Withdrawal of Timely Filed Claims…What’s a Trustee to Do?

By Marsha M. Brown, Staff Attorney to Chapter 13 Trustee Douglas W. Neway (Jacksonville, FL)

What happens when a creditor files a timely, allowed claim, the Trustee commences disbursement on the claim, but the creditor has a change of heart and subsequently withdraws its claim?!? Are those disbursements prior to the withdrawal appropriate? Should the Trustee make the creditor refund the monies? Does there need to be an order approving the funds previously disbursed? As disconcerting as it may be, this article will provide no answers because it seems there are no “firm” answers as to this issue . . .

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