By John G. Merna, Esq. | Last Reviewed: June 2026 | The Merna Law Group, P.C.

Protecting their home is the primary concern for most Virginia homeowners considering bankruptcy. The good news is that bankruptcy — especially Chapter 13 — is often the most effective tool available for saving a home from foreclosure.

The Virginia Homestead Exemption

Virginia’s homestead exemption (Va. Code § 34-4) protects equity in your primary residence up to the amount established under that section. Equity is the difference between your home’s value and what you owe on it. If your equity is within the exemption, the bankruptcy trustee cannot force a sale of your home.

Virginia does not allow filers to use the federal exemption scheme (Va. Code § 34-3.1), so you must use Virginia’s exemptions. Current exemption amounts are verified at law.lis.virginia.gov/vacode/title34/.

Additional exemptions exist for Virginia residents under real estate law, federal law, and other state laws. Contact an attorney to fully understand the protection available for your specific property situation.

Keeping Your Home in Chapter 7

Chapter 7 allows you to keep your home if:

• Your equity is within Virginia’s homestead exemption
• You are current on your mortgage payments
• You continue making mortgage payments going forward

Chapter 7 does not cure missed mortgage payments or stop a foreclosure long-term. The automatic stay halts the foreclosure temporarily when you file, but once your Chapter 7 case closes — typically four to six months later — the lender can resume foreclosure if you remain in default. If you are behind on your mortgage and want to keep your home, Chapter 13 is almost always the better path.

Keeping Your Home in Chapter 13 — The Gold Standard

Chapter 13 is the most powerful tool available to Virginia homeowners facing foreclosure. When you file Chapter 13:

• The automatic stay stops the foreclosure immediately — even if the sale is scheduled for the same day
• Your plan spreads the missed mortgage payments (arrears) over three to five years
• As long as you make your ongoing mortgage payment plus the plan payment for arrears, the lender cannot foreclose
• At the end of a completed plan, the arrears are fully cured and your mortgage is current

Lien Stripping in Chapter 13

If you have a second mortgage or home equity line of credit, and your home is worth less than what you owe on the first mortgage, Chapter 13 may allow you to strip the second lien entirely (11 U.S.C. § 1322(b)(2)). The stripped lien is reclassified as unsecured debt and discharged at the end of the plan. This can eliminate a significant mortgage obligation on an underwater property.

What If I Am Already in Foreclosure?

You can file Chapter 13 at any time before the foreclosure sale is completed to trigger the automatic stay and stop it. Even if the sale is scheduled for today, filing before the gavel falls stops it. Call us immediately at 1-800-662-8813 if you are in this situation.

Tenancy by the Entireties: Extra Protection for Married Homeowners

Virginia recognizes tenancy by the entireties — a form of property ownership available only to married couples. When you and your spouse own your home as tenants by the entireties and only one spouse files bankruptcy, the non-filing spouse’s interest in the property is generally protected from the bankruptcy estate. This means a Chapter 7 trustee typically cannot force a sale of a home held in tenancy by the entireties when only individual debts (not joint debts) are involved.

This protection can be particularly valuable when one spouse has significant individual debt — such as old credit cards or medical bills in their name alone — while the home is jointly owned. A careful analysis of how your home is titled and which debts are joint versus individual is essential before filing. Merna Law reviews your deed and debt structure as part of every consultation to determine whether this protection applies to your situation.

What the Trustee Looks at in Your Home

In Chapter 7, the trustee’s job is to determine whether you have non-exempt equity in your home that could be sold to pay creditors. The calculation is straightforward: the trustee estimates your home’s current market value, subtracts the mortgage balance and any liens, subtracts the cost of sale (typically six to eight percent for realtor commissions and closing costs), and then subtracts your Virginia homestead exemption. If the remaining number is zero or negative, there is nothing for the trustee to pursue and your home is safe.

In practice, most Virginia homeowners filing Chapter 7 are either underwater on their mortgage, have minimal equity, or have equity that falls within the homestead exemption amount. The trustee is not interested in forcing a sale for a few thousand dollars — the administrative cost of selling real property makes small-equity situations not worth pursuing.

Second Mortgages and Lien Stripping

If you have a second mortgage or home equity line of credit and your home’s current market value is less than what you owe on the first mortgage alone, Chapter 13 offers a powerful tool called lien stripping. This allows the bankruptcy court to reclassify your second mortgage as unsecured debt — meaning it gets treated the same as credit card debt in your Chapter 13 plan and is largely or entirely eliminated when you receive your discharge.

Lien stripping is not available in Chapter 7. It requires a Chapter 13 filing and a successful motion demonstrating that your home value does not support the junior lien. For homeowners carrying both a first and second mortgage in Virginia’s current housing market, this analysis can make the difference between keeping your home affordably and losing it to unsustainable combined payments.

After Bankruptcy — Buying a Home

If you are not trying to save a current home but want to buy one in the future, FHA mortgage programs have defined waiting periods after bankruptcy discharge. Conventional loan programs have different timelines. With consistent credit rebuilding after discharge, homeownership is an achievable goal for most bankruptcy filers within two to four years.

Last reviewed by John G. Merna, Esq. | June 2026 | The Merna Law Group, P.C. is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.