If you have reached the point of considering personal bankruptcy, your first question is one that most in the same financial position in Richmond likely share: "What do I stand to lose?" Bankruptcy is meant to be a tool to help put you back on the path to financial stability. At the same time, achieving that becomes difficult if you have to forfeit up much of your own personal property in the process. For this reason, the law allows you to keep your interest in certain property exempt from bankruptcy proceedings.
Bankruptcy exemptions work as follows: if the exemption amount covers the equity you hold on a piece of property, you can keep it. If it doesn't, then the bankruptcy trustee assigned to your case will sell the property and then give you money from the proceeds equal to the exemption amount (the remaining would be used to pay off whatever you still owe on the property, and then dispersed to your remaining creditors).
According to Section 34.4 of the Code of Virginia, the state's homestead exemption is $5000 (plus an additional $500 for any dependents that you have). That amount increases to $10,000 if you are over the age of 65. Your homestead exemption must be filed prior to actually filing for bankruptcy. Exemptions for other common types of property include:
- $6000 for a motor vehicle
- $5000 for household furnishings
- $5000 for family portraits and heirlooms
- $3000 for firearms
- $1000 for clothing
The federal government has also established its own bankruptcy exemptions. Some states do allow you to choose which exemption model you will follow. Unfortunately, Virginia is not among those states.