The Virginia Homestead Exemption allows debtors to protect certain property from the debt collection process. It allows the debtor to select any property, whether real or personal, to protect. “Real property” means real estate. Except in limited circumstances, creditors must obtain a judgment in order to garnish wages or bank accounts or levy and sell property. Once they receive a judgment, creditors can levy personal property of the debtor through the local Court. A creditor can also place a lien on any real property in the County by recording the judgment in the land records.
The Virginia Homestead Exemption only protects property from unsecured debts. A debt is secured if it is protected by some collateral (for example a car loan or a home mortgage). All other debts are unsecured (i.e. credit cards, personal loans). Sometimes, a debt that would normally be secured may be unsecured if there are so many other creditors in line before the debt that the debts is unlikely to be paid. Virginia law seems to indicate that, once a judgment lien is awarded to a creditor, that lien becomes a secured interest in the property it encumbers. For example, a credit card debt is unsecured, even after a judgment is rendered, but once it is recorded, it becomes a secured debt as to any real property in the County.
The question, then, is one about timing. Virginia case law suggests that, where a Homestead Deed is properly recorded prior to the recording of a judgment lien, the judgment lien would not attach to the amount exempted. Thus, for creditors, it is most prudent to record judgment liens as soon as possible to avoid the possibility of a debtor rushing to the Courthouse to record a Homestead Deed. Likewise, debtors wishing to protect their interest in real property will promptly prepare and record a homestead deed in any County where the debtor owns real estate.
If you are a creditor, we can help you get the most out of your judgment lien. If you are a debtor, we can help you protect your rights to exemption. Call today for a consultation. 757-645-0827.
Gregory S. Bean is a debt attorney at Collins & Hyman, representing creditors and debtors in a variety of matters.
The material in this post is for informational purposes only and should not be utilized as legal advice. In order to properly analyze the contents as related to your specific circumstances, a consultation would be necessary.