The State of Virginia has created a new exemption for bankruptcy that was effective since July 2020.
What Is a Bankruptcy Exemption?
A Bankruptcy Exemption allows you to keep some of your assets safe in bankruptcy. This includes inexpensive cars, professional tools, clothing, and a retirement account. If you have exempted assets, then you don’t have to worry about a trustee taking them and selling them for the benefit of your creditors.
How Do Exemptions Work?
This depends on the type of bankruptcy you will be filing, whether you file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7
This is a liquidation bankruptcy where an appointed trustee sells off your nonexempt assets to pay off creditors. The amount of property you can protect in Chapter 7 bankruptcy will depend on the state you live in. The federal system and even most states will allow you to keep a certain amount of equity in your personal property and your house Also, household goods and clothing are exempt, unless they are unusually valuable.
Chapter 13
On the other hand, this type of bankruptcy allows you to keep all your property and reorganize your debt. However, how much you pay creditors will still depend on how much property you can exempt. And with Chapter 13 bankruptcy, your exemptions help reduce the amount you pay off your creditors.
Added Exemption in Virginia Bankruptcy
Now that you know these exemptions, you should know that Virginia lawmakers added additional protections to the existing Code of Virginia § 34-4, which will be effective in July 2020.
Those who will be filing for bankruptcy in the State of Virginia will be able to protect an additional $25,000 of real or personal that’s used as a principal residence.
Previously, the Code of Virginia § 34-4 is as follows:
Every householder shall be entitled…to hold exempt…real and personal property, or either, to be selected by bankruptcy lawyer the householder, including money and debts due to the householder not exceeding $5,000 in value or, if the householder is 65 years of age or older, not exceeding $10,000 in value.
The new Code of Virginia § 34-4 reads as follows:
Homestead exemption of $5,000, or $10,000 if the debtor is 65 years of age or older, in cash, and, in addition, real or personal property used as the principal residence of the householder or the householder's dependents not exceeding $25,000 in value. This exemption may not be claimed in certain cases, such as payment of spousal or child support.
Are you planning to file bankruptcy in Virginia? If so, you can learn about the bankruptcy process here.
Do You Need a Bankruptcy Lawyer in Alexandria, Virginia?
Baneylaw, P.C. Bankruptcy and Business Law is a bankruptcy lawyer in Alexandria, Virginia that offers his expertise in bankruptcy and consumer law to guide you through the bankruptcy process. Whether you are planning to file for a Chapter 7 or Chapter 13 bankruptcy, he can educate you on how to go about the process, so you can take hold of your finances and get back on your feet right away.
Contact us to know more about our services.