Michael D. Hart, P.C.

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What Assets Are Protected in Chapter 7 Bankruptcy?

| Apr 15, 2021 | Chapter 7 Bankruptcy |

If you are going through a tough time financially, you may feel like you are in survival mode, constantly trying to work to manage to provide for your family. However, even if you are able to provide your loved ones with the basic necessities, it is likely that you will be chronically stressed and always thinking about the huge amount of debts that you have facing you.

It is important, therefore, to realize that no matter your financial situation, there are always opportunities to get out of debt. You may be able to do this by increasing your income, through debt reconsolidating or through financial advice. If none of these options work for you, another option is to file for bankruptcy. Many try to avoid filing for bankruptcy because they believe that it will mean losing all of their assets. The following is an overview of Chapter 7 bankruptcy and the assets that will be protected in your Virginia filing.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is only available to those who do not have the means to pay off their debts through a repayment program. This means that before you qualify for Chapter 7 bankruptcy, a means test will be conducted. This will look at your income and your dependents, and compare it with the state average. Chapter 7 bankruptcy is a preferable option for many because it will likely lead to the complete discharge of all debts in a matter of months. However, to do so, you will have to liquidate much of your assets.

What assets are protected in Chapter 7 bankruptcy?

In Virginia, there is a homestead exemption of $5,000, or $10,000 if the debtor is aged 65 or older. While there are no exceptions for luxury items, you will be entitled to keep clothing and personal items up to a certain amount.

If you are struggling financially in Virginia, make sure that you take action to understand the possibilities you have for filing for bankruptcy.