Exemptions

Question 1

What is exempt property?

Answer 1

Property that may not be attached by creditors, either before or after a judgment

Question 2

Personal injury claims and proceeds from them are:

Answer 2

Exempt from creditors’ claims
* A debtor’s legal claim against a third party is a form of personal property that might be attached by a creditor BUT your body can’t be used to satisfy your creditors
* Exception–if debt is for medical expenses related to the injury

Question 3

Property held in tenancy by the entirety is:

Answer 3

Exempt against all but joint creditor claims
* EXCEPTION–the IRS can enforce tax lien against TBE and a creditor who is owed a debt by both psouses may attach TBE

Question 4

Who may claim the homestead exemption?

Answer 4

All VA residents may claim until maximum amount is exhausted

Question 5

What homestead exemption amount may be claimed?

Answer 5

Any property worth up to $5,000 ($10k if 65 or older)
* May be claimed for additional $25,000 in real or personal property used as principal residence of claimant or claimant’s dependents
* Additional $500 claimed for each dependent

Question 6

What is the proper method of claiming the homestead exemption?

Answer 6

By filing a homestead deed for claimed real estate in the county where the property is located
* For personal property, debtor must file homestead deed in the place where the debtor resides, describe the items claimed and designate value
* Note that deed isn’t required if claimed as exempt in bankruptcy case

Question 7

When may a homestead exemption be filed?

Answer 7

Even after a judgment lien has been attached
* Can retroactively limit the creditor’s lien

Question 8

When can the homestead exemption NOT be claimed?

Answer 8

1. Purchase money mortgage or security interest in property
2. Spousal or child support obligations
3. Intentional tort claims
4. Debts where protection has been waived
5. IRS claims

Question 9

What is the “poor debtor’s exemption?”

Answer 9

Exemption of random assortment of exempt property, including:
1. Clothes up to $1,000
2. Household furnishings up to $5,000
3. Tools of the trade up to $10,000
4. Motor vehicle up to $6,000
5. Heirlooms up to $5,000
6. Sentimental items and
7. Burial lots up to $5,000

Question 10

What is the cap on garnishment of wages?

Answer 10

Garnishment limited to lesser of:
(1) 25% of disposable weekly earnings OR
(2) Amount by which disposable earnings exceed 40 times the effective federal minimum hourly wage