Bankruptcy exemptions in Virginia get better July 1.
Bankruptcy exemptions in Virginia got a little better effective July 1, 2011.
HB 1422, sponsored by Del Dave Albo (R-Springfield) increased the exemption for motor vehicles from $2,000 to $6,000. It also exempts one family firearm valued up to $3,000.
Bankruptcy exemptions are important because the bankruptcy trustee is supposed to take and sell your non-exempt assets and use the money to pay creditors. The last major revision of this law had been in 1992, and 20 years of inflation had taken a toll on what people are allowed to keep.
The purpose of exemptions is to allow people (who maybe losing their home to foreclosure), to keep enough to be able to start over. A $6,000 motor vehicle exemption will about cover a seven year old Chevy Malibu–a reasonable car for someone to get to work or the grocery store and feel safe with the kids.
Virginia has a “homestead exemption” of $5,000. That goes back in Virginia law to 1919 and was originally intended to protect real estate equity. Recently most people filing bankruptcy with paid for cars had to use the “homestead” to protect their cars.
Many bankruptcy lawyers this year worked very hard to get the General Assembly to update all the Virginia exemptions to reflect changes in the last twenty years. That didn’t work out. We got a lot less than we asked for.
Fairfax Senator Chap Petersen helped improve Virginia bankruptcy exemptions. Legislation passed in 2011 allows families filing bankruptcy to protect a car such as a seven year old Chevy Malibu.
State Senator Chap Peterson (D-Fairfax) was our key supporter in the Virginia Senate.
Several Bankruptcy Lawyers worked very hard to persuade our elected officials to improve the Virginia exemptions. Mitchell Goldstein, of Richmond, drafted our proposed legislation. Darden Hutson, also of Richmond, coordinated the state-wide effort. Daniel Press, of McLean, worked tirelessly and recruited Senator Peterson to help. Bob Barlow, of Fredericksburg, talked to the legislators in that area. Bob’s success recruiting Del. Mark Cole was key.
Other bankruptcy lawyers who worked hard include Jeanne Hovendon, Ellen Ray, and Jason Greenwood.
I should also mentioned Klinette Kindred, of my law firm. (In 2011 she became a bankruptcy trustee and later moved to a law firm that doe primarily trustee work.) She lives in Springfield VA, in the area represented by Del. Albo. She made an appointment and asked him for support in December 2008. That request from a local voter may have helped tip him over to us two years later. Del Albo is the chairman of the committee that has jurisdiction over exemption law.
For my later blog on exemptions generally, go here.