Bankruptcy Exemptions in Virginia

Chapter 7 bankruptcy petitions are on the rise, and while many people are considering bankruptcy, it may not be the right choice for everyone. Chapter 7 may require that property owners liquidate some personal property to satisfy creditors; however, most consumer debt is then erased, except for alimony, some student loans, child support, and tax debt.

Both federal and state statutes provide exemptions for debtors to protect some types and values of personal property, although Virginia requires that residents claim only state exemptions.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Virginia state exemption – $2,000

Even though a car loan may be erased from the debtor’s credit report, if that loan is secured by the vehicle, missed payments or a default may result in repossession.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Virginia state exemption – $5,000, plus an additional $500 for each dependent
  • If debtor is over 65 – exemption is $10,000
  • Surviving spouse may claim up to $15,000 exemption; minor children may claim exemption when there is no surviving spouse
  • Tenancies by the entirety have unlimited exemption concerning the debts of one spouse
  • Proceeds or property sales are exempt up to $5,000
  • Debtor must file homestead declaration before filing for bankruptcy

Even a home mortgage that is erased from the credit record generally carries a lien belonging to the creditor. If the homeowner fails to make regular payments or defaults on their mortgage, the lien holder may still foreclose.

Virginia allows exemptions for other forms of personal property:

• Disabled veteran who is a householder – up to $2,000
• Any unused homestead
• Wearing apparel – up to $1,000
• Household furnishings – up to $5,000
• Family portraits and heirlooms – up to $5,000
• Burial plot
• Wedding and engagement rings, family Bible, pets, provided they are not raised for sale or profit
• Health aids prescribed by a medical professional
• Personal injury recoveries and causes of action
• Contracts for prepaid tuition
• Tools of the trade
  • For military members – arms, uniforms, and equipment
  • Trade tools, books, instruments, equipment, machines, vehicles, vessels, and aircraft – up to $10,000
  • For farmers – tractor, up to $3,000; various equipment and animals; fertilizer, up to $1,000

Filing Schedule C of a Bankruptcy Petition

Bankruptcy laws require confirmation of all exemptions. That confirmation must be listed on Schedule C and attached to the bankruptcy petition. The information contained on Schedule C must include:

• The property claimed
• The Virginia statutes substantiating those claims
• The property exemption value for each claim
• Each claim’s current assessed value (not the market value)

Getting Legal Help

There are a number of property exemptions available in Virginia that are specific and detailed. A bankruptcy attorney can help debtors determine for which exemptions they are eligible and the legal process for filing those claims. Without such help, bankruptcy petitions can often be delayed or rejected. Don’t hesitate to consult an attorney as you begin this important legal process.