Virginia Bankruptcy Exemptions: What You Can Keep in Chapter 7

Unexpected expenses like medical bills or job loss can create serious financial stress. You might face wage garnishment, repossession, or even losing your home. Bankruptcy may offer the relief you need.

Most people who file bankruptcy keep all of their property. Bankruptcy exemptions protect your assets. You can keep your home, car, and everyday essentials while clearing unsecured debts.

Bankruptcy Exemptions in Virginia: The Basics

Bankruptcy is a federal process. It works mostly the same nationwide. But exemption rules differ by state.

Exemptions determine what property you can keep. Federal law lets each state choose between federal exemptions or state-specific lists. Some states let you pick either option.

Virginia doesn’t give you a choice. You must use Virginia state exemptions when filing bankruptcy here. You can’t use federal bankruptcy exemptions. You may qualify for federal non-bankruptcy exemptions in special cases.

Why Exemptions Matter in a Virginia Chapter 7 Case

You don’t lose everything in Chapter 7 bankruptcy. State law protects certain property within exemption limits. You can keep your car, retirement savings, home equity, and more.

Protected items are called exempt assets. The bankruptcy trustee can only sell non-exempt property. Your car stays with you if its value falls below the exemption amount.

If your car exceeds the exemption limit, the trustee might sell it. You’d receive the exempt amount back. Your income, property value, and debt type affect your bankruptcy outcome.

Does Virginia Allow You To Use Federal Bankruptcy Exemptions?

No. Virginia doesn’t allow federal bankruptcy exemptions. You must use Virginia state exemptions when filing here.

Some states let filers choose between options. Virginia is not one of them. You may still qualify for federal non-bankruptcy exemptions. These special protections can safeguard retirement income and certain benefits.

What Are the Virginia Bankruptcy Exemptions?

Virginia law lets you keep property necessary for living and working. Exemptions protect essential assets. They’re organized by property type.

Common categories include:

• Your home (primary residence real estate)

• Your vehicle

• Household items like furniture and appliances

• Personal property including clothing, heirlooms, and pets

• Wildcard exemptions you can apply to anything

Married couples filing jointly can claim double exemptions. Both spouses must have ownership interest. Doubling exemptions protects more shared assets.

Real Property: The Homestead Exemption

Virginia’s homestead exemption protects your home equity during bankruptcy. You won’t lose your home just because of financial trouble.

You can protect up to $50,000 of equity in your primary residence. Equity is your property’s value minus outstanding loans or mortgages.

• In bankruptcy, claim this exemption on your bankruptcy forms.

• Outside bankruptcy, file a homestead deed with the court for protection.

Protecting home equity is crucial if you own property. Homes not fully protected might require Chapter 13 bankruptcy instead. You might explore other debt relief options. Consider speaking with a bankruptcy attorney for free to discuss your situation.

Legal reference: Virginia Code § 34-6

Wildcard Exemption

Virginia’s wildcard exemption offers extra flexibility. You can protect any property you choose. It’s not limited to specific categories.

You can use the wildcard exemption to protect up to:

• $5,000 in property value

• $10,000 if you’re 65 or older

• An additional $500 for each dependent you support

Apply this exemption to anything. Cash, tax refunds, savings accounts, electronics, jewelry all qualify. It’s helpful for items without specific exemptions.

The wildcard is one of Virginia’s most flexible tools. You can keep what matters most to you.

Motor Vehicle Exemption

Virginia protects up to $10,000 of equity in motor vehicles during bankruptcy. You can protect one or more vehicles under this limit.

Many people rely on their car for work and family needs. The exemption helps you keep your vehicle if it’s paid off or nearly paid off.

Equity equals your car’s value minus what you owe. A $7,000 car with a $2,000 loan has $5,000 equity. That’s fully protected under the $10,000 limit.

Individuals or couples can use this exemption depending on ownership.

Legal reference: Virginia Code § 34-8

Other Personal Property Exemptions

Virginia law protects various personal items important for daily life. You can keep basic belongings and sentimental possessions during bankruptcy.

Protected items include:

• Household furnishings like beds, dressers, refrigerators, and kitchenware, up to $5,000

• Family heirlooms and family portraits, up to $5,000

• Clothing, up to $1,000

• Firearms, up to $3,000

• All pets (not kept for sale or profit)

• Medically prescribed health aids (no value limit)

• Family Bible

• Wedding and engagement rings

You can also protect:

• A burial plot and up to $5,000 in prepaid funeral contracts

• Certain prepaid tuition plans under Virginia education laws

• Up to $20,000 in personal property of a deceased spouse

Legal reference: Virginia Code Ann. §§ 23-38.81, 34-18, 34-4, 34-27, 34-26, and 64.2-310

Money Benefits

Money benefits include pensions, retirement accounts, public benefits, insurance, alimony, and child support.

Pension and Retirement Exemptions

Federal rules fully exempt retirement benefits for certain public employees. Tax-exempt retirement accounts are also exempt.

• You can protect retirement accounts like 401(k)s, profit-sharing plans, 403(b)s, and money purchase plans.

• You can also protect SIMPLE IRAs, SEP plans, and defined benefit plans.

These exemptions are available under U.S.C. § 522. Section § 522(b)(3)(C)(n) protects IRAs and Roth IRAs to the maximum amount.

• Section 51.1-124.4 covers state employees

• Section 51.1-802 covers county, town, and city employees

• Section 51.1-200 covers state police officers

• Section 51.1-300 covers judges

Wage Exemption

Under Section 34-29, you can protect the higher of:

• Forty times the federal minimum hourly wage

• A minimum of 75% of disposable weekly earnings

Judges may approve more for low-income filers in Virginia.

Public Benefits

The following are fully exempt:

• Crime victims’ compensation (unless discharging debt for crime-related injury treatment)

• Unemployment compensation

• General aid and assistance to blind, disabled, and aged people

• Workers’ compensation

• Earned income tax credit

Legal reference: Virginia Code Ann. §§ 9.2-368.12, 63.2-506, 60.2-600, 65.1-82, 34-26(9)

Insurance

Accident and sickness benefits are exempt. Funds in continuing healthcare provider accounts and industrial sick insurance proceeds are protected. Cooperative nonprofit life benefit insurance company benefits are also exempt.

• Life insurance proceeds are exempt under Section 38.2-3122

• Group life insurance policy proceeds are exempt under Section 38.2-3339

• Accident, industrial, sickness, and illness benefits are exempt under Section 38.2-3406

• Cooperative life insurance benefits are exempt under Section 38.2-3811

• Burial society benefits are exempt under Section 38.2-4021

• Fraternal benefit society benefits are exempt under Section 38.2-4118

• Group life or accident insurance for government officials is exempt under Section 51.1-510

Alimony and Child Support

Child support and alimony are exempt in Virginia. These payments must be reasonably necessary for ongoing support of you and your dependents. Exempt under Virginia Code Ann. § 34-26(10).

Other Virginia Exemptions

• Tools of the trade: You can exempt up to $10,000 for items needed in your trade, business, or profession under Virginia Code Ann. §§ 34-26, 34-27.

  • Agricultural workers can exempt a pair of mules or horses with gear, one wagon or cart, one tractor up to $3,000, two plows, and one drag.

  • You can also protect harvest cradle, rake, pitchfork, and fertilizer up to $1,000 under Virginia Code Ann. § 34-27.

• Military equipment

• Burial property and cemeteries

Legal Reference: Virginia Code Ann. §§ 34-26, 34-27, and 44-96

Get Expert Help Filing Chapter 7 Bankruptcy in Virginia

Filing bankruptcy doesn’t have to feel overwhelming. Many people successfully navigate Chapter 7 by understanding exemptions and taking things step by step.

You can protect your essential assets while eliminating unsecured debt. A bankruptcy attorney can help you maximize your exemptions. They ensure you’re taking full advantage of Virginia’s protections.

Ready to take the first step toward your fresh financial start? Speak with a bankruptcy attorney for free to discuss your Virginia bankruptcy options.