High Court Hands Ch. 13 Conversion Leftovers To Debtor

By Jonathan Randles (May 18, 2015, 11:07 AM EDT) -- The U.S. Supreme Court ruled unanimously Monday that post-petition funds held by a Chapter 13 trustee must be returned to the debtor, and not creditors or other parties, after the case is converted to a Chapter 7.

In a win for individual debtors, the justices held that the U.S. bankruptcy code limits a Chapter 7 estate to any property that a debtor owns on the date the original Chapter 13 is filed. Therefore assets a debtor has accumulated after filing Chapter 13, including wages, are excluded from the funds from which creditors can collect after a case has been converted, justices...

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