Note from Aki Koyama on Harris v. Viegelahn

SCOTUS published its opinion this morning for the Harris v. Viegelahn matter. This is the case about what happens to the plan payments the chapter 13 trustee is holding when a case gets converted to chapter 7. In a short opinion, SCOTUS holds that the funds are returned to the debtor. This complicates preconfirmation conversions from 13 to 7. Can the trustee pay attorney’s fees from the plan payment balance when a RARA has been filed but the case is converted preconfirmation? The case seems to indicate no. Our Local Bankruptcy Rules are slient on the issue of what happens to the funds when a case is converted from 13 to 7 and a RARA has been filed. Time for an LBR revision or clarification on whether or not a fee application must be filed in this scenario.

Here’s the link to the opinion

A reader commented to Aki:  Very good point. Although the LBR is silent, how has your office been handling this issue up to now? (attorney fees owed during preconfirmation conversion…RARA filed.

Aki’s response:  Our office has been paying attorney’s fees if a RARA has been filed but we will have to reconsider this now.

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