Who Gets the Money Per the Fifth Circuit

By The Honorable William Houston Brown (Retired)

Fifth Circuit gives undistributed money to creditors. On conversion of a confirmed case to Chapter 7, the undistributed funds held by the Chapter 13 trustee should go to creditors, except for $1,200 assigned by the debtor for payment of unpaid attorney fees. The circuit panel discussed the split of authority on what passes to the Chapter 7 estate on conversion, prior to the 1994 amendment to § 348, as well as the absence of a statute that explictly states what happens to undistributed money on conversion after the 1994 . . .

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