Whether You Can File Chapter 7 Bankruptcy and Keep Your House Depends on Your State Homestead Law
Until 2020, Virginia had the worst bankruptcy homestead protection in the country. Single homeowners (Virginia has great protection for real estate owned by married couples), could protect only $5000. That was written in the Virginia Code in 1919, when $5000 would have protected almost every house in Northern Virginia.
Starting July 1, 2024, single homeowners can protect up to $55,000 in equity while filing Chapter 7 bankruptcy.
The 2020 legislature raised that $5,000 to $30,000. That was a big increase, although still small compared to 10 acres in Texas or the entire District of Columbia.
In 2024, the General Assembly raised the Virginia bankruptcy homestead again, from $30,000 to $55,000, taking effect July 1, 2024. Fairfax County Del. Marcus Simon was the key legislator pushing this through. Special thanks also go to Darden Hutson, a bankruptcy lawyer in Richmond for his hours and hours of work on this issue.
This was made much easier by Democrats taking control of the Virginia Senate in the 2023 elections. (Republicans voted overwhelmingly in favor of this change when it came to the floor, but consumer laws rarely make it out of committee when Republicans are in control.)
Virginia Homestead Law Still Isn’t That Great
Also this year, the state legislature in Oregon raised their exemption for single home owners from $40,000 to $150,000.