Richmond Chapter 7 Bankruptcy Attorneys

What Is Liquidated in a Chapter 7 Bankruptcy? What Can I Keep?

In a Chapter 7 bankruptcy, "liquidation" refers to the sale of your non-exempt assets to pay your creditors. While this sounds alarming, the good news is that the law protects many essential possessions. We can work to make sure you keep everything permitted under the law as you begin a new financial chapter. The goal of Chapter 7 bankruptcy is to give you a fresh start, not to leave you with nothing.

You get to keep your exempt assets. These are specific types of property that the law shields from the bankruptcy process. Virginia has its own set of exemptions you can use to protect your belongings. We can carefully review your assets and apply the correct exemptions to your case, helping you protect everything from your home and car to your household goods and personal belongings.

Some of Virginia’s most common exemption options include:

• Homestead exemption. This is a key tool for homeowners. You can exempt up to $50,000 of equity in your primary residence. The homestead exemption increases by $500 for every dependent you currently support. 
• Wildcard exemption. In addition to the homestead exemption, every Virginia resident gets a $5,000 wildcard exemption. This is highly flexible and can be applied to any property you choose, such as cash in your bank account, stocks, or tax refunds. If you are 65 years of age or older, the wildcard exemption increases to $10,000. Like with the homestead exemption, your wildcard exemption also increases by $500 for every dependent you currently support. 
• Vehicle exemption. You can protect up to $10,000 of equity in one motor vehicles. If you have a car with a loan, you calculate the equity by subtracting the loan balance from the car's market value.
• Household goods and personal property. You can exempt up to $5,000 in household furnishings, appliances, and personal items. You can also exempt up to $1,000 in clothing and up to $3,000 in firearms. Additionally, you can protect all pets, family heirlooms up to $5,000, and all wedding and engagement rings.
• Tools of the trade. If you have tools, equipment, or even a vehicle necessary for your job, you can exempt up to $10,000 in total value.
• Retirement accounts and public benefits. The law fully protects retirement accounts, such as 401(k)s and IRAs, as well as most public benefits like Social Security and unemployment.

What you cannot keep is any property that is non-exempt and has a value greater than the applicable exemption. For example, if you own furniture worth $10,000 (which exceeds the exemption of $5,000), a bankruptcy trustee could potentially sell that furniture to pay your creditors if you do not use a portion of your wildcard exemption to protect the difference in value. 

After evaluating your circumstances, we can walk you through your non-exempt property and explain the potential outcomes, which may include the trustee selling that property or you paying the trustee the value of the non-exempt equity to keep the asset. Our knowledgeable attorneys at Boleman Law Firm, P.C. can work with you to develop an exemption strategy that allows you to keep as much as possible.