Chapter 13 Conversion to 7 Trustee question

[JJK]

My husband and I converted from a 13 to a 7 a couple of days ago. The ch.13 trustee closed the account and we noticed that there was still $2000 in a reserve account that was not sent out to creditors. Will we get any of that money back? Also our attorney was paid in full. Thanks.

[AngelinaCatHub]

My husband and I converted from a 13 to a 7 a couple of days ago. The ch.13 trustee closed the account and we noticed that there was still $2000 in a reserve account that was not sent out to creditors. Will we get any of that money back? Also our attorney was paid in full. Thanks.

Depending on your local exemptions, that account belongs now to your estate. If you cannot exempt or use a wild card exemption, you will be an asset case then your 7 Trustee will distribute it. In other words you will get it back but by way of the estate. It most likely will not become available to your hands. 'Hub

[despritfreya]

Actually, the answer depends upon whether or not your Plan was Confirmed.

If it was Confirmed the funds will be distributed to the creditors.

If the Plan was not Confirmed and there are no unpaid administrative or adequate protection claims, the funds will be returned to you.

In an unconfirmed case the Chapter 7 Trustee is not entitled to the money since your post petition (goes back to your initial filing date) wages are not property of a Chapter 7 estate. Further, in an unconfirmed case, 11 USC 1326(a)(2) directs the 13 Trustee to return funds to the debtor unless there is a Court Order directing something different.

Des.

[JJK]

Our 13 plan was confirmed 4 years ago. We have been paying all this time but decided to give up our home so converted to 7. We have no assets and our plan is almost paid off. Our lawyer just filed the 7 four days ago. We had our trustee payments garnished from our paycheck but the trustee faxed a paper to work stating to stop the garnishment since the 13 trustee closed our case. We are waiting to hear of the court date of creditors. If we do get money back from the trustee, will it be when the 7 is discharged? Thanks.

[despritfreya]

JJK,

Since there is a Court Order (Plan confirmed) directing the Chapter 13 to distribute the $$ he is holding you should not get any $$ back. 1326(a)(2) requires the Trustee to pay the $$ to creditors if the Plan is Confirmed, regardless of any Order to convert - at least that is the way things are handled in my district.

Des.