(888) Debt-Line Blog

I had a client come in today wondering what the chances are for her to convert her Chapter 13 to a Chapter 7 bankruptcy.  She started into her 5 year Chapter 13 plan about a year ago and she is going to retire soon and won’t have the same income as she did before. 

Section 1307(a) of the Bankruptcy Code gives Chapter 13 debtors what seems like an absolute right to convert to a Chapter 7 (if you qualify for a chapter 7).  Rule 1017(f)(3) of the Federal Rules of Bankruptcy Proceedure tells you how it is done.  It is done by filing a notice of conversion and can be done without a court order if done pursuant to Section 1307(a).

So I told my client, if it starts to hurt, we’ll convert.

I just spent the last 3 hours pouring through Oklahoma case law researching the issue of what can be considered “furniture” and thus exempt under the Oklahoma exemption covering “All household and kitchen furniture”.  Because there is no specific language for a TV, piano, washer and dryer, vacuum cleaner, I have always just lumped those types of items under the household furniture exemption and have never had a problem.  Lately, however, I have come across debtors with these types of items that are of significantly higher value so I was forced to face the issue square on and I have found my answer and the answer is……………………………….ready?:

 IT ALL DEPENDS!

 The sad truth is that all the district bankruptcy courts are a little different.  The Western District Bankruptcy Court seems to have the broadest interpretation of what “All household and kitchen furniture” can include, going so far as saying that TVs, VCRs and even lawnmowers can be covered by the exemption, depending on the situation.  The Courts seem to ride on the idea that if something is found to be reasonably necessary for the maintenance of the debtor’s home; that the word “furniture” can easily be substituted for “furnishings” or “goods” thereby broadening the exemption. 

 On the other hand, the Northern and Eastern District seem to take a more stiff approach; with the Eastern District Court even going so far as to bust out the Webster’s Dictionary to define furniture and rigidly applying that definition to say that a lawnmower is not furniture (even though, in the same case, they have no problem construing jewelry as wearing apparel).

 The Northern District Court, in one case made specific mention of the Western District case where the Court, citing the Oklahoma Supreme Court was OK with a piano being furniture.  In that case the Western District went one step further and said, not only is a piano furniture but the piano can be likened to a stereo and thus a stereo could theoretically be exempt under Oklahoma Law.

 In other words, nobody knows and the legislator could have been a little clearer in the wording.