the value of the house, the Debtors’ equity in the house was exempt as

 of the petition date. In June 2016, the Debtors’ Chapter 13 plan was confirmed

 and all of the property of the estate was revested in the Debtors. See 11 U.S.C.

 § 1327(b) (“Except as otherwise provided in the plan or the order confirming the

 plan, the confirmation of a plan vests all of the property of the estate in the

 debtor.”). Following confirmation, the Debtors made monthly cure payments on

 their mortgage arrears to the Chapter 13 trustee and paid regular mortgage

 payments directly to CitiMortgage, Inc. in accordance with the confirmed plan.

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       Time passed, and the value of the Debtors’ home increased. In April 2018,

 while still complying with the confirmed Chapter 13 plan, the Debtors sold the

 house for $520,000. After payment of the liens, taxes, and closing costs, the

 Debtors pocketed $140,251 in sale proceeds. About two weeks later, the Debtors

 filed a notice of voluntary conversion to Chapter 7 under 11 U.S.C. § 1307. The

 Debtors also spent some of the proceeds from the sale. Thus, as of the

 conversion date, the Debtors retained only $100,700.12 of the sale proceeds in a

 savings account.

       After the Trustee contacted the Debtors about whether the non-exempt

 portion of the equity should be part of the Chapter 7 bankruptcy estate, the

 Debtors filed a motion to convert their case back to Chapter 13, which the

 bankruptcy court denied. Now stuck in Chapter 7, the Debtors were forced to

 combat the Trustee’s attempts to require them to turn over the non-exempt

 portion of the house proceeds to the Chapter 7 estate.

       C. Procedural History

       The Trustee filed a motion to compel the Debtors to turn over property of

 the estate, targeting the non-exempt portion of the house proceeds. To eliminate

 factual disputes, the Trustee stipulated that the petition-date value of the house

 equals the value scheduled by the Debtors in their initial Chapter 13 filing

 ($396,606). The bankruptcy court denied the Trustee’s motion. The court

 reasoned that 11 U.S.C. § 348(f)(1)(A) is ambiguous as to what constitutes

 “property,” but based on the legislative history of the statute, it means the

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 property of the estate as it existed on the Chapter 13 petition date, with all its

 attributes, including the amount of equity that existed on that date. Thus,

 according to the bankruptcy court, “property” in § 348(f)(1)(A) does not include

 any of the appreciation in value of the house that occurred from the filing of the

 Chapter 13 petition to the filing of the Chapter 7 conversion. That value is

 therefore excluded from the Chapter 7 estate upon conversion.

       The Tenth Circuit Bankruptcy Appellate Panel (BAP) affirmed the

 bankruptcy court’s denial of the Trustee’s motion for similar reasons.

                                     II. Analysis

       We must interpret 11 U.S.C. § 348(f)(1)(A) to determine whether the sale

 proceeds from the appreciation in value of a debtor’s property after filing a

 Chapter 13 petition but before converting the bankruptcy to Chapter 7 is property

 of the Chapter 7 estate or the debtor. We conclude it is property of the debtor.

       Our review of this statutory interpretation question is de novo. See In re

 Taylor, 899 F.3d 1126, 1129 (10th Cir. 2018). We start with the statutory

 language and look to the plain meaning of 11 U.S.C. §§ 348 and 541. Section

 348(f)(1)(A) explains that “property of the estate in the converted case shall

 consist of property of the estate, as of the date of filing of the petition, that

 remains in the possession of or is under the control of the debtor on the date of

 conversion[.]” (Emphasis added).

       Section 348(f)(1)(A)’s explicit reference to “property of the estate” is

 defined in § 541 to include “all legal or equitable interests of the debtor in
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  property[.]” 11 U.S.C. § 541(a)(1). It also defines “property of the estate” to

  include “[p]roceeds . . . from property of the estate.” Id. § 541(a)(6). If proceeds

  were the same interest as the anchor legal or equitable interest, the inclusion of

  § 541(a)(6) would be redundant alongside § 541(a)(1). Thus, § 541 recognizes

  that “all legal and equitable interests” are legally distinct from “proceeds” from

  those interests. 1

         The Trustee cites a long list of cases that he insists establishes that

  proceeds gained post-petition, pre-conversion are property of the estate. 2 But the

  cases he relies on are distinguishable. They address primarily whether proceeds

  from the sale of property are generally part of a Chapter 7 estate or whether

  appreciation in the value of property is part of the estate in a Chapter 13 to

  Chapter 7 conversion. They do not address our question here: whether, in a post-

  1
    The parties discuss at length whether post-petition, pre-conversion appreciation
  in value of the house is included in the Chapter 7 estate upon conversion. And
  this is the question the bankruptcy court and the BAP addressed in finding for the
  Debtors. But we need not decide whether appreciation in a house still owned by
  debtors at the time of conversion is property of the debtors or the estate. That is
  not the case before us. We are dealing with proceeds from the sale of the house,
  not the house itself. Thus, our conclusion relies only on whether cash remaining
  from a post-petition, pre-conversion real property sale is included in the Chapter
  7 estate upon conversion. As we explain in this section, it is not.
  2
    See Aplt. Br. at 17–18 (citing Wilson v. Rigby, 909 F.3d 306, 308–09 (9th Cir.
  2018); In re Orton, 687 F.3d 612, 619 (3d Cir. 2012); In re Gebhart, 621 F.3d
  1206, 1211 (9th Cir. 2010); Hyman v. Plotkin, 967 F.2d 1316, 1321 (9th Cir.
  1992); In re Potter, 228 B.R. 422, 424 (9th Cir. BAP 1999); In re Celentano, No.
  10-22833 NLW, 2012 WL 3867335, at *5 (Bankr. D.N.J. 2012) (unpublished); In
  re Prospero, 107 B.R. 732, 735 (Bankr. C.D. Cal. 1989); In re Paolella, 85 B.R.
  974, 976 (Bankr. E.D. Pa. 1988)).

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  confirmation conversion from Chapter 13 to Chapter 7, proceeds from the post-

  petition sale of property are identical to the underlying property that the debtor

  possessed on the Chapter 13 petition date. Based upon § 348(f)(1)(A)’s plain

  language, when read alongside § 541(a), they are not.

        Based on the plain language of § 348(f)(1)(A), then, the sale proceeds—a

  property interest distinct from the physical house from which they were derived—

  do not enter the converted Chapter 7 estate. See 11 U.S.C. § 348(f)(1)(A); see

  also David Carlson, The Chapter 13 Estate and Its Discontents, 17 Am. Bankr.

  Inst. L. Rev. 233, 280 (2009) (“If this principle is taken seriously, then proceeds

  of what historically was property of the estate do not go to the chapter 7 trustee.

  Although it is easy to forget, proceeds are, strictly speaking, after-acquired

  property.” (emphasis in original)). The physical house was not “in the possession

  of or . . . under the control of the [D]ebtor[s] on the date of conversion”—they

  had sold it. 11 U.S.C. § 348(f)(1)(A). And the proceeds from the sale of the

  physical house did not exist on the date of filing the Chapter 13 petition, so the

  proceeds cannot have “remain[ed] in the possession of or [have been] under the

  control of the debtor on the date of conversion[.]” Id. (emphasis added).

        The automatic vesting provision of § 1327(b) supports our conclusion that

  the proceeds from the sale of the Debtors’ house are not included in the Chapter 7

  estate. Under § 541(a)(6), only proceeds “of or from property of the estate”

  become property of the bankruptcy estate. In a typical Chapter 13 case, this

  provision is operative only before confirmation of the Chapter 13 plan because

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  confirmation “vests all of the property of the estate in the debtor.” Id. § 1327(b).

  Thus, proceeds generated from the debtor’s property after confirmation do not

               § 348(f)(1)(A): “property of the estate in the converted case
               shall consist of property of the estate, as of the date of filing of
               the petition, that remains in the possession of or is under the
               control of the debtor on the date of conversion”

                                                            

              Chapter        Confirmation         Sale of home       Chapter 7
              13 petition                                            conversion
              filing date                                            date

                     = all legal or equitable interests of the debtor in property
                        as of the commencement of the case (§ 541(a)(1))
                     = proceeds from property of the estate (§ 541(a)(6))
                     = confirmation of a plan vests all the property of the
                        estate in the debtor (§ 1327(b))
  become property of the estate as the underlying property no longer belongs to the

  estate. 3

  3
    We recognize this interpretation potentially creates a conflict with 11
  U.S.C. § 1306, which provides that property of the estate includes all
  property—as defined in § 541—that the debtor “acquires after the
  commencement of the case but before the case is closed, dismissed, or
  converted to a case under chapter 7, 11, or 12 of this title.” 11 U.S.C.
  § 1306(a)(1). Many courts have attempted to resolve the inherent tension
  between § 1327’s revestment provision and § 1306’s after-acquired
  property provision. See In re Larzelere,    B.R. , 2021 WL 3745428, at
  *3–4 (Bankr. D.N.J. Aug. 24, 2021) (collecting cases); In re Baker, 620
  B.R. 655, 665 (Bankr. D. Colo. 2020) (same). Given that the Debtors’
  proceeds here did not exist at the commencement of the case and thus did
  (continued . . .)
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        The Trustee’s view that the post-confirmation proceeds from the sale of the

  Debtors’ house became property of the estate ignores § 1327(b)’s revestment

  provision. At the time the Debtors sold their house, the Debtors’ Chapter 13 plan

  had been confirmed and the house had been revested in the Debtors. As a result,

  the Debtors’ house was not property of the Chapter 13 estate when the Debtors

  sold it. The proceeds generated from the sale of the house were therefore not

  “proceeds . . . of or from property of the estate.” See id. § 541(a)(6).

        Although the bankruptcy court and the BAP reached the same outcome we

  do here, they did so by asserting the statutory language is ambiguous and pivoting

  to legislative history. The BAP quoted the House of Representatives’ Committee

  on the Judiciary Report on the Bankruptcy Act of 1994, which discussed the

  amendment to § 348 as follows:

                  This amendment would clarify the Code to resolve a
               split in the case law about what property is in the
               bankruptcy estate when a debtor converts from chapter 13
               to chapter 7. The problem arises because in chapter 13
               (and chapter 12), any property acquired after the petition
               becomes property of the estate, at least until confirmation
               of a plan. Some courts have held that if the case is
               converted, all of this after-acquired property becomes
               part of the estate in the converted chapter 7 case, even
               though the statutory provisions making it property of the
               estate do not apply to chapter 7. Other courts have held
               that property of the estate in a converted case is the

  not become part of the converted Chapter 7 estate under § 348(f)(1)(A), we
  need not decide whether the proceeds ever became part of the Chapter 13
  estate.
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               property the debtor had when the original chapter 13
               petition was filed.
               ...
                   This amendment overrules the holding in cases such
               as Matter of Lybrook, 951 F.2d 136 (7th Cir. 1991) and
               adopts the reasoning of In re Bobroff, 766 F.2d 797 (3d
               Cir. 1985). However, it also gives the court discretion, in
               a case in which the debtor has abused the right to convert
               and converted in bad faith, to order that all property held
               at the time of conversion shall constitute property of the
               estate in the converted case.

  Aplt. App. at 250–51. The Third Circuit in Bobroff determined that a Chapter 13

  debtor’s tort claims that accrued post-petition, pre-conversion were not part of the

  converted Chapter 7 estate. Conversely, the Seventh Circuit in Lybrook

  concluded that real estate inherited by a Chapter 13 debtor post-petition but pre-

  conversion was part of the converted Chapter 7 estate. See In re Bobroff, 766

  F.2d at 803; In re Lybrook, 951 F.2d at 137. So, the legislative history supports

  the outcome to which the plain text already points: the pre-conversion house-sale

  proceeds are not property of the Chapter 7 estate. Because the text, structure, and

  context of these provisions confirm our analysis, we need not rely on the

  legislative history.

        We recognize that our interpretation of § 348(f)(1)(A) potentially allows

  converting debtors to sell property of the estate after confirmation of the Chapter

  13 plan prior to conversion to shield the value of those assets from creditors. But

  11 U.S.C. § 348(f)(2) already ensures that if a debtor converts in “bad faith,” “the

  property of the estate in the converted case shall consist of the property of the

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  estate as of the date of conversion.” 4 (Emphasis added.) What’s more, the

  Bankruptcy Code appears to anticipate that debtors may be able to take these

  types of actions in some instances. Specifically, it permits a debtor to protect

  assets to the detriment of his creditors as long as those actions are not taken in

  bad faith. See, e.g., Hanson v. First Nat. Bank in Brookings, 848 F.2d 866, 868

  (8th Cir. 1988) (“[U]nder the Code, a debtor’s conversion of non-exempt property

  to exempt property on the eve of bankruptcy for the express purpose of placing

  that property beyond the reach of creditors, without more, will not deprive the

  debtor of the exemption to which he otherwise would be entitled.”); but see In re

  Fobber, 256 B.R. 268, 279 (Bankr. E.D. Tenn. 2000) (“[Section] 348(f) was

  never designed to be a safe harbor for debtors who fraudulently and

  surreptitiously dispose of property of the estate while in chapter 13.”).

  Nevertheless, the issue of bad faith is not before us, so we need not decide

  4
    Indeed, the power of bankruptcy courts to make bad-faith determinations is
  broad. See 11 U.S.C. § 105 (stating that a bankruptcy court may, “sua sponte,
  tak[e] any action or mak[e] any determination necessary or appropriate to enforce
  or implement court orders or rules, or to prevent an abuse of process”); see also
  Marrama, 549 U.S. at 375 (discussing 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”). In these fact-intensive inquiries,
  bankruptcy courts look at the “totality of circumstances” and have wide
  discretion in considering all the facts. See, e.g., In re Pac. Rim Invs., LLP, 243
  B.R. 768, 773 (Bankr. D. Colo. 2000); In re Siegfried, 219 B.R. 581, 585 (Bankr.
  D. Colo. 1998) (finding a debtor’s conversion from Chapter 13 to Chapter 7 was
  in bad faith due in part to the debtor’s “pattern of dissembling, failure to fully or
  accurately disclose financial affairs, disingenuous explanations of wrongful
  conduct and unfair manipulation of the bankruptcy system to the detriment of his
  creditors”).

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  whether the Debtors acted in bad faith here. 5 It is our job to interpret the

  statutory text, and it is up to Congress to set the parameters in which debtors and

  creditors operate. 6

  5
    Though not at issue in this case, the Bankruptcy Code may also limit the extent
  to which debtors converting from Chapter 13 to Chapter 7 can shield their assets
  from secured creditors. The Code states that
              if the debtor and an entity entered into a security
              agreement before the commencement of the case and if
              the security interest created by such agreement extends
              to property of the debtor acquired before the
              commencement of the case and to proceeds . . . of such
              property, then such security interest extends to such
              proceeds . . . acquired by the estate after the
              commencement of the case to the extent provided by
              such security agreement and by applicable
              nonbankruptcy law, except to any extent that the court,
              after notice and a hearing based on the equities of the
              case, orders otherwise.

  11 U.S.C. § 552(b)(1). Creditors may also request a modification of a confirmed
  Chapter 13 plan to account for proceeds from the post-confirmation sale of an
  asset by the debtor. See id. § 1329(a). Creditors are protected when a plan is
  modified because any modification of a confirmed plan requires the bankruptcy
  court to consider the best interests of the creditors. See id. § 1329(b)
  (incorporating § 1325(a)(4)). The court will only modify a plan if creditors
  receive the same or greater value under the modified plan as they would under a
  Chapter 7 liquidation. Id.; In re Baker, 620 B.R. at 658. There may also be other
  techniques creditors can deploy if they fear surviving assets will be sold after
  Chapter 13 confirmation.
  6
    We understand that several bankruptcy courts have reached the opposite
  conclusion in similar cases, electing to treat post-petition, pre-conversion
  proceeds as property of the estate. See, e.g., In re Laflemme, 397 B.R. 194, 203
  (Bankr. D.N.H. 2008) (treating commissions the debtor earned pre-petition, but
  did not receive until after filing the petition, as property of the estate upon
  conversion from Chapter 13 to Chapter 7); In re Grein, 435 B.R. 695, 702 (Bankr.
  D. Colo. 2010) (“[E]ven though the Debtors . . . did not possess nor control the
  [assets] at the time of reconversion, these assets are property of the reconverted
  (continued . . .)
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                                      *    *     *

        The most faithful reading of the statutory text supports the conclusion that

  the proceeds from the sale of the Debtors’ house belong to the Debtors, not the

  Chapter 7 estate.

                                 III. Conclusion

        We accordingly AFFIRM the Bankruptcy Appellate Panel.

  Chapter 7 estate because literal application of 11 U.S.C. § 348(f)(1)(A) would
  produce absurd results and permit debtors to engage in carte blanche fraud.”).
  Nevertheless, we believe the text is plain and guides our result here. If Congress
  believes that debtors are abusing § 348(f)(1)(A), it can address any unintended
  consequences.
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