A common misconception about filing for bankruptcy is that none of your assets (the things you own) are exempt from liquidation and that the court will sell all your assets to raise money for your creditors. The truth is, an experienced bankruptcy attorney can help you preserve your most important assets.
Items you’re permitted to keep are known as exempt assets.
Virginia bankruptcy law lets you keep the property on your exemption list during and following the bankruptcy filing process whereas the trustee will collect and sell your nonexempt assets to repay your creditors.
What Are Exempt Assets?
Exempt assets include belongings vital to your wellbeing for practical, occupational, spiritual, or personal reasons such as pensions, tools, appliances, personal effects, your car, and your house.
The bankruptcy laws in each state specify which items residents are permitted to keep. Some allow residents to use the federal exempt-assets list, but Virginia residents must use the state’s list.
A bankruptcy exemption list specifies the maximum dollar amount for each exempt asset. The trustee can repossess items when the value exceeds the maximum permitted value.
The best bankruptcy attorneys protect as many of your assets as possible.
Virginia Bankruptcy Exemptions
Each asset in the Virginia Bankruptcy Exemptions list, which we’ve summarized below, is specified by a unique ID number, followed by the type of asset and the maximum protected value if any.
34-4 – Homestead/personal property: $5000, plus $500 per dependent
34-26 – Personal property: $6000 for automobiles, $1000 for clothing, $5000 for furniture, etc.
34-28.1 – Recoveries from personal injury
38.2-5604 – Accounts for health and medical savings
64.2-310 – Personal property from deceased spouse: $20,000
34-29 – Wages: either 40x federal minimum hourly wage or ≥75% of disposable earnings per week
11 U.S.C. § 522 – Retirement accounts including 401(k), 403(b), SEP, SIMPLE IRA, benefit plans, and profit sharing/money purchase plans
11 U.S.C § 522(b)(3)(C)(n) – Roth IRA and IRA: $1,283,025
34-34 – Benefits qualified by ERISA: amount indicated by federal bankruptcy law
51.1-124.4 – Pensions for state employees
51.1-802 – Pensions for employees of counties, cities, and towns
51.1-200 – Pensions for state police officers
12.2-368.12 – Compensation for being the victim of a crime
60.2-600 – Compensation for unemployment
63.2-506 – Assistance for disability
65.1-82 – Workers’ compensation
34-26(9) – Tax credit from earned income
44-96 – Military member gear, including weaponry, equipment, and uniforms
34.26 – Occupation-related equipment, machines, instruments, implements, books, and tools: $10,000
34-27 – Farming equipment: $3000 for tractor, $1000 for fertilizer.
38.2-3122 – Proceeds, interest, dividends, cash, loan, or surrender value from life insurance policies
38.2-3339 – Group life insurance policy or earnings
38.2-3406 – Insurance benefits from accident, sickness, or industry
38.2-3811 – Benefits from cooperative life insurance
38.2-4021 – Benefits from burial society
38.2-4118 – Benefits from fraternal benefit society
51.1-510 – Government official group life or accident insurance benefits
64.2-309 – Allowance for surviving spouse or minor children of deceased: $24,000
34-26(1); 34-28.2 – Child support
How Do Attorneys Handle Bankruptcy Exemptions?
If you find the list above confusing, you are not alone. That’s why no one is advised to file for bankruptcy without an experienced attorney on their team. A skilled bankruptcy lawyer understands the inner workings of these exemptions, including how to distribute allowances to maximize your assets.
Maximizing your assets takes a different shape for each case. To illustrate, imagine you are filing for Chapter 7 bankruptcy. You’ve paid $8,000 thus far for your $18,000 car. The market value of your vehicle is not relevant; what you’ve paid is. Your $8,000 equity (ownership) exceeds the $6,000 maximum for an automobile put forth in 34-26.
To exempt your vehicle from repossession, your bankruptcy attorney might use a portion of your property protection from code 34-4 to exempt the extra $2,000 equity in your car.
This example illustrates just the tip of the iceberg when it comes to bankruptcy exemptions and the strategies attorneys employ to help their clients. Your attorney will work with you to determine which possessions to keep and how to exempt them from repossession.
Chapter 7 Exemptions vs. Chapter 13 Exemptions
Asset exemptions apply to both types of bankruptcy. In a Chapter 13 bankruptcy, you are permitted to keep possessions that exceed the maximum values the state allows. But, you’ll need to pay the balance you owe by following a court-authorized 5-year payment plan.
When Should I File for Chapter 13?
Your attorney will likely guide you toward Chapter 13 if you own an expensive asset you wish to keep, which could include a house, expensive automobile, or other valuable property.
Contact Robert Stevens Law to Maximize Your Exemptions
At Robert Stevens Law, we leverage over 25 years of experience to maximize exempt assets for our clients. We will handle your case with focus, compassion, and expertise, paying attention to your story and your concerns. We understand that your situation is unique.
Maximize your exemptions and receive the respect and compassion you deserve.
Call Robert Stevens Law today to set up a free consultation: (434) 973-5012