What is the homestead exemption in Chapter 13 Bankruptcy?
The homestead exemption in Chapter 13 Bankruptcy Law in Virginia protects the equity in a debtor’s home from the claims of creditors. Equity is the difference between what is owed on the mortgage and the home’s market value. This exemption applies to a debtor’s primary residence and grants a certain level of protection. Under Virginia law, the homestead exemption is limited to the lesser of $350,000 or 10 acres of land (with buildings) outside certain localities or 25 acres within certain localities. Additionally, the debtor may exempt up to $10,000 worth of personal property located at the residence, such as furniture, appliances, and vehicles. Debtors who file for Chapter 13 Bankruptcy in Virginia must list their home as an asset in their bankruptcy petition and indicate the value of the homestead exemption they are claiming. The value of the exemption will reduce the total value of the debtor’s assets, which, in turn, will affect the amount of money the debtor has to repay creditors that is determined by their payment plan. The value of the homestead exemption is determined by the date of the debtor’s bankruptcy filing, so it is important for the debtor to consult with an experienced bankruptcy attorney to ensure that they are receiving the full benefit of the exemption.
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