Chapter 13 Bankruptcy in Virginia: Plan, Exemptions, and Costs

Chapter 13 bankruptcy in Virginia is a court-supervised repayment plan that runs three to five years, letting residents with steady income keep their homes, cars, and other property while catching up on past-due debts through a single monthly payment to a trustee. Your income, expenses, debt load, and Virginia’s exemption rules together decide how much you pay and how much your unsecured creditors ultimately receive.

Who Can File

Two thresholds control eligibility. You need “regular income,” which the Bankruptcy Code reads broadly to include wages, self-employment earnings, Social Security, pensions, and consistent support payments. Your debts also have to fit under statutory caps: as of the April 2025 adjustment, noncontingent liquidated unsecured debts must be under $526,700 and noncontingent liquidated secured debts under $1,580,125.¹ Above those limits, Chapter 13 is off the table and Chapter 11 becomes the reorganization option.

You also have to be current on federal and state tax returns for the four tax years before you file. The IRS will not support a plan when returns are missing.² Check these gates first. Filing a case the court will dismiss or refuse to confirm burns filing fees, attorney fees, and months of time.

Three Years or Five: Where You Fall Against Virginia’s Median

Plan length depends on your household income compared to Virginia’s median. Below the median for your household size, you propose a three-year plan (the court can approve longer for cause). At or above the median, you generally commit to five years.³

For cases filed on or after April 1, 2026, Virginia’s median family income figures are:

One earner: $78,491
Household of two: $101,171
Household of three: $123,159
Household of four: $144,826
Each additional person: add $11,100

The U.S. Trustee Program updates these figures periodically from Census data.⁴

The math itself lives on Official Forms 122C-1 and 122C-2.⁵ Form 122C-1 calculates current monthly income and places you above or below the median. Form 122C-2 subtracts standardized living expenses, including Virginia-specific allowances for housing, food, and transportation, to reach your “disposable income.” That number sets the minimum your plan has to send unsecured creditors each month. Above-median filers sometimes find the standardized deductions generous enough that little flows to credit card and medical debt; below-median filers on tight budgets often pay only a small fraction of unsecured balances.

What You File and What It Costs

Before filing, you complete a credit counseling session with a U.S. Trustee-approved provider within the 180 days before your petition. Skipping it can get the case dismissed.⁶ The session runs $10 to $50 and is usually available online or by phone. Keep the certificate; it gets filed with your petition.

Federal law requires you to file copies of every pay stub or other proof of income you received in the 60 days before filing, plus your most recent federal tax return. The court or trustee can also request returns from the three prior tax years if any were unfiled when the case began.⁷

The petition itself is Official Form 101, filed with Schedules A through J. The schedules require a detailed inventory: real estate, vehicles, bank accounts, retirement funds, mortgage balances, car loans, credit cards, medical bills, monthly income, monthly expenses. The Statement of Financial Affairs adds recent transactions, lawsuits, and property transfers. Leaving a creditor off means that creditor may not receive notice and can later challenge your discharge, so completeness matters more here than in almost any other legal filing.

The court filing fee is $313 and can be paid in installments with court approval. Attorney fees vary by district. Many Virginia courts set a presumptive maximum “no-look” fee an attorney can charge without detailed justification, typically $4,500 to $6,000 for a straightforward case; contested cramdowns, adversary proceedings, or plan modifications push that higher. Attorney fees are usually paid through the plan rather than upfront. A post-filing debtor education course is also required before discharge, and it has to be a separate session from the pre-filing counseling.⁸ Skipping the education course means no discharge, wasting years of payments.

Virginia Exemptions and Why They Still Matter

Virginia lets you choose between the federal bankruptcy exemption list and the state’s own exemptions. Pick one system and use it for everything; no mixing. Which set works better depends on your specific assets.

Homestead

Virginia’s homestead exemption protects up to $5,000 in real or personal property of your choosing, doubled to $10,000 if you are 65 or older. A separate $50,000 exemption applies to property used as your principal residence, with an additional $500 per dependent.⁹

Personal Property and Tools of the Trade

The “poor debtor’s exemption” under Code § 34-26 protects wedding rings, family heirlooms up to $5,000, wearing apparel up to $1,000, household furnishings up to $5,000, firearms up to $3,000, pets, and medically prescribed health aids. It also shields tools, equipment, and vehicles necessary for your occupation up to $10,000, though existing security interests take priority.¹⁰ Most retirement accounts, including 401(k)s and IRAs, are fully exempt under both state and federal protections.

The Effect on Your Plan Payment

Chapter 13 lets you keep property, so it might seem like exemptions don’t matter. They do. Your plan has to pass the “best interests of creditors” test: unsecured creditors must receive at least what they would have received in a Chapter 7 liquidation.¹¹ Own a boat worth $15,000 with only $5,000 exempt, and the $10,000 gap becomes a floor your plan has to pay unsecured creditors. Higher exemptions, lower floor.

How the Repayment Plan Pays Your Creditors

The plan is the case. It sets the monthly payment, the length, and the distribution among creditors. A court only confirms a plan proposed in good faith, feasible on your actual budget, and compliant with several statutory tests.¹¹

Priority Debts

Some debts have to be paid in full. Domestic support obligations like child support and alimony come first, followed by certain tax debts owed to federal, state, and local governments.¹² No discount, no negotiation. A plan that doesn’t fully cover priority debts won’t be confirmed.

Secured Debts and Mortgage Arrears

Secured debts like car loans are paid at a rate that gives the creditor the present value of the collateral. If your car is worth less than the loan balance and you bought it more than 910 days before filing, you may be able to “cram down” the loan to the vehicle’s current market value and pay that reduced amount through the plan at a court-approved interest rate. Bought within 910 days, the full balance stays.

Chapter 13’s most useful feature for many Virginia homeowners is catching up on a past-due mortgage. You resume regular monthly payments going forward while the plan spreads the missed payments (the “arrearage”) across its three-to-five-year life.¹³ That’s the mechanism that stops foreclosure. Lender fees, late charges, and legal costs incurred before filing can be part of the arrearage you have to cure.

Unsecured Debts

Credit cards, medical bills, and personal loans sit at the bottom. Your plan must commit all projected disposable income for its full length, and what unsecured creditors get depends on what’s left after priority and secured claims. Sometimes pennies on the dollar. Sometimes full payment. Income, expenses, and the size of higher-priority debts drive the outcome.

The Trustee’s Cut

A Chapter 13 trustee can collect up to 10% of plan payments as compensation for administering the case.¹⁴ That fee is inside the monthly payment, not on top of it, so a $500 payment might send $450 to creditors and $50 to the trustee. Some districts run below 10%, but budgeting for the full amount is safer.

What Happens After You File

You file in the U.S. Bankruptcy Court for either the Eastern District of Virginia (offices in Richmond, Alexandria, Norfolk, and Newport News) or the Western District of Virginia, depending on where you live.¹⁵¹⁶

The automatic stay takes effect the moment you file. Creditors have to stop collection calls, lawsuits, wage garnishments, and foreclosure. The stay is limited for repeat filers, though: with a prior case dismissed in the past year, the new stay lasts only 30 days unless the court extends it, and with two or more dismissals in that window you get no automatic stay at all and have to ask the court to impose one.¹⁷

Roughly 21 to 50 days after filing, you attend the Meeting of Creditors, called the “341 meeting” after the Code section that requires it. The trustee questions you under oath about income, expenses, assets, and the proposed plan. Creditors are invited but rarely show in straightforward consumer cases. A confirmation hearing follows. The judge checks that the plan meets the statutory tests: good faith, feasibility, full payment of priority debts, the best-interests test, and adequate treatment of secured claims.¹¹ Shortfalls usually mean an amendment, not outright rejection.

Debts That Don’t Go Away

Finishing your plan doesn’t wipe every obligation. Categories that survive discharge include:

Domestic support obligations: child support and alimony
Certain tax debts, including taxes where the return was filed late (within two years of the petition) or the filer attempted to evade payment
Student loans, unless you win a separate adversary proceeding proving repayment would impose undue hardship
Debts for death or injury caused while driving under the influence
Criminal restitution and fines ordered as part of a criminal sentence
Debts from willful and malicious injury to another person or their property

These exceptions live in Sections 1328(a) and 523(a) of the Bankruptcy Code.¹⁸ Chapter 13’s discharge is somewhat broader than Chapter 7’s, but the categories above stay non-negotiable. If student loans dominate your balance sheet, know that you’d have to file a separate adversary proceeding inside your bankruptcy case and meet the undue hardship standard, which most courts evaluate by asking whether you can maintain a minimal standard of living, whether that situation is likely to persist, and whether you made good-faith efforts to repay.

If the Plan Doesn’t Make It to the End

Not every Chapter 13 case reaches discharge. Lose your income, fall behind on plan payments, or fail to comply with court requirements, and the case can be dismissed or converted to Chapter 7. The consequences differ.

Dismissal ends the case without a discharge. The automatic stay lifts, creditors resume collection, and if you were cramming down a car loan, the original terms snap back. Months of payments may be recalculated under the original contract, leaving you worse off. You generally have the right to voluntarily dismiss your own case, though the court may restrict how soon you can refile.

Conversion to Chapter 7 shifts the case to liquidation. You can request it, or a creditor can move for it. One wrinkle: debts you took on between filing the Chapter 13 and the conversion date become eligible for discharge in the Chapter 7. But if you weren’t eligible for a Chapter 7 discharge when the Chapter 13 was filed (for example, because you received a Chapter 7 discharge within the prior eight years), conversion doesn’t cure that.

Refiling speed depends on the reason for dismissal. Dismissal for failing to appear, for bad faith, or after a creditor’s motion for relief triggers a mandatory 180-day wait. Otherwise you can refile immediately, but the automatic stay in the new case may be limited to 30 days because of the prior dismissal in the preceding year.¹⁷ Courts scrutinize repeat filings, so a clear explanation of what has changed since the last case matters.

1
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
2
Internal Revenue Service. Understanding Federal Tax Obligations During Chapter 13 Bankruptcy
3
United States Courts. Chapter 13 Bankruptcy Basics
4
United States Department of Justice. Median Family Income – On or After April 1, 2026
5
United States Department of Justice. Means Testing
6
United States Department of Justice. Credit Counseling and Debtor Education Information
7
Office of the Law Revision Counsel. 11 USC 521 – Debtor’s Duties
8
United States Courts. Credit Counseling and Debtor Education Courses
9
Virginia Code Commission. Virginia Code 34-4 – Exemption Created
10
Virginia Code Commission. Virginia Code 34-26 – Poor Debtor’s Exemption, Exempt Articles Enumerated
11
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
12
Office of the Law Revision Counsel. 11 US Code 507 – Priorities
13
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
14
Office of the Law Revision Counsel. 28 US Code 586 – Duties, Supervision by Attorney General
15
United States Bankruptcy Court. Eastern District of Virginia
16
United States Bankruptcy Court. United States Bankruptcy Court for the Western District of Virginia
17
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
18
Office of the Law Revision Counsel. 11 USC 1328 – Discharge