Increased Exemption for Chapter 7 Bankruptcy in VA Means You Keep More.
Guess what? As of July 1, 2020, the Virginia exemption just went up! It used to be $5,000, but now the amount is $25,000. This means, you can keep more and your fresh start can begin with more money than before.
What is an exemption? If you file for a Chapter 7 Bankruptcy, most of your debts will be cleared. But some debt such as child support or alimony, student loans, and taxes are not dischargeable. If you file for a Chapter 7 Bankruptcy, you get a fresh start but with what? For most people, everything you have is what is in your pockets. But, this isn’t actually true. In Virginia, it used to be that you could keep property and cash that values up to $5,000 and $500 per person you claim as a dependent. Now, with the new law, you can keep property and cash that values up to $25,000.
The federal bankruptcy code allows the debtor (you) to keep a certain amount of money and property so that a trustee cannot take everything on behalf of a creditor. The amount you can keep depends on the state you live in. Although bankruptcy is federal law, the allowable exemption is state law and will vary based on the state in which you live and where you file. Some states allow you to choose between the federal exemption or the state exemption. In Virginia, you cannot choose. You use the allowable amounts under the Virginia Code 34-4 which dictates the amount of exemption allowed under state law.
In essence, this increase in exemption opened the opportunity for more people drowning in debt to possibly file for bankruptcy. Now, people who can no longer pay their debts will be left with more money and assets to help rebuild their lives after filing for a Chapter 7 bankruptcy.
Quit drowning. This amendment to the Virginia exemption code might be your lifeline. Call for a free consultation for you or anyone you know.