Virginia Bankruptcy Exemptions and Law

When debts become overwhelming, you can file for bankruptcy. Bankruptcy proceedings are conducted in federal court under the U.S. Bankruptcy Code, which also allows states to set their own rules on what property residents can protect from creditors so they don’t lose all their assets in bankruptcy. Virginia has enacted its own bankruptcy exemptions. To understand the exemptions, it’s first important to understand the basics of bankruptcy.

Chapter 7 vs. Chapter 13

Property exemptions don’t apply to all personal bankruptcies, only those filed under Chapter 7. The other type of personal bankruptcy is Chapter 13 bankruptcy, where you can often keep most of your assets.

Chapter 7 bankruptcies are also known as “liquidation” bankruptcies because you must turn over all of the property not protected by an exemption to a bankruptcy trustee. The bankruptcy trustee then sells the property and uses the proceeds to repay your creditors.

In return for giving up your non-exempt property, you’ll exit Chapter 7 bankruptcy free from nearly all of your debts. Not everyone who files for bankruptcy qualifies for Chapter 7. You must show that your income is low enough to qualify.

Chapter 13 bankruptcy lets people with a steady income reorganize most of their debt and pay it off over three to five years under a court-approved plan. Debt elimination is possible, but debt payment is the primary function of a Chapter 13 filing. Chapter 13 is popular with homeowners because it often lets them keep their homes.

The Automatic Stay Protects You From Creditors

Whether you file under Chapter 7 or Chapter 13, the court will issue an automatic stay when you file. The automatic stay is a powerful tool that forces creditors to stop trying to collect their debts while you resolve your financial issues through bankruptcy.

The automatic stay will stop almost all collection activity against you, including foreclosures and lawsuits. If a creditor contacts you to collect payment while the stay is in place, the court can order it to pay damages, including attorneys’ fees.

Secured vs. Unsecured Debt

Not all debt is treated the same during bankruptcy. When you declare bankruptcy, your debt will be categorized as either secured or unsecured. How your debt is classified will often determine how much you can eliminate through bankruptcy. Let’s explain each type.

Unsecured Debt

Creditors seeking payment for your unsecured debt can’t seize your property to collect. Credit card debt, court judgments, and medical debt are among the most common types of unsecured debt.

Unsecured creditors have no collateral for their debts, making them the most likely to be eliminated in bankruptcy. Some priority unsecured debts, like child and spousal support, can’t be discharged.

Secured Debt

When debt is secured, a creditor can repossess your property if you fail to pay. Most secured debts come from a loan transaction in which you signed a contract giving the lender the right to place a lien on the property you put up as collateral if you don’t repay the loan. Home mortgages and car loans are the most common types of secured debt.

Filing for bankruptcy may force secured creditors to pause collection activities for a time, but most secured debt can’t be discharged. You’ll either need to give up the property or work out a payment plan with the creditor.

Secured and Unsecured Debt in Bankruptcy

When you file for bankruptcy under Chapter 7, you can often discharge most of your unsecured debt. Secured debt can rarely be eliminated, leaving you with three options:

• Returning the property to the creditor: You will lose the property, but you can usually stop paying the creditor
• Keep the property and continue making payments: This is only possible if a state exemption covers the equity you have in the item
• Purchase the property outright: This almost never happens in Chapter 7 because those who meet the chapter’s income requirements rarely have the money to purchase their property

In Chapter 13 bankruptcy, you create a plan to repay your secured creditors over three to five years. The court must approve the plan. Creditors may be forced to reduce or restructure your debt. Mortgage payments aren’t included in the plan, so keep making those payments to your lender outside of bankruptcy.

Your unsecured Chapter 13 creditors are paid with the disposable income left over after you make the required payments to secured creditors. Any unsecured debt not repaid by the end of the plan will be eliminated.

Am I Eligible for Bankruptcy in Virginia?

You can file for Chapter 7 bankruptcy only if you can show your income is below certain thresholds. The easiest way to qualify is to show that your household income is below the median household income for Virginia households of the same size.

According to the U.S. Department of Justice, U.S. Trustee Program, the median household income levels for Virginia as of 2026 are as follows:

• One-person household: $78,491
• Two-person household: $101,171
• Three-person household: $123,159
• Four-person household: $144,826

You can check if you qualify through FindLaw’s Means Test Calculator. If your household income is above the state median, you may still qualify to file under Chapter 7 if you can show you have little to no disposable income each month. You determine this by subtracting your estimated monthly expenses from your monthly income.

Chapter 13 also has eligibility requirements. You’ll need to show a steady income, unsecured debt of less than $526,700, and secured debt of no more than $1,580,125.

Regardless of the type you file, you’ll also be required to complete a credit counseling course. These are available online and usually aren’t expensive.

Virginia Bankruptcy Exemptions

Anyone filing in Virginia may use the Virginia bankruptcy exemptions. Property that falls within the exemptions can be protected from creditors and used to start over after you complete bankruptcy.

When you and your spouse file for bankruptcy in Virginia, each of you can often claim the full exemption if you own the property together. This effectively doubles the exemption.

Homestead Exemption

Virginia’s exemption laws are more complex than they are in many other states. Here’s a basic breakdown of the homestead exemption amounts in Virginia:

• $5,000 general property exemption ($10,000 if you are over the age of 65 or disabled)
• $50,000 in home equity for individual debtors ($100,000 for married couples filing jointly and who both hold an ownership)
• An additional $500 for each dependent living in your primary residence

The homestead exemption can be crucial for keeping your primary residence during bankruptcy. If you have any questions or concerns, consider speaking with a Virginia bankruptcy attorney.

Wage Exemption

Virginia lets you exempt the greater of 75% of your weekly earnings or 40 times the federal minimum wage. The judge may allow low-income individuals to keep more of their income.

Motor Vehicle Exemption

You can exempt up to $10,000 of equity in a motor vehicle.

Personal Property Exemptions

The following personal property exemptions are available in Virginia:

• Clothing: $1,000
• Family portraits and heirlooms: $5,000
• Burial plot/burial ground: $5,000
• Household goods/Household furnishings: $5,000
• Firearms: $3,000
• Animals: 100%
• Health aids: 100%

You’ll be required to show documentation reflecting true value for many of these exemptions if you claim them.

Tools of the Trade Exemptions

Virginia exempts up to $10,000 in value for the tools, equipment, machines, and books you need to pursue your trade or occupation. You may apply the exemption to motor vehicles, boats, and aircraft necessary to pursue your trade.

Farmers receive additional exemptions, including:

• Up to $3,000 for a tractor
• Up to $1,000 in fertilizer
• One wagon or cart
• A pair of horses or mules
• Two plows
• Certain hand tools

Military members can exempt arms, uniforms, and equipment.

Insurance Benefits Exemptions

The state provides the following exemptions for insurance:

• Most life insurance policies
• Benefits paid as the result of an accident, sickness, or industrial illness
• Group life or accident insurance policies for government officials
• Fraternal benefit society benefits
• Burial society benefits

Include copies with your filing.

Pension and Retirement Exemptions

Most pension and retirement plans are exempt in Virginia, including:

• Tax-exempt retirement accounts such as 401(k)s, IRAs, and defined benefit plans
• City, town, and county employee plans
• Plans for state employees and judges

Pensions are also usually exempt.

Public Benefit Exemptions

Virginia provides exemptions for the following public benefits:

• Social Security benefits
• Unemployment compensation
• Workers’ compensation
• Crime victims’ compensation
• Aid to the blind, aged, disabled, and families with dependent children

Awards from lawsuits may not be exempt.

Other Exemptions

• Necessary spousal and child support payments
• Business partnership property
• Alimony

Disclaimer: State laws can change due to new legislation, higher court rulings, and other factors. While FindLaw strives to provide the most current information, consult a local bankruptcy attorney to verify Virginia law.

Need Help Filing for Bankruptcy in Virginia? Speak With an Attorney

Filing bankruptcy can offer a fresh start, but you should know the rules and consequences. If you don’t follow bankruptcy laws precisely, the bankruptcy court may dismiss your bankruptcy petition. That means starting the bankruptcy process over and paying the filing fee again.

An experienced Virginia bankruptcy attorney can ensure that the filing of your Chapter 7 case or Chapter 13 case goes smoothly. Getting legal advice before you file can help ensure that your bankruptcy forms are completed correctly.