While this scenario does not involve many people, when it does apply to you, it is a very important rule. In a Chapter 13 bankruptcy, a person makes monthly payments to the bankruptcy court in order to pay for the person’s creditors. When the person is unable to make the monthly payments, the person can change their bankruptcy from a Chapter 13 bankruptcy to a Chapter 7 bankruptcy. The funds that the court received before the conversion to a Chapter 7 that were not distributed to creditors are required to be returned to the debtor.
If you are thinking of filing for bankruptcy or are needing a bankruptcy attorney, contact our law office at www.Hoorfarlaw.com or 816-524-4949.