Virginia Homestead Exemption too low to protect this Widow.
Told a Widow this Week, She’ll Lose her House because of COVID and Business Debts
Widow lost her small shop in the COVID depression. The Virginia homestead exemption is too small to protect her house.
She has about $65,000 in business debts and no way to pay them.
If she tries to file Chapter 7 bankruptcy here in Virginia, the bankruptcy trustee will sell her house to pay those debts. Virginia law protects real estate that belongs to a married couple–but she’s a widow.
Bankruptcy is set up by the Federal Government, but each state sets its own rule on how much real estate equity you can protect. (That’s called your homestead exemption.) Thanks to the new majority in the Virginia General Assembly, you can protect $30,000.00 in equity. (Up from $5,000.00. The Virginia homestead exemption had been the lowest in the country.)
This widow has a little over $100,000.00 in equity, so the Virginia homestead exemption isn’t enough for her. She may need to sell the house to get cash to survive, because she lost her business, and isn’t social security age yet.
I like to say I can help almost everyone who contacts me; but I can’t help her.
PS Virginia Homestead Exemption is still near the bottom
While Virginia increased our homestead exemption from $5,000.00 to $30,000.00, it’s still near the bottom of the fifty states. You can protect 100 acres of Texas, 160 acres of Florida. You could own the entire District of Columbia. Just this week California increased their homestead exemption from $75,000 to $300,000, in the rural counties. And up to $600,000 in in the urban areas.
Here’s a slightly outdated breakdown of the homestead exemption of all fifty states.