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When Chapter 13 is dismissed, can I recover money paid to the trustee?

Phoenix, AZ |

I have a judgment, bank garnishment and a charging order against the debtors' business. The debtors filed for Chapter 13 immediately after the garnishment and charging order hearing so I didn't collect any money. The case is now being dismissed and there will be money left over which the trustee plans on returning to the debtors. Can I use my existing judgment to garnish that money so that it is returned to me and not the debtors? If so, what is the procedure I should follow?

Attorney Answers 3

Posted

The funds, in some states, are sent to the attorney of the debtor first. So, plan to attempt a garnishment there as well. Each state is different, best hire a local atty that handles "creditor rights"

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Posted

You can use your existing judgment to garnish money that is to be returned to the debtors although the current practice in Florida is that money is not returned to the debtors in Chapter 13, but instead paid to the creditors as it is paid to the trustee. You would name the Chapter 13 Trustee as a defendant in a garnishment lawsuit. Call the Chapter 13 Trustee to see if garnishment can be expedited.

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Posted

I agree with my colleagues, the procedures differ from jurisdiction to jurisdiction. Generally, the only time there are funds available upon dismissal is if the case is dismissed before confirmation. In our district, I have never heard of a Trustee refund being garnished, but it makes legal sense that the possibility is there. The Trustee is a 3rd party holding property belonging to the judgment Debtor.

I hope this helps.
Respectfully,
Steven A. Leahy
www.chicagotaxteam.com

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.

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