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Does the Bankruptcy Court Take My Property?
Most people keep everything. Virginia law allows you to keep your furniture, clothes, and car up to certain limits of value. The law also gives you the right to protect other assets: bank accounts, expensive cars– again up to certain limits. The Virginia limit on paid for cars was quite low: $2,000.00; and often required some planning to work around. The Virginia General Assembly raised it to $6000–effective July 1, 2011. Single people who still have some equity often require a Chapter 13 to keep their house–Virginia is tied for worst of the fifty states in the protection for single people in bankruptcy, allowing equity of $5,000.00. (It was set at $2,0000 for a hundred years, and raised about 30 years ago.) Married people can more often keep their house with equity in Chapter 7. (If falling real estate values have wiped out the equity in your house, then you don’t need to worry about that.) Especially under the new bankruptcy law, it’s smart to see a lawyer right away if you are in financial difficulties and own real estate in Virginia. We can usually put together a plan that works if you come to see us early enough. If you have something valuable that the court can sell and get more than about $5,000.00 for, the court will sell it to help pay off your debts. About one person out of a hundred has the bankruptcy court sell something they own. Here’s what each person is allowed to keep under Virginia law from the court.
- Your clothes– worth up to $1000.00 at thrift store prices.
- Your household goods– up to $5000.00 at thrift store prices.
- Your car– worth up to $2000.00 more than you owe on it. ($6000 starting July 2011)
- Cash– or whatever else you want, up to $5000.00
- Your wedding or engagement ring–regardless of what it’s worth
- Your 401(k), IRA or retirement–regardless of how much (I helped a guy twelve years ago who had $950,000 in his 401(k).)
- Your firearms up to $3000, effective July 2011.
Recently real estate values have been falling here, which is a help in some ways. Virginia allows single people to file Chapter 7 and keep your house only if you have very little equity. Virginia does provide much better protection for married couples who own a house. The sooner you come to see us the more strategies we can try.