Who retains the chapter 13 paYments?

Asked about 1 year ago - Phoenix, AZ

I filed a chapter 13 in Arizona, made payments for 13 months, the bk was never confirmed by the trustee, I became ill and couldnt continue to make the payments so I reverted to a chapter 7. Who gets the money I paid in over 13 months?

Attorney answers (7)

  1. Thomas A McAvity

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    Contributor Level 14

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    Answered . My experience is that you will likely receive something in the way of a refund after the trustee administrative costs are deducted and pre-confirmation payments to secured creditors have been distributed.

    Please consult an attorney who is licensed in your state to evaluate your case if you have any questions at all.... more
  2. Lonnie K McDowell

    Contributor Level 15

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    Answered . The money you paid into the chpt 13 prior to converting to a 7 is not exempt, and can be taken by the chpt 7 trustee to pay to your creditors. Some chpt 7 trustees do so, others let it get refunded to you. If it does get refunded to you, I suggest you do not spend it until the trustee files a notice of abandonment and the court closes the case. Few things are more painful than having the trustee claim money you've already spent and cannot easily repay.

    The general advice above does not constitute an attorney-client relationship: you haven't hired me or given me... more
  3. Diane L Drain

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    Answered . From your question I assume you are not represented by an attorney. If so, please talk to them.

    You can see from the answers that some conflict with others. The correct answer is that most of the funds you paid to the chapter 13 will be returned to you. The trustee will retain certain funds depending on what has been paid out (adequate protection payments) and may submit pre petition assets (such as tax refunds) to the chapter 7 trustee.

    Arizona has a self help center at the Bankrupty Court. Contact them for an appointment.

    This firm is in the business of helping people and companies file for bankruptcy protection. Therefore, the... more
  4. Steven W Zachary

    Contributor Level 17

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    Answered . I have seen the trustee return the money to the petitioner in 7 cases. You should ask the 13 trustee what is his intention are with the money collected.

  5. Steven M. Brechner

    Contributor Level 2

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    Answered . Diane Drain is correct, entirely.

  6. David K. Hilbern

    Contributor Level 5

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    Best Answer
    chosen by asker

    Answered . Because the plan was not confirmed the plan payments were not dispersed to your creditors. The chapter 13 trustee should release the money back to you - in Oklahoma it usually takes about 30 days. However, I agree that the plan payment refunds may not be exempt property in the chapter 7 and the chapter 7 trustee may want you to turn over the funds to be distributed to your creditors. You would want to make sure you talk to your lawyer or the chapter 7 trustee before spending the money.

    DISCLAIMER: David K. Hilbern 405-213-1919 is licensed to practice law in the State of Oklahoma and this answer is... more
  7. Paula Brown Sinclair

    Contributor Level 20

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    Answered . If the Plan was never confirmed by the c ourt, the payments were held in trust by the Trustee, and will be released on conversion.

    Best wishes for a favorable outcome, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.

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