Virginia Bankruptcy Exemptions

Find out how to protect property in a Virginia bankruptcy using Virginia's bankruptcy exemptions.

By , Attorney · University of the Pacific McGeorge School of Law

Virginia bankruptcy exemption laws protect property in bankruptcy and are essential to a fresh start. When you file, the Virginia bankruptcy exemptions will let you keep what you need to work and live. However, exemptions protect essential assets only, not unnecessary luxury goods.

To prevent a costly property loss, you'll want to understand the exemptions available under Virginia, and what happens to property you can't protect with an exemption. In this article, you'll also learn whether you've lived in Virginia long enough to use Virginia bankruptcy exemptions.

Using Exemptions When Filing for Bankruptcy in Virginia

Bankruptcy is a federal process that works the same way in every state. However, you'll use Virginia state laws known as "bankruptcy exemptions" and federal nonbankruptcy exemptions to protect your property. Federal bankruptcy exemptions aren't available in Virginia.

Virginia Bankruptcy Exemptions

Caution: The state exemptions have not been updated and should not be relied on but only used as a general guide. Some state exemption amounts could be higher, and your state could have changed the law by adding new or deleting old exemptions. Verify exemption availability through research or by consulting a local bankruptcy attorney.

Homestead Exemption

  • $25,000 real or personal property used as a principal residence
  • property can be used by debtor or debtor's dependents
  • protections available for property held as tenants by the entireties

Va. Code Ann. §§ 34-4; 55.1-136; 55.1-202

Learn about using the homestead exemption in Virginia.

Motor Vehicle Exemption

  • $6,000

Va. Code Ann. § 34-26(8)

Learn about the motor vehicle exemption in Virginia.

Tools of Trade Exemption

  • tools, books, equipment, and machines up to $10,000, including motor vehicles, vessels, and aircraft necessary in occupation or trade
  • tractor to $3,000; horses; cart; two plows; one cradle; one pitchfork; two iron wedges; fertilizer to $1,000
  • arms, uniforms, and equipment of a military member

Va. Code Ann. §§ 34-26; 34-27; 44-96

Wildcard Exemption

  • $5,000 of any real estate or personal property; $10,000 if 65 years of age or older
  • $500 more for each dependent
  • $10,000 more for disabled veterans
  • $5,000 of unused homestead exemption

Va. Code Ann. §§ 34-4; 34-4.1; 34-13

Learn about the wildcard exemption in Virginia.

Personal Property Exemptions

  • clothing up to $1,000
  • household furnishings up to $5,000
  • firearms up to $3,000
  • family portraits and heirlooms up to $5,000
  • burial plot
  • wedding and engagement rings
  • family Bible
  • pets
  • medically prescribed health aids
  • personal injury recoveries and causes of action
  • health savings accounts and medical savings accounts
  • spendthrift trusts
  • rents and profits of exempt property
  • prepaid tuition contracts and college savings trust accounts
  • surviving spouse or minor children can exempt up to $20,000 of deceased spouse's personal property

Va. Code Ann. §§ 23.1-707; 34-18; 34-26; 34-28.1; 38.2-5604; 64.2-743(C); 64.2-310

Retirement Accounts

  • retirement benefits exempt under the Internal Revenue Code

Va. Code Ann. § 34-34

Federal law lets all filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 U.S.C. 522(b)(3)(C); (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)

Available Federal Exemptions

Federal Nonbankruptcy Exemptions

Where to Find Statutes

Code of Virginia

Other Virginia Bankruptcy Exemptions

Below you'll find more Virginia exemptions, but it's not an exhaustive list, and it's not being updated. As with all exemptions, check for current amounts and qualification requirements.

Virginia Public Benefits and Wage Exemptions

  • Public assistance (Va. Code Ann. § 2-506.)
  • Crime victims' compensation (Va. Code Ann. § 2-368.12.)
  • Earned income tax credit (Va. Code Ann. § 34-26(9).)
  • Unemployment compensation (Va. Code Ann. § 2-600.)
  • Workers' compensation (Va. Code Ann. § 2-531.)
  • 40 times the federal minimum hourly wage or minimum of 75% of disposable weekly earnings; judge can approve more (Va. Code Ann. § 34-29.)
  • Spousal or child support (Va. Code Ann. §§ 20-108.1(G); 34-28.2.)

Virginia Insurance Exemptions

  • Life insurance proceeds, dividends, interest, loan, cash, or surrender value ( Code Ann. § 38.2-3122.)
  • Group life insurance policy or proceeds (Va. Code Ann. §§ 2-3339; 51.1-510.)
  • Accident, sickness, or industrial illness benefits (Va. Code Ann. §§ 38.2-3406; 38.2-3549.)
  • Cooperative life insurance benefits (Va. Code Ann. §§ 2-3811.)
  • Burial society benefits (Va. Code Ann. § 2-4021.)
  • Fraternal benefit society benefits (Va. Code Ann. §§ 2-4118.)

Other Virginia Bankruptcy Exemptions

Below, you'll find more Virginia exemptions. However, it's not an exhaustive list. Also, as with all laws, exemption laws can change. Be sure to check for current amounts and read the statute for qualification requirements (we haven't included them here).

  • Business partnership property (Va. Code Ann. § 50-73.105.)

How to Verify Available Exemptions in Virginia

Almost everyone who files for bankruptcy benefits from meeting with a bankruptcy lawyer. A local bankruptcy attorney will ensure a smooth and uneventful bankruptcy by complying with filing requirements and helping you protect all possible property.

What Are the Virginia Bankruptcy Exemption Timing Rules?

It's tempting to move to a state with significantly more generous bankruptcy exemptions when filing for bankruptcy. But it doesn't work that way. To prevent people from abusing the system, filers must live in the state for at least two years. Otherwise, they must use the previous state's exemptions. Here's how it works.

  • If you've made your permanent home (your "domicile") in your current state for at least two years, you can use the state's exemptions (or the federal exemptions if allowed).
  • If your domicile hasn't been in the same state for two years, the rules get more complicated, so prepare yourself. It sounds so strange we'll explain it in three different ways so that you know you didn't read it wrong. Here goes: You'll choose the state you lived in the longest during the 180 days immediately before the two years before filing.

Did you get that? If not, here's a way to figure it out. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.

Still confused? Let's try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you'd qualify to use the exemptions of whichever state you resided in the most from July 1, 2019, through December 31, 2019. You wouldn't have to file your case there, but you'd use that state's exemptions. Hopefully, that helps!

Special Homestead Exemption Rules

The homestead exemption protects your ownership interest in your home. You'll need to read your state's homestead statute to determine the specifics, such as the amount of equity and acreage covered, whether the exemption protects a manufactured home, and if you need to file a homestead exemption with the county clerk. But in all states, the property must be your residence. Also, you'll need to comply with a federal timing law. Here's the rule:

You must live in the home for over 40 months before filing for bankruptcy. Otherwise, your homestead exemption is capped at $189,050 if you file on or after April 1, 2022 (the amount changes every three years). This cap won't apply if you bought your home with home sales proceeds from that state.

What Happens to Property You Can't Exempt in a Virginia Bankruptcy?

It will depend on the chapter you file. In Chapter 7 bankruptcy, you lose property not covered by an exemption. The bankruptcy trustee responsible for managing your case will sell the property for the benefit of your creditors.

In Chapter 13 bankruptcy, you can keep all your property. However, that luxury comes at a price. You'll pay your creditors the value of any property not covered by an exemption in your Chapter 13 repayment plan.

For example, say you own a car outright worth $3,000, and your state has a vehicle exemption of up to $5,000. Here's what would happen in each chapter.

  • Chapter 7 Bankruptcy. If you file for Chapter 7 bankruptcy, you will get to keep your car because the exemption would protect the equity fully. In the same example, if your vehicle were worth $15,000, the bankruptcy trustee would sell your vehicle, pay you $5,000 for the exemption, and distribute the rest to your unsecured creditors.
  • Chapter 13 Bankruptcy. In Chapter 13, you wouldn't need to pay extra to your creditors through your repayment plan. However, if the car were worth $15,000, you'd need to pay your creditors at least $10,000 (minus sales costs) through your plan.

Keep in mind that these examples don't take into account a vehicle loan. You'll find more information about protecting financed homes and cars in a Virginia bankruptcy below.

How Do You Protect a Financed Home or Car in a Virginia Bankruptcy?

Many wonder if they can wipe out a home mortgage or car loan and keep the property without paying for it. The simple answer is "No." If you still owe a balance on your mortgage or car loan, you must pay as agreed to prevent the lender from foreclosing or repossessing the property.

Why? Because when you purchased it, you gave the lender a property "lien." The lien created a secured debt, allowing the lender to take back the property if you don't pay as agreed, even in bankruptcy.

Protecting Financed Property in Chapter 7 Bankruptcy

Chapter 7 doesn't have a mechanism that will allow you to catch up on a mortgage or car payment over time. So, the mortgage or car payment must be current. You'll lose the property if you're behind on the payment and file for Chapter 7.

The lender will ask the bankruptcy court to allow the lender to proceed with foreclosure or repossession during the bankruptcy or wait until Chapter 7 ends.

A few more vehicle protection options exist in Chapter 7. Learn more about how to file for bankruptcy without losing a car.

Protecting Financed Property in Chapter 13 Bankruptcy

You don't lose property in Chapter 13. However, before the bankruptcy judge approves or "confirms" your plan, you must prove you earn enough to make the monthly payment and pay the late payments by the end of the three- to five-year plan.

Some filers can pay less on financed property if they qualify to reduce an auto loan to the car's value or strip a junior mortgage, credit line, or lien from a home. Learn more about catching up on arrearages in Chapter 13 and how mortgages work in bankruptcy.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help you find the answers you need.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

More Bankruptcy Information

Bankruptcy Forms and Document Checklist

Chapters 7 and 13 Bankruptcy Form List

Bankruptcy Document Checklist

You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage. The forms relating to this article topic include the following:

Schedule A/B: Property

Schedule C: The Property You Claim as Exempt

Statement of Intention for Individuals

More You Might Like

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Can I Use My Credit Card Before I File for Bankruptcy?

Should I Ignore a Debt Collector's Calls and Letters?

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

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