Virginia Homestead Act

The Virginia Homestead Act provides limited creditor protection for residents who file bankruptcy. If you're filing Chapter 7 bankruptcy, the trustee assigned to your case will assess the value of your assets. For homeowners, equity -- the difference between the amount owed and the fair market value of the home -- is considered an asset. If you don't have any equity in your home or you don't own a home at all, the homestead exemption can apply toward protecting other personal property.

Home Equity

In bankruptcy, the court can order the trustee to sell your home to pay off your debts. If you own a home valued at $200,000 and the mortgage is $140,000, your equity is $60,000. Under the Virginia Homestead Act, you'll receive an exemption allowing you to keep $5,000 to $15,000 of that equity, depending on your qualifying status. The remaining sale proceeds are distributed among your creditors after the mortgage, liens, sales fees and trustee's fees are paid.

The act designates the amount of equity in your home exempt from creditors. If you owe more than your home is worth, the trustee may decide it's not worth liquidating the home because you have no equity. However, it doesn't mean you can keep the property. The lender can foreclose on the home if you aren't paying. If your equity is equal to the amount of the homestead exemption or slightly more, it may deter the trustee from selling the home since there wouldn't much left to pay the creditors.

Eligible Real Estate

Your primary residence is eligible for protection under the act. You can't use the homestead exemption for an investment or vacation home. Types of homes eligible for the exemption include your:

  • Home.
  • Condominium.
  • Mobile home.
  • Manufactured home.

Personal Property

Any unused amount of the homestead exemption can be used to exempt personal property in the bankruptcy case. For example, if you have no equity in your home, you can apply the exemption toward your valuable coin collection instead. Even if you don't own a home, complete the deed listing your personal property instead of a home. A few examples of personal property you can claim under your homestead exemption includes:

  • Cash.
  • Stocks.
  • Tax refunds.
  • Collectibles.
  • Furniture.


Under state law, Virginia residents who are seeking a homestead exemption in a bankruptcy case must abide by state laws, not federal laws. Although some states allow filers to choose either state or federal exemptions, Virginia law doesn't offer that option. The amount of the exemption varies based on several factors, including marital status, bankruptcy filing status and number of dependents living in the household.

  • Individuals are entitled to a $5,000 exemption plus $500 for each dependent living in the home. If a married couple is filing bankruptcy, the exemption doubles to $10,000.
  • Individuals age 65 and over are allowed to declare a maximum of $10,000. The amount doesn't double for couples over age 65.
  • Surviving spouses of deceased homeowners are allowed a $15,000 exemption. If there are minor children of the deceased homeowner but no surviving spouse, the children are each entitled to a share of the $15,000 exemption. 

Homestead Filing

Homestead exemptions aren't automatic. You'll need to file a homestead deed within five days of the meeting of creditors. The homestead deed is a filed declaration that you're asserting your legal rights to the exemption. You can get the homestead deed from your bankruptcy attorney, download one online or create your own using a sample form. If you fail to file, you forfeit the exemption and lose your creditor protection. The deed must be filed at the county clerk's land records office. If you're claiming the exemption for a home, file the deed in the county where the home is located. For personal property, file it in the county where you live. The fees for recording the deed vary but are around $21, at the time of publication.