Not in Virginia. In a recent 4th Circuit decision, the court held that the Virginia Department of Social Services, Division of Child Support Enforcement, was not entitled to post-petition funds held by the Trustee following the dismissal of Mr. Webb’s unconfirmed Chapter 13 case to apply against his delinquent child support.
Affirming the bankruptcy and district courts, the Court of Appeals held that 11 U.S.C. § 1326(a) (2) unambiguously states that if a court does not confirm a bankruptcy plan, the Chapter 13 Trustee “shall return” all payments to the debtor. This requirement is sufficiently clear that it preempts Virginia law allowing levy of the Chapter 13 Trustee for delinquent child support.