MEMORANDUM DECISION THAT FUNDS HELD BY CHAPTER 13 TRUSTEE SHOULD BE RETURNED TO DEBTOR

HERB ROSS Bankruptcy Judge.

The basis for ruling how the $17,253.11 in funds held by the chapter 13 trustee from plan payments should be distributed is set forth in sufficient detail to explain the court's ruling in the Proceeding Memorandum at ECF 260 on 09/06/16. The only open question was whether it was possible that these funds were from prepetition property of the estate.

If the plan payments were from prepetition property of the estate, the chapter 7 trustee would have been entitled to the funds pursuant to 11 USC §348(f)(1)(A) since they were still in existence (being held by the chapter 13 trustee). If they were not from prepetition property of the estate and there was no confirmed plan, they should be returned to the debtor pursuant to 11 USC §1326(a)(1)(A) net of certain administrative expenses.

So, I asked the parties to show by tracing what the source of the $17,253.11 was. The parties filed supplemental briefs and papers (ECF 279 for NVPH and ECF 280 for the debtor). From this material, I conclude that about $2,000 was clearly postpetition since it was from the 2015 Alaska Permanent Fund dividend paid in October 2015. The balance of the chapter 13 plan payments were from postpetition funds loaned or given to debtor from his wife's separate property.

Regardless of the source, debtor has established that the $17,253.11 was from postpetition property, so these funds should be returned to the debtor. A separate order will be entered.