08 B 31707, 11 A 02415
Debtors/Plaintiffs filed for relief under Chapter 13 and confirmed their plan. They fell behind on plan payments, attempted to catch up, then voluntarily dismissed their case. The Chapter 13 Trustee was left holding a sum of money at dismissal. Debtors filed an adversary proceeding seeking turnover of the funds. The Chapter 13 Trustee argued that she must distribute the funds to creditors. Debtors filed a motion for judgment on the pleadings, since no facts were in dispute. HELD: The funds must be returned to the Debtors. 11 U.S.C. 1326(a)(2), which instructs trustees to distribute certain payments to creditors in accordance with the plan, applies only to preconfirmation payments. Postconfirmation, trustees must make payments under the plan pursuant to 1326(c). At dismissal, however, 349(b)(3) revests property of the estate in the entity in which such property was vested immediately before the commencement of the case, which in the case of funds paid into the plan, held by the Chapter 13 Trustee and not yet distributed, is the Debtors.