Opinion: Tie goes to the debtor in consumer bankruptcy dispute about funds paid to trustee

Harris v. Viegelahn is living proof that the Court takes its responsibility for resolving circuit conflicts seriously. This is a consumer bankruptcy case that involves only $5000 and turns on a remarkably narrow issue of statutory interpretation: when a debtor converts a bankruptcy proceeding from Chapter 13 to Chapter 7, what happens to funds that the trustee is holding at that moment, previously collected out of the debtor’s wages but not yet distributed to creditors? With refreshing candor, the Court acknowledges that the statute provides no clear answer to the question, resting its decision to side with the debtor largely on the Court’s intuitions about how the Bankruptcy Code should work.
To understand how the issue arises, consider the facts of the case at hand. Petitioner Charles Harris filed a petition for relief under Chapter 13 in 2010.

Original SCOTUS article

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