Virginia v. Haley (In Re Haley)

MEMORANDUM OPINION

THOMAS J. WILSON, Bankruptcy Judge.

Plaintiff, the Commonwealth of Virginia, is seeking to set off an unsecured claim against Debtor/Defendant, Shelby Thacker Haley’s claim against the Commonwealth for a refund of her employee contributions to the State retirement system.

The issue is whether Virginia Supplemental Retirement System contributions, claimed as exempt under Code of Virginia § 34-4 (Supp.1983), may be used by the Commonwealth to set off an indebtedness due the State as of the date of filing bankruptcy, where the indebtedness results from embezzlement of funds and…