By Michael L. Moskowitz and Melissa A. Guseynov

In an unpublished opinion dated October 19, 2017, the District Court for the Western District of Virginia held that the Virginia Department of Social Services was not entitled to receive funds paid to a chapter 13 trustee (“Trustee”) when debtor failed to confirm his chapter 13 plan. Virginia Dep’t. of Social Services v. Beskin, 2017 WL 4706912 (W.D. VA, Oct. 19, 2017).

In Beskin, debtor filed a chapter 13 bankruptcy petition listing, among other things, a $74,000 child support debt to the Virginia Department of Social Services (“State”). Debtor made plan payments totaling $3,000 to the Trustee, but was subsequently unable to confirm his chapter 13 plan. After debtor’s chapter 13 case was dismissed, State served Trustee with an order pursuant to Virginia’s child support enforcement statute, requiring Trustee hold the $3,000 rather than returning it to debtor. Seeking guidance, Trustee filed a motion with the Bankruptcy Court. The Bankruptcy Court determined Trustee must return the funds to debtor. State appealed to the District Court.