The article is replenished by the guest writer Anya Bennett of Oak View Law Group.
Debts stricken consumers who are contemplating to file bankruptcy in Virginia must know that you might lose your house if you are declared bankrupt. If you think that you can protect your secondary residence because you do not have a mortgage, then it is your misconception. Actually, you can protect your house only if you do not default on your mortgage payment. The State law of Virginia safeguards only up to $5,000 in home equity.
Virginia consumers who are filing under chapter 7 bankruptcy have a chance of losing their house. Unlike chapter 7, people who are filing under chapter 13 Bankruptcy can still have control over their house. Under liquidation bankruptcy, the state appointed trustee will sell your valuable property and the fund raised from it will be disbursed among the creditors. However, under chapter 13 bankruptcy in Virginia, the trustee will rearrange your debts and set a repayment plan to make it affordable for you to pay off.
If a home owner files under Chapter 7 bankruptcy in Virginia, there is a great possibility but no guarantee that he will not lose his house. A house can be protected under Chapter 7 bankruptcy through a homestead exemption. This will exempt your house from liquidation process only if it is within a stipulated amount. In Virginia, the base homestead exemption is near about $5,000 which is the lowest, when compared with other states. Amongst other states, Florida offers an unlimited value on homestead exemption grant, so there is no risk of losing your house. Therefore, it can be a great disappointment for homeowners in Virginia who are contemplating bankruptcy.
Special Exemption
In Virginia, you can claim for $5,000 base homestead exemption, but you can additionally claim $500 in exemption for each individual living in the house. If a homeowner has four dependent people in his house, then he can claim $7,000 in total homestead exemption. However, a homeowner with financially independent members is eligible to claim only $5,000.