I'm converting my chapter 13 bankruptcy case to a chapter 7 but the trustee still have funds that have not been sent to creditors which are all unsecure loans
Yes. Upon conversion of the Ch13 to a Ch7, a Ch7 Trustee is then assigned and the case is transferred from the Ch13 Trustee to the new Ch7 Trustee. A new Ch7 Meeting of Creditors date is also assigned. The Ch13 Trustee will then prepare and file an accounting showing the un-distributed funds on hand, and will forward those funds to the Ch7 Trustee. You should file an amendment to your Petition, to show the amount of the post-petition payments that you made to the Ch13 Trustee (on Schedule B) and exempt those funds to the extent possible on Schedule C). Once the Ch7 Trustee has completed their examination of you at the new Ch7 Sect. 341(a) Meeting of Creditors, and has concluded that examination and determined that there are no non-exempt assets available for creditors (and has then filed the Trustee's Report of No Distribution), then the Trustee will refund to you the previous Ch13 funds. To the extent the Ch7 Trustee determines there ARE non-exempt assets and that monies are to be paid to creditors, then some or all of the previous Ch13 funds may be used for those payments.
In my district you would receive a refund of the money with the chapter 13 trustee. I am not sure if that is the case in every district. You should check with your attorney.
The answer above is for general information purposes only. You should talk to an attorney to determine your specific legal rights.
Chapter 13 Bankruptcy Attorney
It really depends on your trustee. If your trustee has undistributed funds at the time you convert to the Chapter 7 technically the funds become property of your Chapter 7 bankurptcy estate. Some Chapter 13 trustee's will forward the funds to the debtor but some Chapter 13 trustee's will forward the funds to the new Chapter 7 trustee and it is then up to the debtor to prove the funds are exempt and get them back. Unless there is an urgent need to convert wait until the Chapter 13 trustee has distributed all of the funds and files a motion to dismiss then file the notice of conversion to the Chapter 7 before the motion is heard. That will buy you the most amount of time to be protected by the stay of both the Chapter 13 and the Chapter 7. The best way to know if the Chapter 13 trustee has funds is to call up and ask.
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