NOT FOR PUBLICATION1

UNITED STATES BANKRUPTCY APPELLATE PANEL 

OF THE TENTH CIRCUIT 

_________________________________ 

IN RE ALEXANDER L. BEDNAR,

 Debtor. 

___________________________________ 

JILL BEDNAR, RICK WARREN, 

Oklahoma County Clerk of Court, and 

JENNIFER BYLER, Deputy Courtroom 

Clerk, 

 Appellants, 

v. 

ALEXANDER L. BEDNAR and JOHN T. 

HARDEMAN, Chapter 13 Trustee, 

 Appellees.

BAP No. WO-20-041

BAP No. WO-20-042 

Bankr. No. 19-14021 

Chapter 13 

OPINION 

_________________________________ 

Appeal from the United States Bankruptcy Court 

for the District of Oklahoma Western 

_________________________________ 

Before ROMERO, Chief Judge, SOMERS, and PARKER, Bankruptcy Judges. 

 _________________________________ 

ROMERO, Chief Judge. 

 ________________________________ 

1

 This unpublished opinion may be cited for its persuasive value, but is not 

precedential, except under the doctrines of law of the case, claim preclusion, and issue 

preclusion. 10th Cir. BAP L.R. 8026-6. 

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The subject of how chapter 13 Trustees are to deal with funds in their possession 

upon the dismissal of a chapter 13 case has received considerable court attention the past 

few years. This case presents yet another chapter in the ever-evolving manual for dealing 

with such funds. In the matter before us, judgment creditors in a chapter 13 case 

dismissed before confirmation moved the Bankruptcy Court for authority to initiate 

garnishment proceedings against plan payments in the Trustee’s possession postdismissal. The Bankruptcy Court denied the request and this matter is now before us on 

appeal. 

I. FACTS

Alexander Bednar (“Bednar”) is a disbarred Oklahoma attorney who is no stranger 

to the bankruptcy system. The present saga began in connection with proceedings to 

foreclose Bednar’s interest in real property before the Oklahoma County District Court 

(“Oklahoma Court”). Specifically, on June 6, 2019, Bednar was ordered by the 

Oklahoma Court to appear for a hearing on assets.2

 Instead of appearing, Bednar filed a 

voluntary petition under chapter 13 of the Bankruptcy Code before the United States 

Bankruptcy Court for the Western District of Oklahoma (“Bankruptcy Court”),3 causing 

the hearing to terminate with no action. The First Case was promptly dismissed because 

Bednar failed to obtain the mandatory credit counseling.

4

2 Appellants’ App. at 112.

3 Case No. 19-12312 (“First Case”). See id.

4 Id.

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Subsequently the Oklahoma Court reset the asset hearing.5

 This was followed by 

Bednar filing another bankruptcy petition, again preventing the hearing from going 

forward.6

 Bednar failed to appear for the Meeting of Creditors and the Bankruptcy Court 

dismissed the Second Case on September 6, 2019.7

 Once again, the Oklahoma Court 

reset the asset hearing,8 but the third try was not the charm, as Bednar filed bankruptcy 

yet again on October 1, 2019.9

 These appeals arise from proceedings in the nowdismissed Third Case.

Shortly after Bednar filed the Third Case, Oklahoma County Court Clerk Rick 

Warren (“Warren”) and Deputy Courtroom Clerk Jennifer Byler (“Byler”) filed their 

appearances before the Bankruptcy Court.10 Warren and Byler, in their official 

capacities, are each creditors of Bednar by virtue of four sanctions judgments against 

him: two judgments issued by the Oklahoma Court and two issued by the Oklahoma 

Supreme Court (“Sanctions Judgments”).11 The four Sanctions Judgments arose upon 

5 Id.

6 Case No. 19-12845 (“Second Case”). See id.

7 Id.

8 Id.

9 Case No. 19-14021 (“Third Case”). See id.

10 Appellants’ App. at 10 (Bankruptcy Court ECF No. 18).

11 Id. at 111.

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findings Bednar engaged in frivolous and vexatious conduct and together total 

$31,582.50 (excluding interest).

Warren and Byler promptly requested the Bankruptcy Court enter an order 

confirming the non-existence of the automatic stay in the Third Case pursuant to 11 

U.S.C. § 362(c)(4)(A)(i).12 On October 10, 2019, the Bankruptcy Court agreed and 

entered an Order confirming there was no stay in effect.13

Over the next eight months, Bednar made multiple attempts to confirm a chapter 

13 Plan. Each of Bednar’s confirmation attempts were opposed by Warren, Byler, 

chapter 13 Trustee John Hardeman (“Trustee”) and Bednar’s ex-spouse, Jill Bednar (“J. 

Bednar”).14 On June 9, 2020, these efforts culminated in a final evidentiary hearing on 

confirmation of Bednar’s Amended Chapter 13 Plan.15 On June 24, 2020, the 

Bankruptcy Court sustained the objections to confirmation, finding Bednar was not 

eligible to proceed under chapter 13.16 The Bankruptcy Court denied confirmation and 

dismissed the Third Case effective June 24, 2020.17 The Bankruptcy Court’s dismissal 

12 Id. at 111-16. All future references to “Bankruptcy Code,” “Code,” or “§,” refer to Title

11 of the United States Code.

13 Id. at 117-18 (Bankruptcy Court ECF No. 20).

14 J. Bednar asserts non-dischargeable claims related to the parties’ divorce for at least 

$141,469.56. See id. at 132.

15 Id. at 275 (Bankruptcy Court ECF No. 81).

16 Id. at 275-76.

17 Id. at 281-82 (Bankruptcy Court ECF No. 82).

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order neither reserved jurisdiction for any particular purpose nor altered the typical 

revesting of estate property provided in § 349(b).

Before dismissal, Bednar made plan payments totaling $30,838.92.18 The Trustee 

deducted his fees of $1,572.77, leaving a balance of $29,266.15. On June 26, 2020, 

Warren and Byler filed a motion with the Bankruptcy Court seeking leave to garnish 

those funds in the hands of the Trustee.19 J. Bednar then filed her own motion for leave 

to garnish the funds in the Trustee’s possession, asserting her garnishment rights as a 

priority creditor holding domestic support obligations were superior over Warren and 

Byler’s interest as general unsecured creditors.20

The Bankruptcy Court entered an order requiring the Trustee to file a response 

stating his position and setting a telephonic hearing for July 31, 2020.21 The Trustee 

responded, stating he opposed allowing garnishment of the funds in his possession.22 The 

Trustee agreed with Warren, Byler, and J. Bednar that, under the Barton doctrine, the 

Bankruptcy Court must consent to any garnishment action proceeding in state court. 

However, the Trustee also maintained § 1326(a)(2) required him to return any 

18 Id. at 428.

19 Id. at 283-89.

20 Id. at 354-58.

21 Id. at 359-60.

22 Id. at 361-66.

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undistributed plan payments to the Debtor irrespective of the Barton doctrine.23 The 

Bankruptcy Court took the matter under advisement at the end of the telephonic hearing. 

On September 2, 2020, the Bankruptcy Court entered its Order Denying Motions for 

Leave to Garnish Funds, denying both Oklahoma County’s Motion and Bednar’s Motion 

(the “Order”).24

The Bankruptcy Court first framed the request, explaining the movants “are 

essentially asking this Court to grant them permission to institute garnishment actions 

against the Trustee in state court while imposing a stay preventing the Trustee’s 

distribution of surplus funds as directed by § 1326(a)(2).”25 According to the Bankruptcy 

Court, “Movants and the Trustee agree that before Movants may initiate garnishment 

actions in state court to reach the funds held by the Trustee, the Barton Doctrine requires 

them to obtain approval from this Court.”26 Reviewing the policy and intent underlying 

the Barton doctrine, the Bankruptcy Court found “the relief Movants seek here is the type 

of action the Barton Doctrine is designed to prevent.”27 

The Bankruptcy Court reasoned the Barton doctrine applies in this case to protect 

the Trustee from “a tremendous administrative burden . . . requiring him to be personally 

23 Id.

24 Id. at 427-34.

25 Id. at 430.

26 Id.

27 Id. at 431.

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involved in garnishment actions across his district, which stretches across forty 

counties.”28 While the Bankruptcy Court acknowledged “the administrative duties may 

be minimal in this one case,” the Bankruptcy Court found “the small burden of one 

garnishment could quickly swell to a large burden of hundreds of garnishments if 

creditors are given the green light to file immediately upon the conclusion of every 

bankruptcy case.”29 Even though the Bankruptcy Court found the Barton doctrine likely 

prevented the garnishment from being enforced, after reviewing a split of authority on the 

issue, it ruled the plain language of § 1326(a)(2) requires the Trustee to return the funds 

to the Debtor with no possibility of any intervening diversion. 30

Warren, Byler and J. Bednar filed separate notices of appeal on September 15, 

2020. J. Bednar requested the appeals be companioned for briefing and oral argument, 

and a BAP motions panel (consisting of Judges Michael, Jacobvitz, and Parker) granted 

the motion on October 13, 2020. Both appellants requested the Bankruptcy Court stay 

the Order pending appeal. The Bankruptcy Court granted these requests on October 19, 

2020, preventing the Trustee from returning the $29,266.15 to the Debtor prior to 

disposition of the appeals. 

28 Id.

29 Id. (internal citation omitted).

30 Id.

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II. JURISDICTION AND STANDARD OF REVIEW

The Order affects the final distribution of chapter 13 plan payments in the 

Debtor’s underlying bankruptcy case, and therefore is a final appealable order.31 Here, 

the issues on appeal primarily involve pure questions of law which are reviewed de 

novo.

32 Specifically, the Bankruptcy Court’s application of § 1326(a)(2) as a per se bar 

to garnishment of a trustee following dismissal, irrespective of the Barton doctrine, is 

reviewed de novo. Similarly, whether the Barton doctrine applies and requires leave to 

sue presents an issue which is “jurisdictional in nature” and therefore subject to de novo

review.33 However, the Bankruptcy Court’s decision to decline leave to sue the Trustee 

under the Barton doctrine is reviewed for abuse of discretion because “the bankruptcy 

court . . . given its familiarity with the underlying facts and the parties, is uniquely 

situated to determine whether a claim against the trustee has merit.”34 

31 See In re Miranda, 285 B.R. 344, 2001 WL 1538003, at *1 (10th Cir. BAP Dec. 4, 

2001) (concluding order denying chapter 13 trustee’s motion to distribute 10 percent 

administrative fee under 28U.S.C. § 586 from plan payments was a final order) 

(unpublished); In re Yates, 337 B.R. 728, 2005 WL 2499488, at *2 (10th Cir. BAP Oct. 

4, 2005) (holding order denying motion for turnover of funds held by chapter 13 trustee 

in case converted to chapter 7 was a final order) (unpublished).

32 Pierce v. Underwood, 487 U.S. 552, 558 (1988) (“For purposes of standard of review, 

decisions by judges are traditionally divided into three categories, denominated questions 

of law (reviewable de novo), questions of fact (reviewable for clear error), and matters of 

discretion (reviewable for ‘abuse of discretion’”)). See also Fowler Bros. v. Young (In re 

Young), 91 F.3d 1367, 1370 (10th Cir. 1996). 

33 Lankford v. Wagner, 853 F.3d 1119, 1122 (10th Cir. 2017) (conducting de novo

review of District Court’s decision to dismiss suit against trustee under Fed. R. Civ. P. 

12(b)(1) where plaintiffs did not seek or obtain leave under the Barton doctrine).

34 See In re VistaCare Grp., LLC, 678 F.3d 218, 232-33 (3d Cir. 2012).

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III. ANALYSIS

a. Barton Doctrine

Bankruptcy law, as it has evolved in United States jurisprudence, has led to the 

creation of a few relatively obscure doctrines. One such concept, the Barton doctrine, 

was established in Barton v. Barbour, 104 U.S. 126 (1881), and requires before suit can 

be brought against bankruptcy trustees or their counsel for acts taken in their official 

capacities during a bankruptcy case, the plaintiff must first seek leave of the overseeing 

bankruptcy court.35 The Barton doctrine includes actions seeking bankruptcy estate 

property as well as actions against a bankruptcy trustee for conduct during the pendency 

of the bankruptcy case.36 Because of this, the Barton doctrine is “jurisdictional in 

nature.”37 As explained by the Bankruptcy Court, the doctrine “exists to ensure other 

courts do not intervene in the bankruptcy court’s administration of an estate without 

permission.”38 Generally, the Barton doctrine is intended: “(1) to maintain the integrity 

of the bankruptcy court’s jurisdiction; (2) to control burdensome litigation that may 

35 See In re Lane, No. 11-20398 at ECF No. 1787 at 4-5 (Bankr. D. Wyo. Sept. 9, 2020) 

(citing Lankford, 853 F.3d at 1122).

36 Id. (citing In re Delta Invs. & Dev., LLC, No. 12-01160-NPO, 2019 WL 137578, at *14 

(Bankr. S.D. Miss. Jan. 8, 2019) (unpublished)).

37 Id. at 5 (citing Lankford, 853 F.3d at 1122).

38 Satterfield v. Malloy, 700 F.3d 1231, 1237 (10th Cir. 2012).

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impede the trustee’s work as an officer of the court; and (3) to allow the bankruptcy court 

to monitor effectively the trustee’s work.”39

In Satterfield v. Malloy,40 the Tenth Circuit Court of Appeals expounded on the 

functions and purposes of the Barton doctrine. The court began by examining the 

language of Barton v. Barbour itself, noting “[a] plaintiff who brings such a suit [against 

a receiver] . . . attempts to ‘obtain some advantage over the other claimants upon the 

assets in the receivers hands.’”41 “If allowed to proceed, ‘the court which appointed the 

receiver and was administering the trust assets would be impotent to restrain’ such a 

plaintiff, complicating the proper administration of the estate.’”42 

Because the Barton doctrine is focused on protecting the receiver from 

impediments to administration, as well as ensuring equality among competing claimants, 

the Tenth Circuit applies the Barton doctrine to bankruptcy trustees as to “‘acts done in 

the trustee’s official capacity and within the trustee’s authority as an officer of the 

court.’”43 The court further reasoned if a trustee “is burdened with having to defend 

against suits by litigants disappointed by his actions on the court’s behalf, his work for 

39 In re Horton, 612 B.R. 400, 404 (Bankr. D.N.M. 2020) (citations omitted).

40 Satterfield, 700 F.3d at 1234-35; see also Lankford, 853 F.3d at 1122.

41 Satterfield, at 1235 (quoting Barton v. Barbour, 104 U.S. 126 (1881)). 

42 Id.

43 Id. (quoting Heavrin v. Schilling (In re Triple S Rests., Inc.), 519 F.3d 575, 578 (6th 

Cir. 2008)).

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the court will be impeded.”44 Moreover, the Barton doctrine continues to apply after 

dismissal of a bankruptcy case because:

Without the requirement [of obtaining leave from the appointing court], 

trusteeship will become a more irksome duty, and so it will be harder for 

courts to find competent people to appoint as trustees. Trustees will have to 

pay higher malpractice premiums, and this will make the administration of 

bankruptcy laws more expensive (and the expense of bankruptcy is already 

a source of considerable concern). Furthermore, requiring that leave to sue 

be sought enables bankruptcy judges to monitor the work of the trustees 

more effectively. It does this by compelling suits growing out of that work 

to be as it were prefiled before the bankruptcy judge that made the 

appointment; this helps the judge to decide whether to approve this trustee 

in a subsequent case.45

In sum, in the Tenth Circuit the Barton doctrine “exists to ensure other courts do 

not intervene in the bankruptcy court’s administration of an estate without permission.”46 

As explained by an Indiana bankruptcy court in In re Shields, the Barton doctrine applies 

to prevent the trustee’s performance from being “compromised by state court proceedings 

that divert the Trustee’s attention.”47 Thus, “[t]he Trustee should not be required to 

defend against or otherwise appear in state court each time he is served with the 

garnishment order.”48 A Georgia bankruptcy court in In re Jankauskas expanded on 

44 Id.

45 Id. at 1236-37 (quoting In re Linton, 136 F.3d 544, 545 (7th Cir. 1998)).

46 Id. at 1237.

47 In re Shields, 431 B.R. 446, 452 (Bankr. S.D. Ind. 2010).

48 Id.

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Shields’s application of the Barton doctrine to post-dismissal garnishments.49 The court 

explained the Barton doctrine applies to post-dismissal garnishments because trustees 

may have residual liability to the issuing court for failure to comply with the mandate of 

the garnishment.50 

In this case, the proposed garnishment directly implicates the Trustee’s fiduciary 

duties to Bednar with respect to property that was formerly part of the estate.51 The 

garnishment would also affect the Trustee’s final administration of the estate by 

determining to whom the residual funds should be paid. Thus, the Panel agrees with the 

Bankruptcy Court the Barton doctrine applies. Importantly, however, this holding speaks 

only to whether pre-suit leave is required, not whether such leave should or should not be 

granted. As noted by the court in Jankauskas, “application of the Barton doctrine does 

not establish a per se ban on garnishments against a trustee, it merely requires bankruptcy 

court approval before the garnishment may be filed.”52 

49 In re Jankauskas, 593 B.R. 1, 9 (Bankr. N.D. Ga. 2018).

50 Id. at 10.

51 See In re Christensen, 598 B.R. 658, 668-69 (Bankr. D. Utah 2019) (holding Barton 

doctrine required leave to sue trustee for negotiating short-sale for improper motive, 

explaining “[a] trustee becomes a fiduciary vis-à-vis a debtor because he holds property 

that belongs to the debtor by operation of law. The scope of his duty, therefore, is strictly 

limited to safeguarding property of the estate in the trustee’s possession or the proceeds 

from the sale thereof to which the debtor is entitled and ensuring that the debtor receives 

that property.”).

52 Jankauskas, 593 B.R. at 11-12.

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In In re VistaCare Group, the Third Circuit Court of Appeals reviewed the 

bankruptcy court’s order granting Barton leave to sue a trustee and expounded on the 

factors bearing on the court’s decision.53 First, the party seeking Barton leave “‘must 

make a prima facie case against the trustee, showing that its claim is not without 

foundation.’”54 Second, the bankruptcy court should consider the “potential effect of a 

judgment against the trustee on the debtor’s estate.”55 This “may involve a ‘balancing of 

the interests of all parties involved’ and consideration of whether another tribunal may 

have expertise regarding the issues in the proposed suit.”56 However, the bankruptcy 

court “is not required to consider immunities and defenses raised by a trustee when 

evaluating a motion for leave. A bankruptcy court cannot be expected to conduct a trial 

on the merits of a party’s proposed state law claim against a trustee simply to decide 

whether to grant leave to purse such a claim in state court.”57 Instead, the trustee 

preserves any defenses for adjudication in the state court.58

In In re Christenson, the bankruptcy court ruled it would exercise its discretion to 

deny Barton leave to sue a trustee because none of the claims passed muster under the 

53 In re VistaCare Grp., LLC, 678 F.3d 218, 232-33 (3d Cir. 2012).

54 Id. at 232 (quoting In re Nat’l Molding Co., 230 F.2d 69, 71 (3d Cir. 1956)).

55 Id. 

56 Id.

57 Id. at 234-35.

58 Id.

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prima facie analysis.59 Further, it held “even if” the proposed claims were found to be 

merited, the bankruptcy court would take guidance from the Ninth Circuit Bankruptcy 

Appellate Panel in In re Kashani.

60 Specifically, the Kashani panel enumerated five 

factors bankruptcy courts should consider in deciding whether to grant Barton leave:

1. Whether the acts or transactions relate to the carrying on of the business 

connected with the property of the bankruptcy estate. If the proceeding is 

under 28 U.S.C. § 959(a), then no court approval is necessary. However, 

the moving party may request this initial review by the bankruptcy court in 

the motion for leave to sue the trustee, or perhaps in the form of a 

complaint, seeking a declaratory judgment from the bankruptcy court.

2. If approval from the appointing court appears necessary, do the claims 

pertain to actions of the trustee while administering the estate? By asking 

this question, the court may determine whether the proceeding is a core 

proceeding or a proceeding which is related to a case or proceeding under 

Title 11, United States Code. 

3. Do the claims involve the individual acting within the scope of his or her 

authority under the statute or orders of the bankruptcy court, so that the 

trustee is entitled to quasi-judicial or derived judicial immunity?

4. Are the movants or proposed plaintiffs seeking to surcharge the trustee; 

that is, seeking a judgment against the trustee personally?

5. Do the claims involve the trustee’s breaching her fiduciary duty either 

through negligent or willful misconduct?61

By conducting such an analysis, the bankruptcy court will determine 

whether the issues affect solely the administration of the bankruptcy estate and 

should be heard by the bankruptcy court. The bankruptcy court will also be able 

to determine whether the claims have been previously decided on the merits and 

59 In re Christensen, 598 B.R. 658, 673 (Bankr. D. Utah 2019).

60 Id. (citing Kashani v. Fulton (In re Kashani), 190 B.R. 875, 886-87 (9th Cir. BAP 

1995)).

61 Kashani, 190 B.R. at 886-87.

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should not be pursued by the movants or proposed plaintiffs on the basis of res 

judicata or collateral estoppel. The bankruptcy court will also be in a position to 

determine whether the trustee is entitled to quasi-judicial or derived judicial 

immunity. Again, one or more of these factors may be a basis for the bankruptcy 

court to retain jurisdiction over the claims. Such an analysis will also assist the 

bankruptcy court in determining which claims should be tried in another forum.62

Here, it appears the Bankruptcy Court’s Order in analyzing whether leave should 

be granted focused upon mere speculation by the trustee that generally opening the 

trustee to garnishment proceedings post-dismissal could create “a tremendous 

administrative burden on him.”63 As the foregoing authorities show, a bankruptcy court’s 

exercise of discretion on a Barton question is much broader in scope and encompasses 

much wider factors than potential inconvenience or burden to the Trustee. The mere 

possibility of inconvenience cannot serve as a blanket protection for trustees from a legal 

process to which any other person may ordinarily be subjected. It is significant the 

Bankruptcy Court acknowledged in its decision “the administrative duties may be 

minimal in this one case.”64 In making a Barton determination, a bankruptcy court 

should gather all relevant facts, and then consider the meritorious foundations of the 

62 Id.

63 Order at 5, in Appellants’ App. at 431.

64 Id.

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garnishment claims, as well as the factors identified in the case law discussed herein, 

particularly VistaCare Group and Kashani.. 

In sum, on de novo review, the Panel holds the Barton doctrine required Warren, 

Byler and J. Bednar obtain approval of the Bankruptcy Court before commencing their 

garnishment actions. However, the Panel further concludes the Bankruptcy Court abused 

its discretion by denying Barton leave based upon unsupported allegations of potential 

inconvenience to the Trustee without weighing the other important factors bearing upon 

such a decision.

b. Section 1326

Notwithstanding its conclusion that the Barton doctrine prohibited the 

enforceability of the garnishment in question, the Bankruptcy Court also dealt with 

whether the proposed garnishment was also prohibited by § 1326(a)(2). 

Whether the Bankruptcy Code permits creditor garnishment of the Trustee 

following dismissal of a bankruptcy case without a confirmed chapter 13 plan is a 

question of statutory interpretation, which naturally begins with the language of the 

statute itself. The initial inquiry is whether there is ambiguity in the relevant Code 

sections because “where . . . the statute’s language is plain, ‘the sole function of the 

courts is to enforce it according to its terms.’”65 Here, § 1326(a)(2) provides plan 

payments

65 United States v. Ron Pair Enters., 489 U.S. 235, 241 (1989) (quoting Caminetti v. 

United States, 242 U.S. 470, 485 (1917)).

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shall be retained by the trustee until confirmation or denial of confirmation. 

If a plan is confirmed, the trustee shall distribute any such payment in 

accordance with the plan as soon as is practicable. If a plan is not 

confirmed, the trustee shall return any such payments not previously paid 

and not yet due and owing to creditors . . . to the debtor, after deducting any 

unpaid claim allowed under section 503(b).66

Of course, § 1326 dovetails into the basic revesting language set forth in § 349(b)(3), 

which provides dismissal “revests the property of the estate in the entity in which such 

property was vested immediately before the commencement of the case under this 

title.”67

As recognized by the Bankruptcy Court, there is a split of authority in the 

application of § 1326(a)(2). Some courts apply a plain meaning analysis to conclude 

§ 1326(a)(2) and § 349(b)(3) unambiguously require the return of all plan payments to

the debtor following pre-confirmation dismissal. Other courts find ambiguity in 

§ 1326(a)(2) within the context of § 349(b)(3), and instead focus on the technical 

functionality of the competing Code provisions. 

i. Plain Meaning Cases

The Bankruptcy Court adopted the view of those cases holding the plain language 

of § 1326(a)(2) directs return of plan payments to debtors whose cases are dismissed 

before confirmation. For example, in In re Oliver the court reviewed earlier case law and 

concluded “section 13265(a)(2) [is] unambiguous, and the plain language of § 1326(a)(2) 

66 11 U.S.C. § 1326(a)(2).

67 11 U.S. C. § 1326(b)(3).

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required the Trustee to turn over all funds to the debtor.”68 The court reasoned its 

conclusion would “place[] all of the relative parties in a position as near as possible to 

where they would have been if the debtor had never filed for protection under the 

Bankruptcy Code.”69

Several years later, the court in In re Davis adopted what it referred to as the “In re 

Oliver line of cases,” which hold § 1326(a) is clear and unambiguous with regard to the 

disposition of funds.70 The Davis court went further to expressly hold § 1326 “preempts 

the state court garnishment statute” with respect to the trustee’s duty to return funds to 

the debtor.71 In reaching these conclusions, the Davis court relied heavily on its view of 

the public policy underlying § 1326. As the court explained, the return of funds to the 

debtor “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.”72 The Davis court also reasoned the Oliver 

approach ensures the “orderly and efficient disposition of chapter 13 cases” by ensuring 

68 In re Oliver, 222 B.R. 272, 274 (Bankr. E.D. Va. 1998) (adopting the reasoning of In 

re Walter, 199 B.R. 390 (Bankr. C.D. Ill. 1996) and In re Clifford, 182 B.R. 229 (Bankr. 

N.D. Ill. 1995)).

69 Id. at 275. See also In re Hamilton, 493 B.R. 31, 37-38 (Bankr. M.D. Tenn. 2013) 

(focusing on § 349(b) as the basis for the policy of returning debtors to their pre-petition 

status quo ante).

70 In re Davis, No. 04-30002-DHW, 2004 WL 3310531 at *2 (Bankr. M.D. Ala. June 16, 

2004) (unpublished).

71 Id.

72 Id.

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“any attempts to reach the money would ensue outside the jurisdiction of the bankruptcy 

court” so cases “may be closed as quickly as statutorily possible following dismissal.”73 

Thus, “[h]olding to the contrary would create a ‘race to the trustee’ and effectively ignore 

the statutory mandate to return the money to the debtor.”74

The court in Commonwealth of Virginia v. Beskin framed its plain language 

approach against the Supreme Court’s expressed views on the voluntary nature of chapter 

13 proceedings.75 In Harris v. Vieglahn, the Court stated “the ‘wholly voluntary’ process 

of chapter 13 bankruptcy is meant to ‘benefit debtors and creditors alike.’”76 Moreover, 

in Czyzewski v. Jevic Holding Corp., the Court “emphasized that dismissal of a 

bankruptcy case ‘aims to return to the prepetition financial status quo.’”77

In sum, courts adopting the plain language approach to post-dismissal preconfirmation garnishment find harmony between the wording of § 1326 and the policy 

purposes served by the statutory language. The court in In re Inyamah summarized this 

view by enumerating three “statutory purposes” served by the plain language of § 1326:

As noted by the In re Davis court, returning the funds to debtors 

accomplishes three statutory purposes: (1) when plans fail allowing 

creditors to seize debtors’ funds would be in conflict with the policy of 

encouraging chapter 13 filings; (2) return of the funds to debtors allows for 

73 Id.

74 Id.

75 Commonwealth of Virginia v. Beskin, 581 B.R. 162, 166 (Bankr. W.D. Va. 2017), aff’d 

sub nom. Commonwealth of Virginia v. Webb, 908 F.3d 941 (4th Cir. 2018).

76 Id. (quoting Harris v. Viegelahn, 575 U.S. 510 (2015)).

77 Id. (quoting Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2015)).

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the prompt closing of the estate by precluding conflicting efforts of 

creditors to gain access to funds held by chapter 13 trustees; and (3) 

returning funds to debtors fosters the concept of revesting upon dismissal 

by placing the funds in their hands thereby restoring all parties to their 

original positions.78

ii. The “Debtor of a Debtor” Cases

The divergent line of cases, which approve of post-dismissal trustee garnishments, 

not only takes a different view of the statutory language, but also the underlying policy 

motivations. These cases generally do not disagree with the plain language interpretation 

of § 1326, but instead take a more practical approach which gives the language more 

meaning within the broader context of the Code.

The first such case is In re Steenstra.

79 There, the debtor’s chapter 13 case was 

dismissed prior to confirmation of a plan and was followed by efforts to levy plan 

payments held by the trustee.80 The bankruptcy court followed the plain language 

approach to § 1326, holding the funds remained in custodia legis and were not subject to 

levy until the case was closed.81 The First Circuit Bankruptcy Appellate Panel reversed, 

approving the notion of post-dismissal garnishment. 

78 In re Inyamah, 378 B.R. 183, 185 (Bankr. S.D. Ohio 2007). See also In re Locascio, 

481 B.R. 285, 289 (Bankr. S.D.N.Y. 2012) (“The plain language of section 1326(a)(2), 

the policies behind that provision, and the Supremacy Clause all mandate return of plan 

payments directly to the debtor upon dismissal, despite the existence of a garnishment.”); 

In re Hamilton, 493 B.R.at 31. 

79 In re Steenstra, 307 B.R. 732 (1st Cir. BAP 2004). 

80 Id. at 735.

81 Id.

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First, the panel focused on the termination of the bankruptcy estate and the 

automatic stay upon entry of a dismissal order.82 Thus, while § 1326(a)(2) and 

§ 349(b)(3) ostensibly require a trustee return payments to the debtor, any such payments 

lose the protection of the automatic stay upon dismissal.83 In the panel’s view, this is 

critical because “the revestment is not immediate or automatic.”84 For example, 

§ 1326(a)(2) requires the trustee to pay administrative expenses before returning the 

funds to the debtor.85 In this sense, “before the funds may be returned to the debtor, the 

chapter 13 trustee must complete the administration of the case. . . .”86 Because the 

trustee’s withholding of administrative expenses occurs before the funds are returned to 

the debtor, the funds payable for such expenses “are protected from levy or garnishment” 

as part of trustee’s ongoing estate administration.87 The question, then, is whether “the 

remaining funds are also protected from levy or garnishment once the automatic stay has 

terminated.”88

82 Id. at 737-38 (“[D]ismissal of a bankruptcy petition ‘has the simultaneous effect of 

undoing the bankruptcy estate and lifting the automatic stay[.]’”) (quoting In re Garnett, 

303 B.R. 274, 278 (E.D.N.Y. 2003)).

83 Id.

84 Id. at 738. 

85 Id.

86 Id.

87 Id.

88 Id.

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The panel then approvingly cited In re Doherty as expressing the correct reasoning

upon which to consider this question. In Doherty, the court “reasoned that because the 

dismissal order terminated the automatic stay, there was no stay in place to protect the 

funds held by the trustee after the court entered the dismissal order.”89 “Because the 

dismissal of a bankruptcy case prior to confirmation removes the protections afforded by 

the Bankruptcy Code, the funds belonging to the debtor but which are held by the trustee 

are not afforded protection from levy merely because they were once part of the estate.”90 

This creates what the Steenstra panel approvingly referred to as the “debtor of the debtor” 

approach to the trustee’s predicament:

[T]he Court finds that, once the order of dismissal is entered, and the stay 

has been lifted, and the Trustee has been ordered to turn over the funds to 

the Debtor, she becomes a debtor of the Debtor to that extent. The funds 

held by the Trustee are subject to levy or garnishment by creditors of the 

Debtor, pursuant to applicable law. The Trustee is bound to accept the levy 

if she has any money that belongs to the Debtor.91

Finally, the Steenstra panel considered whether the funds are excepted from the 

possibility of levy because they remained within the bankruptcy court’s custody and 

control pursuant to the doctrine of in custodia legis.

92 The panel rejected the possibility 

of protection through this doctrine, reasoning that in the absence of a formal retention of 

jurisdiction, entry of the dismissal order retires the bankruptcy court’s duties and 

89 Id. at 739 (quoting In re Doherty, 229 B.R. 461 (Bankr. E.D. Wash. 1999)).

90 Id.

91 Id. at 740 (quoting In re Schlapper, 195 B.R. 805, 806 (Bankr. M.D. Fla. 1996)).

92 Id.

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jurisdiction with respect to property formerly part of the now non-existent estate.93 In 

contrast, in custodia legis “relates to specific funds held by the court for a specific 

purpose.”94 “[W]here nothing more remains for the custodian to do but make delivery of 

the property or payment of the money, the reason for the doctrine of in custodia legis is 

satisfied[.]”95

The court in In re Fischer followed similar reasoning to conclude garnishment had 

no effect on the trustee’s obligation to return funds to the debtor.96 First, the Fischer 

court reasoned:

In short, there is nothing special about funds the Chapter 13 trustee holds 

that should prevent a creditor from proceeding with garnishment after 

dismissal of a Chapter 13 case. If the trustee is holding funds that belong to 

the debtor, viz-a-viz a third party creditor with a writ of garnishment, the 

trustee is just like any other “debtor of the debtor,” and a creditor should 

not be prevented from garnishing such funds.97

Importantly, the Fischer court went on to reconcile its approach with the “plain 

meaning” reasoning of courts reaching the opposite conclusion. Rather than finding 

§ 1326 ambiguous, the Fischer court explained the statute “simply states that the ‘trustee 

shall return’ to the debtor any payments made in accordance with an unconfirmed 

93 Id.

94 Id.

95 Id. at 741 (quoting United States v. Powell, 492 F. Supp. 1030, 1032 (W.D. Tex. 1980),

aff’d, 639 F.2d 224 (5th Cir. 1981)).

96 In re Fischer, 432 B.R. 863, 864 (Bankr. M.D. Fla. 2010).

97 Id. at 865.

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plan.”98 According to Fischer, nothing in the plain language of § 1326(a) prohibits postdismissal garnishment, but rather operates to prevent the trustee from retaining the funds 

or distributing them to an unrelated party.99 Thus, “there is no difference between this 

situation and a typical wage garnishment in which an employee is entitled to any wages 

earned, except when a creditor has a valid writ of garnishment allowing it to garnish 

wages held by the employer.”100 

The court in In re Cohen also followed the “debtor of a debtor” reasoning, but 

further responded to the purported policy justifications referenced in the plain meaning 

cases (for example, those articulated by the court in Inyamah).101 First, the court rejected 

the idea that returning plan payments to debtors encourages chapter 13 filings by not 

penalizing debtors for their failed efforts. The court reasoned this policy “fails to explain 

why a debtor who did not confirm a plan is given greater consideration than one whose 

plan is confirmed. Additionally, this argument may encourage bad-faith filings solely 

motivated by the purpose of avoiding payment obligations.”102 In the court’s view, a 

hypothetical debtor “could file bankruptcy, receive protection from garnishment against 

98 Id.

99 Id.

100 Id. See also In re Price, 484 B.R. 870, 873-74 (Bankr. E.D. Ark. 2013) (“[A] trustee 

who owes amounts to a debtor is not any different than any other party that is subject to a 

garnishment.”).

101 In re Cohen, No. 2:14-bk-11079-DPC, 2016 WL 797656 (Bankr. D. Ariz. Feb. 29, 

2016) (unpublished).

102 Id. at *5.

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his wages, fail to confirm a plan, receive those funds back safely from the trustee, and 

then potentially spend those funds before a creditor could reinstate a wage garnishment 

after the case is dismissed.”103 The result of such a practice could be “rewarding debtors 

who do not produce a viable plan, while not extending similar protections to debtors who 

made serious efforts toward repaying creditors.”104

Next, the Cohen court was not persuaded by the argument levy orders impose 

additional administrative burdens on the trustee’s office. The court reasoned the trustee 

has no stake in who gets the money, and therefore can comply with a garnishment as 

easily as she could return the funds to the debtor.105 Moreover, trustees can avoid the 

problem altogether by immediately returning the funds upon dismissal, avoiding a race to 

the trustee by preempting any garnishment efforts.106

Finally, the Cohen court addressed the purported policy behind the plain language 

approach to § 1326 to return debtors to the pre-petition status quo ante. These arguments 

“greatly overlook[] the protections chapter 13 provides debtors” because prior to 

dismissal “a debtor will have had the advantage of the bankruptcy automatic stay and 

their income will have been protected against garnishment and levies all the while.”107 

103 Id.

104 Id.

105 Id.

106 Id.

107 Id.

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Indeed, the court observed “[a]bsent the bankruptcy automatic stay, those funds likely 

would have been garnished or levied at an earlier time.”108 Therefore, returning the funds 

to the debtor after dismissal does not actually return debtor to his pre-petition status, but 

rather, enhances the debtor’s position by enabling him to delay levy with no 

consequence.109

Arguably, the foregoing analyses reach different conclusions from the plain 

language cases without necessarily disagreeing on whether § 1326 is plain and 

unambiguous. Rather, these cases can be viewed as simply taking a more nuanced and 

functional approach to applying the statute. The court in Shields expanded on this 

dynamic, while comprehensively summarizing the debtor of a debtor approach: 

Assuming that § 1326(a)(2) applies in dismissed cases, it does not, and 

cannot, provide for every scenario for disposition of funds in a dismissed 

case with an unconfirmed plan. For example, to whom should the funds be 

returned upon the death of a debtor? Upon incarceration of a debtor? Upon 

incompetency of a debtor for which a guardian has been appointed? Would 

the Trustee argue § 1326(a)(2) directs him to pay the funds to the debtor in 

such cases? If the funds cannot be returned to the debtor due to the 

debtor’s incarceration, incompetency or death, would the trustee hold the 

funds indefinitely?

***

I conclude that what § 1326(a)(2) and § 349(b)(3) do unambiguously 

provide for is the return of the funds to (after payment of § 503(b) 

expenses) and the revesting of property in the debtor where there are no 

post dismissal intervening events that challenge the debtor's right to receive 

the funds or claim the property. However, application of these sections 

beyond this garden variety scenario, in my opinion, just was not 

108 Id.

109 Id.

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contemplated by Congress. . . . I do not believe that Congress would have 

so easily disregarded creditors who, free from the automatic stay, enforce 

their judgments by obtaining valid state court garnishment orders and 

levying property that is neither property of the estate nor property needed to 

pay administrative claims. Had Congress intended to sequester funds from 

these creditors under these circumstances, it certainly knew how to provide 

for it and could have added “notwithstanding any challenge after dismissal 

but before closing of the case” or similar language to § 1326(a)(2) or 

§ 349(b)(3). . . .

Rather, I follow the lead of the Steenstra and Doherty cases and conclude 

that, § 362 controls here. As stated in those cases, dismissal of a case 

terminates the automatic stay and the bankruptcy estate. What was 

formerly property of the estate revests in the entity in which it was vested 

prior to the commencement of the case under § 349(b)(3) and is no longer 

property of the estate. Such property loses the protection of the automatic 

stay upon dismissal under § 362(c)(1) and nothing in § 362, § 349, or 

§ 1326 expressly shields from levy funds that are not needed to pay 

§ 503(b) claims. Since the funds are not protected, they are subject to levy 

and the trustee is like any other third-party holding funds owed to a debtor 

against which a judgment creditor has levied.110

The Panel agrees with the reasoning of the “debtor of the debtor” approach as 

summarized by Shields. The plain language cases are attractive for their simplicity, but 

their literalistic approach to § 1326(a)(2) fails to account for the functional practicalities 

of the tripartite relationship between the trustee, the garnishor, and the debtor. Because 

of the termination of the automatic stay and the non-existence of the prior bankruptcy 

estate upon entry of a dismissal order, the Trustee is effectively no longer operating as 

court-appointed fiduciary. Certainly, the Trustee can no longer be thought of as a 

representative of the estate exercising control over property of the estate. 

110 In re Shields, 431 B.R. 446, 450-51 (Bankr. S.D. Ind. 2010). See also In re 

Jankauskas, 593 B.R. 1 (Bankr. N.D. Ga. 2018).

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Instead, the legal relationship between the debtor and a trustee following dismissal 

is akin to a traditional bailment.111 The debtor has voluntarily transferred personal 

property to a third party who, absent the duties of a trustee as estate representative, is 

merely a custodian safeguarding the debtor’s property in a trustee’s hands. As discussed 

hereinabove, a similarly situated custodian, such as a bank, is not excused from 

complying with a levy or garnishment concerning the subject property. The Panel sees 

no reason why a different rule should apply to trustees merely because they were 

formerly an estate representative and the property used to be in custodia legis through an 

estate which no longer exists. 

Moreover, even under the plain language approach, there is reason to question 

whether a trustee’s compliance with the garnishment even violates the statutory direction 

to return the funds to the debtor. While the trustee physically completes the transfer of 

possession of the money to the garnishor, the transfer of title to the property occurs 

through operation of state law, not by action of the trustee. This must be so because, as 

discussed, the trustee merely holds possession of, but not title to, the funds after 

dismissal. 

Upon delivery of the garnished funds, the debtor’s ownership interest is removed 

while the debtor’s liability on the underlying debt is reduced. Both sides of the 

111 See Chambers v. Morgan, 671 P.2d 89, 90 (Okla. App. 1983) (“Bailment is a legal 

status created by the transference of possession of personal property to another for the 

accomplishment of some particular purpose and establishes a bailor-bailee [ ] 

relationship.”).

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transactional ledger must be considered, especially in a post-dismissal reference frame 

where the debtor is no longer seeking reorganization or discharge. In this sense, the 

trustee would in fact be returning the property to the debtor, not in the form of a cash 

payment, but in the form of a debt reduction. In the same sense, the trustee is also 

returning debtor’s ledger to its pre-petition status—the property and liability columns 

have changed but in equal amounts on each side. The transfer may not be to the debtor, 

but it is nevertheless made for the debtor’s benefit.112

IV. CONCLUSION

Trustees play an invaluable role in the bankruptcy process and the Barton doctrine 

provides appropriate protection against litigation which may seriously and adversely 

affect the execution of their duties. The line is difficult to enunciate; but we believe more 

than mere inconvenience is required to trigger such prohibition of actions against a 

trustee once a case has been dismissed. Further, once a case is dismissed, if the Barton 

doctrine does not prohibit a proposed garnishment action, a trustee sits in a similar 

position to any other party holding money for another and subject to garnishment. 

112 This approach also comports with the court’s solution in Shields. There, the court 

directed the trustee to issue a check in the debtor’s name, but to deliver the check to the 

possession of the state court which issued the writ of garnishment for further proceedings. 

Shields, 431 B.R. at 452. The court explained “[b]y ordering the Trustee to issue the 

Check payable to the Debtors and to send it to the State Court, the Trustee’s concerns 

with § 1326(a)(2)’s ‘mandate’ are allayed, and the Court preserves a source of recovery” 

for the creditor. Id.

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For the foregoing reasons the decision of the Bankruptcy Court is REVERSED 

and REMANDED for the purpose of conducting further proceedings on the Barton 

doctrine issues consistent with this opinion.

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