Notwithstanding Trustee and Creditor Objections, Court Granted Chapter 13 Debtor’s Motion to Direct Where Funds Held by Trustee Go When She Voluntarily Dismissed Confirmed Case

Notwithstanding Trustee and Creditor Objections, Court Granted Chapter 13 Debtor’s Motion to Direct Where Funds Held by Trustee Go When She Voluntarily Dismissed Confirmed Case

Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on August 31, 2016. The Debtor’s plan utilized the form plan approved in this district. It was filed with her petition and was orally confirmed on October 18, 2016. It provided Debtor would pay $1,847 per month for not less than 36 months, and these payments would be made by an order directed to Debtor’s employer. The plan provided the Trustee would pay as administrative expenses attorney fees to Moore & Associates in the amount of $2,950 and the court filing fee of $310. The plan also provided the Trustee would pay ongoing mortgage payments and a prepetition arrearage to Rushmore Loan Management Services, LLC (Rushmore). Paragraph 16 of the confirmed plan defined property of the estate as “property specified in 11 U.S.C. § 541 . . . [and] all property acquired after the filing of the bankruptcy petition, including earnings.” It also stated, “[a]ll property of the estate will vest in Debtor at discharge or dismissal of the case.”

Debtor filed a notice of voluntary dismissal on July 21, 2017, and an order dismissing the case was entered on July 24, 2017. At the time of the dismissal, the Trustee had funds on hand in the amount of $13,788.87, which were being held for Rushmore. The funds had accumulated because Rushmore did not file its proof of claim until June 20, 2017. The Trustee’s motion to allow the claim was granted on July 20, 2017, four days before the dismissal order was entered. When Debtor’s counsel advised the Trustee that she would be filing a motion to have the funds paid to Debtor, the Trustee manually pulled a check that his payment system had written to Rushmore in the amount of $13,788.87, dated July 31, 2017.

After oral argument, at the request of the Court, Debtor filed her agreement with Moore & Associates. It provides for a flat fee for basic bankruptcy services and a schedule of fees for additional services. It also states, “I/We agree that in the event my/our case is dismissed at any time after the Meeting of Creditors, that Moore & Associates, LLC shall have the right to recover all funds in the hands of the Chapter 13 Trustee that would otherwise be refunded, up to the total fees then due for this case.”

Please note, in order to view NACBA Member Content, you must sign in and then visit NEWS. If you are not a NACBA member, you may Become a NACBA Member 

No Comments

Post a Comment