Marrama V. Citizens Bank of Mass

Marrama v. Citizens Bank of Massachusetts was a 2006 Supreme Court case that dealt with bankruptcy and bad faith. The case began in 2003 when Robert Marrama filed for Chapter 7 bankruptcy. The main creditor he owed money to was Citizens Bank of Massachusetts. In filing for bankruptcy, Marrama made several false statements when disclosing the details about his home in an attempt to keep the property. When the case went to court, Marrama stated that his misinformation was a result of scrivener's error and argued that he should be given the right to switch from Chapter 7 to Chapter 13 bankruptcy under section §706(a) of the Code. This was rejected by the judge at the bankruptcy trial. Marrama appealed this ruling.

The appeals eventually made it to the Supreme Court because some of the circuit courts issued opinions that were contrary to one another. The Supreme Court took the case, and the main question at stake was whether or not a Chapter 7 debtor had the right to convert to Chapter 13, even when acting in bad faith or concealing assets while filing, based on the statements found in §706(a) of the Code. The Citizens Bank lawyers argued that because the statute says "may" instead of "shall" when granting this right, the courts can make an exception when debtors act in bad faith. The opinion was written by Justice Stevens, and in it the Court upheld the original decision, stating that courts have the right to make an exception for bad faith when a debtor is switching from Chapter 7 to Chapter 13. This decision was a five to four decision.

Click here to learn more about Kevin P. Simmons of Simmons, Jannace & Stagg