Bankruptcy Exemptions in Virginia: What You Can Keep?

Bankruptcy can be a difficult and overwhelming process, and one of the primary concerns for individuals considering filing for bankruptcy is what assets they will be able to retain. In Virginia, bankruptcy exemptions exist to provide individuals with certain protections and allow them to keep essential property as they seek to rebuild their financial lives.

Understanding Bankruptcy Exemptions

Bankruptcy exemptions are provisions in both federal and state laws that identify specific types of property that are excluded from the bankruptcy estate. This means that these assets are protected and cannot be seized by the bankruptcy trustee to satisfy debts owed to creditors.

In Virginia, bankruptcy filers have the opportunity to choose between two sets of exemptions: the federal exemptions provided under the United States Bankruptcy Code, or the state exemptions available under Virginia law.

Virginia’s Homestead Exemption

One of the most significant exemptions available to bankruptcy filers in Virginia is the homestead exemption, which protects the equity in a filer’s primary residence. Currently, Virginia law allows bankruptcy filers to exempt up a certain portion of their home equity, and potentially more if they are married and filing jointly. This exemption amount is per filer, meaning that married couples filing jointly can potentially exempt up to double of the exemption for home equity.

It is important to note that the homestead exemption does not protect against certain types of debts, such as mortgages, tax liens, or mechanic’s liens against the property. Additionally, the exemption may not apply if the filer has engaged in fraudulent activities or intentionally caused harm to the property.

Motor Vehicle Exemption

In addition to the homestead exemption, bankruptcy filers in Virginia can also protect the equity in their motor vehicles by utilizing the motor vehicle exemption. This exemption allows filers to exempt up to $6,000 in equity per vehicle. It is vital to determine the fair market value of the vehicle and subtract the amount owed on any loans or liens to ascertain the total equity in the vehicle.

Personal Property Exemptions

Virginia law also provides bankruptcy filers with exemptions for certain types of personal property. Some notable exemptions include:

• Household goods and furnishings: Bankruptcy filers can exempt up to $5,000 in household goods, such as furniture, appliances, and electronics. This exemption also extends to clothing and other necessary personal items.
• Jewelry: Jewelry with a value of up to $6,000 can be exempted.
• Tools of the trade: Filers who rely on specific tools or equipment to earn a living can exempt up to $10,000 worth of tools, books, or implements of their trade.
• 529 college savings plans: Contributions to and earnings from a Virginia 529 college savings plan are exempt from the bankruptcy estate.
• Public benefits: Various public benefits, such as Social Security, unemployment compensation, and workers’ compensation, are typically exempted from the bankruptcy estate.

You can read about Virginia’s debtor exemptions during the bankruptcy process.

Renter’s Exemption

Virginia recognizes a unique exemption known as the renter’s exemption. This exemption allows bankruptcy filers to protect up to $5,000 of their security deposit, as long as they are eligible for the homestead exemption but do not own a home. However, this exemption specifically applies only to the security deposit and does not extend to other types of rental property.

Consulting a Bankruptcy Attorney

Bankruptcy exemptions can significantly impact the outcome of your bankruptcy case. It is important to consult with an experienced bankruptcy attorney to determine the best strategy for maximizing your exemptions while navigating the bankruptcy process effectively.

Our team of knowledgeable bankruptcy attorneys in Roanoke has deep expertise in Virginia bankruptcy law and can provide you with the guidance you need. Contact us today to schedule a consultation and take the first step toward a brighter financial future.