§ 44.5     Return of Payments to Debtor
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 44.5, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),1 § 1326(a)(2) contained this provision with respect to the disposition of payments by the debtor to the trustee:

A payment made under [§ 1326(a)] shall be retained by the trustee until confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan as soon as practicable. If a plan is not confirmed, the trustee shall return any such payment to the debtor, after deducting any unpaid claim allowed under § 503(b) of this title.2

This section was substantially and inartfully rewritten by BAPCPA, and the new version creates many new problems.3 The related issues of entitlement to funds held by the trustee upon conversion or dismissal are discussed elsewhere.4

[2]

If the debtor commenced making payments to the trustee consistent with § 1326(a)(1),5 there will usually be a fund of money held by the trustee at the time of denial of confirmation. Although § 1326(a)(2)—before and after amendment by BAPCPA—speaks of any unpaid claim and § 503(b) allows administrative expenses, the ambiguous wording of § 1326(a)(2) was interpreted prior to BAPCPA to mean that the debtor was entitled to a return of payments in an unconfirmed case subject to the allowance of administrative expenses.6 Because of the strange rewording of § 1326(a)(2) by BAPCPA, there are now difficult questions of statutory interpretation with respect to which “payments” commenced under § 1326(a) must be returned to the debtor in an unconfirmed case.7

[3]

Section 1326(a)(2) most often comes into play when the trustee holds payments from the debtor in an unconfirmed case at conversion8 or dismissal.9 But § 1326(a)(2) does not require the debtor to wait until conversion or dismissal to demand return of payments. At conversion or dismissal after confirmation, a majority of courts both before and after BAPCPA conclude that funds on hand are distributed to creditors, though a respectable minority disagrees.10

[4]

There was no uniformity among jurisdictions in pre-BAPCPA cases concerning the handling of refunds under § 1326(a)(2). In some jurisdictions, after the denial of confirmation, the Chapter 13 trustee mailed any funds on hand to the debtor unless a motion, objection or request for payment of an administrative expense was filed. In other jurisdictions, the trustee issued a check jointly payable to the debtor and the debtor’s attorney. In all jurisdictions, the burden was on the party asserting an administrative expense to come forward quickly to stop the trustee from returning all the money on hand. But there is no bankruptcy rule that requires notice to creditors before the trustee refunds payments under § 1326(a)(2).

[5]

It is likely that BAPCPA will change practice with respect to the management of refunds under § 1326(a)(2). Detailed elsewhere,11 as amended by BAPCPA, § 1326(a)(1) requires Chapter 13 debtors to commence payments not later than 30 days after the petition with respect to leases of personal property and to provide adequate protection to some allowed secured claim holders. BAPCPA added ambiguous new language to § 1326(a)(2) with respect to payments “not previously paid and not yet due and owing to creditors pursuant to [§ 1326(a)(3)].”12 Arguably, the new language in § 1326(a)(2) creates statutory rights in some creditors with respect to payments in an unconfirmed case that will require procedural protection at the demise of a Chapter 13 case before confirmation. This is a fertile area for some attention by the Advisory Committee on Bankruptcy Rules.

[6]

Typically, the debtor’s lawyer has the most interest in deflecting the return of funds held by the trustee at denial of confirmation. Debtor’s counsel will often have unpaid fees allowable as an administrative expense under § 503(b). To protect that administrative expense, counsel should file and serve the trustee with a request under § 503(a) immediately after the denial of confirmation. Some jurisdictions additionally require debtor’s counsel to give notice to all creditors that funds held by the trustee will be used to pay attorneys’ fees absent a timely objection. Anyone with a competing administrative expense must come forward and request to share in the funds held by the trustee. After BAPCPA, some lessors of personal property and the holders of some allowed secured claims may also assert rights in the funds held by the trustee.13 When a Chapter 13 case is dismissed before confirmation, § 1326(a)(2) requires payment of attorneys’ fees allowed under § 503(b) before refunding the balance to the debtor.14

[7]

The reported pre-BAPCPA decisions reveal traps for debtors’ counsel when no plan is confirmed and payments must be returned to the debtor under § 1326(a)(2). It is apparently the practice of some debtors’ counsel to require a power of attorney or a letter from the debtors before commencement of the case authorizing counsel to collect unpaid fees from any money held by the trustee in the event the Chapter 13 case fails before confirmation. In In re Marin,15 the bankruptcy court held that debtors’ counsel violated §§ 1329, 1330 and 1326 of the Bankruptcy Code and Bankruptcy Rule 2016 by applying funds from the Chapter 13 trustee to fees based on a letter signed by the debtors before the filing of the case.

[8]

The potential conflict of interest hinted at in Marin is fleshed out by the bankruptcy court in In re Haskew.16 The Chapter 13 case in Haskew was dismissed before confirmation. The debtor’s attorney was unpaid and sought compensation as an administrative expense under § 503(b). The bankruptcy court found that debtor’s counsel had a special obligation to explain to the debtor the conflict of interest created by § 1326(a)(2):

[B]y virtue of the debtors’ right to all funds on hand except to the extent § 503(b) expenses are allowed, they are truly adverse to any administrative expense applicant, including the trustee or their own attorney. The practical dynamics created by § 1326(a)(2) require the applicant to give clear notice to the debtor of the relief sought and the nature of the impact on the debtor’s interest. . . . [A] debtor’s attorney seeking compensation in a dismissed chapter 13 case and payment from a Trustee under § 1326(a)(2) must do more than simply send a copy of a form fee application to his client. The debtor has no one, save the attorney he or she has hired, who can (and should) advise them how § 1326(a)(2) works.17
[9]

Chapter 13 trustees sometimes assess an expense charge in an unconfirmed case. 28 U.S.C. § 586(e) allows a standing trustee to collect a fee not to exceed 10 percent “from all payments received by such individual under plans in the cases under chapter . . . 13 . . . for which such individual serves as standing trustee.”18 The percentage fee for compensation and expense in 28 U.S.C. § 586(e) probably is not an administrative expense described in § 503(b) and thus is not deductible from the payments held by a Chapter 13 trustee in an unconfirmed Chapter 13 case under § 1326(a)(2).19 Section 1326(b)(2) mandates payment of a standing trustee’s percentage fee under 28 U.S.C. § 586(e)(1)(B) “[b]efore or at the time of each payment to creditors under the plan.”20 In an unconfirmed case, typically there will not have been any payments to creditors.21 The trustee’s best argument for recovery of the percentage fee in an unconfirmed case may be the word “[b]efore” in § 1326(b)(2). On the other hand, the pre-BAPCPA version of § 1326(a)(2) required the trustee to “retain[ ]” payments made by the debtor “until confirmation or denial of confirmation of a plan.” After BAPCPA, the trustee is only required to retain payments “made under [§ 1326(a)(1)(A)]”—that is, payments “proposed by the plan to the trustee.”22 If all parts of § 1326 work together, the trustee has difficulty identifying the statutory basis for collecting fees or expenses in an unconfirmed case.23

[10]

It is certainly true that the Chapter 13 trustee does the most work and incurs a greater portion of actual and necessary expenses in the early stages of a Chapter 13 case. But retention of the entire percentage fee could be excessive in some unconfirmed Chapter 13 case. It is the local practice in some jurisdictions in unconfirmed cases that the trustee deducts a fixed “setup fee” from the funds on hand before paying the balance to other administrative expenses or to the debtor. This is a reasonable outcome, though it is not obvious that such a payment is contemplated by the Code in an unconfirmed case.

[11]

Creditors sometimes have administrative expenses in an unconfirmed case. Any entity that expended money or advanced goods or services for the “actual, necessary costs and expenses of preserving the estate” may request an administrative expense under § 503(b).24 For example, a landlord might have an administrative expense if the debtor failed to pay postpetition rent.25 Wages, salaries or commissions for services rendered to a business debtor might be allowable from the money held by the trustee.26 Even before BAPCPA, Chapter 13 debtors sometimes provided adequate protection of a secured claim holder’s interest in collateral prior to confirmation by making payments to the Chapter 13 trustee.27 After BAPCPA, § 1326(a)(1)(C) requires a strange form of “adequate protection” to certain allowed secured claim holders commencing not later than 30 days after the petition.28 If no plan is confirmed, a creditor entitled to preconfirmation adequate protection payments may argue for an administrative expense allowance in the money held by the trustee.29

[12]

It will be very difficult to recover administrative expenses after the trustee returns money to the debtor under § 1326(a)(2). Any creditor with an administrative expense must act quickly to assert claims to the money held by the trustee after a denial of confirmation. Although controversial, several decisions demonstrate that an especially diligent creditor can capture the funds held by the trustee in an unconfirmed case before return to the debtor by serving a levy or execution on the trustee.30


 

1  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

2  11 U.S.C. § 1326(a)(2), prior to amendment by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

3  See 11 U.S.C. § 1326(a)(2), discussed in § 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA.

 

4  See §§ 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994, 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994, 338.1 [ In General ] § 153.1  In General, 534.1 [ Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) ] § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA and 541.1 [ Consequences of Dismissal ] § 153.2  Consequences of Dismissal Added or Changed by BAPCPA.

 

5  See §§ 43.1 [ First Test of Debtor’s Good Intentions ] § 44.1  First Test of Debtor’s Good Intentions and 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA.

 

6  See §§ 99.1 [ What Claims Are Priority Claims? ] § 73.2  What Claims Are Priority Claims?, 100.4 [ Special Provisions for Attorneys’ Fees ] § 73.8  Special Provisions for Attorneys’ Fees, 291.1 [ Treatment of Priority Claims ] § 136.1  Treatment of Priority Claims, 293.1 [ Trustee’s Fees and Expenses ] § 136.4  Trustee’s Fees and Expenses before BAPCPA, 294.1 [ Debtors’ Attorneys’ Fees ] § 136.6  Debtors’ Attorneys’ Fees before BAPCPA and 298.1 [ Miscellaneous Administrative Expenses and Other Priority Claims ] § 136.14  Miscellaneous Administrative Expenses and Priority Claims before BAPCPA.

 

7  See § 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA.

 

8  See §§ 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994, 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994 and 534.1 [ Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) ] § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

9  See §§ 338.1 [ In General ] § 153.1  In General and 541.1 [ Consequences of Dismissal ] § 153.2  Consequences of Dismissal Added or Changed by BAPCPA.

 

10  See §§ 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994, 338.1 [ In General ] § 153.1  In General, 534.1 [ Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) ] § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA and 541.1 [ Consequences of Dismissal ] § 153.2  Consequences of Dismissal Added or Changed by BAPCPA. See, e.g., In re Parker, 400 B.R. 55 (Bankr. E.D. Pa. 2009) (Section 1326(a)(2) only requires refund to debtor of payments before confirmation; secured creditor is entitled to unclaimed funds at dismissal after confirmation.); In re Chase, No. 03-10092, 2008 WL 2309529 (Bankr. W.D. Pa. June 4, 2008) (unpublished) (At dismissal after confirmation, § 1326(a)(2) requires trustee to pay funds on hand to creditors.).

 

11  See § 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA.

 

12  11 U.S.C. §  1326(a)(2), discussed in § 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA.

 

13  See § 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA.

 

14  See, e.g., In re Lewis, 346 B.R. 89 (Bankr. E.D. Pa. 2006) (At dismissal before confirmation, § 349(b)(3) ordinarily would revest in the debtor all funds held by the Chapter 13 trustee; however, if debtor’s counsel files a request for payment of attorney’s fees as an administrative expense before the case is dismissed, § 1326(a)(2) allows a surcharge of the funds held by the trustee for “cause.”); In re Hall, 296 B.R. 707 (Bankr. E.D. Va. 2002).

 

15  256 B.R. 503 (Bankr. D. Colo. 2000).

 

16  No. 00-20792, 2001 WL 589043 (Bankr. D. Idaho May 18, 2001) (unpublished).

 

17  2001 WL 589043, at *3.

 

18  28 U.S.C. § 586(e)(2). See § 63.1 [ Standard Percentage Fee and Expenses ] § 54.1  Standard Percentage Fee and Expenses.

 

19  See §§ 63.1 [ Standard Percentage Fee and Expenses ] § 54.1  Standard Percentage Fee and Expenses, 64.7 [ Compensation When Case Is Dismissed or Converted before Confirmation ] § 54.9  Compensation When Case Is Dismissed or Converted before Confirmation, 99.1 [ What Claims Are Priority Claims? ] § 73.2  What Claims Are Priority Claims?, 293.1 [ Trustee’s Fees and Expenses ] § 136.4  Trustee’s Fees and Expenses before BAPCPA and 338.1 [ In General ] § 153.1  In General. See, e.g., Skehen v. Miranda (In re Miranda), Nos. NM 01-044 to -048, 2001 WL 1538003 (B.A.P. 10th Cir. Dec. 4, 2001) (unpublished) (At dismissal before confirmation, fees and expenses of standing Chapter 13 trustee are not administrative expenses under § 503(b) and cannot be collected before returning payments to debtor.). But see In re Doherty, 229 B.R. 461, 467 (Bankr. E.D. Wash. 1999) (At dismissal in an unconfirmed case, “the Trustee is authorized and entitled to deduct from the funds held the sum of $516.00 for administrative expenses. . . . [T]he remaining funds are subject to the Department of Revenue’s Notice and Order to Withhold and Deliver.”).

 

20  11 U.S.C. § 1326(b)(2). See §§ 63.1 [ Standard Percentage Fee and Expenses ] § 54.1  Standard Percentage Fee and Expenses, 64.4 [ Compensation on Direct Payments by Debtor ] § 54.6  Compensation on Direct Payments by Debtor, 64.7 [ Compensation When Case Is Dismissed or Converted before Confirmation ] § 54.9  Compensation When Case Is Dismissed or Converted before Confirmation and 293.1 [ Trustee’s Fees and Expenses ] § 136.4  Trustee’s Fees and Expenses before BAPCPA.

 

21  After BAPCPA, payments to creditors before confirmation are more common because of the amendments to § 1326(a)(1)(B) and (C). Payments to creditors “under the plan” for 28 U.S.C. § 586(e)(1)(B) purposes could occur before confirmation of a plan when the plan proposed by the debtor includes preconfirmation payments to creditors. This creates an uncertain dynamic in failed unconfirmed cases after BAPCPA. See § 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA for further discussion.

 

22  11 U.S.C. § 1326(a)(1)(A), as amended by BAPCPA. See §§ 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA and 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA.

 

23  See § 338.1 [ In General ] § 153.1  In General.

 

24  See § 298.1 [ Miscellaneous Administrative Expenses and Other Priority Claims ] § 136.14  Miscellaneous Administrative Expenses and Priority Claims before BAPCPA.

 

25  See § 296.1 [ Leases and Executory Contracts ] § 136.10  Leases and Executory Contracts before BAPCPA. See, e.g., In re Watkins, 362 B.R. 568 (E.D.N.Y. 2007) (At dismissal before confirmation, trustee is ordered to disburse postpetition rents to landlord and balance of funds on hand to debtor.).

 

26  See 11 U.S.C. § 503(b)(1)(A).

 

27  See § 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation.

 

28  See 11 U.S.C. § 1326(a)(1)(C), discussed in §§ 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA, 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA, 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA and 426.1 [ Adequate Protection Rights before Confirmation ] § 57.3  Preconfirmation Adequate Protection Rights after BAPCPA.

 

29  See §§ 297.1 [ Failed Adequate Protection ] § 136.12  Failed Adequate Protection before BAPCPA, 402.1 [ Disposition of Preconfirmation Payments ] § 44.7  Disposition of Preconfirmation Payments after BAPCPA, 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA and 518.1 [ Failed Adequate Protection ] § 136.13  Failed Adequate Protection after BAPCPA for discussion of the questions whether adequate protection of a secured claim holder can be an administrative expense under § 503(b) and whether the failure of confirmation of a plan triggers the “super priority” in § 507(b). See, e.g., In re Inyamah, 378 B.R. 183 (Bankr. S.D. Ohio 2007) (At dismissal before confirmation, undistributed funds held by trustee, less adequate protection payments and administrative claims, are returned to debtor under § 1326(a)(2). Contrary decisions are unpersuasive, citing Massachusetts v. Pappalardo (In re Steenstra), 307 B.R. 732 (B.A.P. 1st Cir. 2004).); In re Brown, 319 B.R. 898, 902–03 (Bankr. M.D. Ga. 2004) (In dicta, “[i]n the Southern District of Georgia, in the event a case is dismissed prior to confirmation, accumulated payments are disbursed to secured creditors rather than returned to the debtor based on this rationale.” The rationale is: “This Court routinely denies stay relief to automobile creditors prior to confirmation of Chapter 13 plans because considering such motions early in the case and requiring appropriate payments would hopelessly disrupt the administration of Chapter 13 cases. This delay in payment usually ends at confirmation, when the accumulated payments made by the debtor preconfirmation are disbursed to secured creditors. Courts like this one typically reason that the debtor’s payments into the plan beginning one month after filing . . . serve as informal adequate protection.” Because the debtor’s plan would delay payments to a car lender until 10 months after the petition, while attorney fees were paid in full, bankruptcy court denied confirmation and dismissed the case, and “[a]ny money paid into the case will, after payment of trustee fees, be distributed to secured creditors in proportion to the size of their secured claims.”).

 

30  See Beam v. IRS (In re Beam), 192 F.3d 941 (9th Cir. 1999) (IRS levy captures $24,000 held by trustee at dismissal of an unconfirmed Chapter 13 case. Chapter 13 case filed in January of 1993 was denied confirmation in June of 1997. Over the intervening four years, the debtors deposited with the trustee $24,000 toward the proposed plan. After confirmation was denied, debtors moved to dismiss. IRS served a notice of levy on the Chapter 13 trustee. “Congress clearly intended to exclude from IRS levy only those 13 categories of property specifically-exempted in [26 U.S.C.] § 6334(a). . . . Section 1326(a)(2) of the Bankruptcy Code is not listed among the 13 items exempt from levy under § 6334(a). . . . Because a trustee in bankruptcy represents the bankruptcy estate, see 11 U.S.C. § 323, the trustee is therefore obligated to the estate. Accordingly, service of a notice of levy upon the trustee in bankruptcy for any obligations owed by the estate is proper.”); In re Pruitt, Nos. 07-31620-DHW, 07-10877-DHW, 2008 WL 2079145 (Bankr. M.D. Ala. May 15, 2008) (unpublished) (Although § 1326(a)(2) requires trustee to return payments to debtor upon denial of confirmation, 26 U.S.C. § 6331 requires trustee to honor levy of IRS to extent funds are not exempt under 26 U.S.C. § 6334; in contrast to garnishment cases involving state law, federal tax levy is not subject to preemption by Bankruptcy Code.); In re Roberts, No. 01-14849-13, 2002 WL 1770767, at *1 (Bankr. S.D. Ala. June 18, 2002) (unpublished) (Standing trustee must honor IRS’s levy served after dismissal of Chapter 13 case before refunding to the debtor. “[United States v. Ruff, 99 F.3d 1559 (11th Cir. 1996),] has been applied to require a Chapter 13 Trustee to honor a Title 26 Notice of Levy. . . . This requirement applies notwithstanding language in 11 U.S.C. § 1326(a) calling for return of funds to the debtor. . . . The Trustee is instructed to follow the command of 26 U.S.C. § 6331 and hand over all funds remaining after his administrative expenses to the counsel for the United States.”); In re Brown, 280 B.R. 231, 234 (Bankr. E.D. Wis. 2002) (At dismissal before confirmation, IRS’s prepetition lien trumps debtor’s right to return of funds. “As the [Beam v. IRS (In re Beam), 192 F.3d 941 (9th Cir. 1999),] court found, the IRS’ lien and levy superceded the debtor’s right to return of the funds under 11 U.S.C. § 1326(a)(2).”); In re Doherty, 229 B.R. 461, 462–67 (Bankr. E.D. Wash. 1999) (Upon dismissal in an unconfirmed case, after deduction of administrative expenses, levy by State of Washington on Chapter 13 trustee defeats debtor’s right to return of payments under § 1326(a)(2). At dismissal before confirmation, trustee was holding $9,330 received from the debtor. State of Washington levied on the trustee to recover prepetition taxes owed by debtor. “The disposition of post-petition funds received by the Chapter 13 Trustee is addressed in 11 U.S.C. § 1326(a)(2). This section directs that post-petition payments be returned to the debtor if the case is dismissed prior to confirmation. . . . This is a clear statutory mandate to the Trustee. The Court cannot permit the State’s levy to interfere with the accomplishment of the Trustee’s duties to determine and pay costs of administration. Those statutory duties are preemptive both under the Supremacy Clause of the United States Constitution and the doctrine of Custodia Legis. The Trustee in this case has accomplished these duties and the only matter remaining is distribution of the remainder of the funds to the debtor after paying costs of administration. The question then becomes whether the State’s levy upon the funds not necessary to pay the administrative and trustee costs primes the Debtors’ claim to the funds. . . . The automatic stay provision of § 362 protects both the debtors and the property of their estates. Those protections terminate upon the dismissal of the case. The language of § 1326(a)(2) does not clearly extend those protections beyond the entry of the order of dismissal.”). But see Mickler v. Davis, No. 3:04CV135J99TEM, 2005 WL 2179772 (M.D. Fla. Sept. 9, 2005) (unpublished) (Section 1326(a) requires trustee to return funds to debtor rather than to creditors at dismissal before confirmation; suit against trustee for returning money to debtor is dismissed under Barton v. Barbour, 104 U.S. 126, 26 L. Ed. 672 (1881), when plaintiff did not obtain permission of bankruptcy court and did not exhaust administrative remedies before suing.); In re Sexton, 397 B.R. 375 (Bankr. M.D. Tenn. 2008) (Paine) (Section 1326(a) is unambiguous: at dismissal, trustee must refund money on hand to debtors rather than to U.S. Department of Health and Human Services under writ of garnishment served on trustee.); In re Weitzman, 381 B.R. 874 (Bankr. N.D. Ill. 2008) (Upon dismissal, § 1326(a) requires trustee to return funds to debtor net of administrative expenses, superseding state law that might require trustee to hold funds for creditor. Casino’s motion to reopen case to pursue state court action against trustee is without merit. Trustee is protected by Barton doctrine, Barton v. Barbour, 104 U.S. 126, 128–29, 26 L. Ed. 2d 672 (1881) (receiver could not be sued without permission from court that appointed receiver).); In re Bailey, 330 B.R. 775, 776, 777 (Bankr. D. Or. 2005) (Funds held by the Chapter 13 trustee following dismissal of the case prior to confirmation must be returned to the debtor and are not subject to levy or other forced collection under state law. The debtor’s case was dismissed prior to confirmation, and the trustee had collected $4,800 in plan payments. After dismissal, a creditor served the trustee with a state garnishment. The trustee sought instructions from the bankruptcy court. The funds must be returned to the debtor based upon the clear language of § 1326(a)(2), which mandates return of the funds to the debtor. “Section 1326(a)(2) is clear and unambiguous, therefore, its dictates must be followed. . . . In addition, sound policy reasons support returning the funds to the debtor. . .  ‘Returning the money to the debtor ensures the orderly and efficient disposition of chapter 13 cases. . . . By requiring the trustee to return the money to the debtor, Congress ensured that any attempts to reach the money would ensue outside the jurisdiction of the bankruptcy court. Therefore, unconfirmed cases may be closed as quickly as statutorily possible following dismissal.’”); In re Davis, No. 04-30002-DHW, 2004 WL 3310531, at *2 (Bankr. M.D. Ala. June 16, 2004) (unpublished) (At dismissal before confirmation, bankruptcy court retains jurisdiction to determine disposition of money held by the Chapter 13 trustee, and § 1326 trumps a state court levy on the trustee by a creditor with a prepetition debt. “This court agrees with the [In re Oliver, 222 B.R. 272 (Bankr. E.D. Va. 1998),] line of cases holding that § 1326(a) is clear and unambiguous with regard to the disposition of the funds. The trustee has a statutory obligation to return the funds to the debtor. 11 U.S.C. § 1326 preempts the state court garnishments statute. This disposition of the money . . . fosters the policy of encouraging debtors who are financially able to repay their debts to file chapter 13. It ensures that debtors who attempt chapter 13 will not be penalized for an unconfirmed attempt.”).