Virginia Bankruptcy Laws - Operation of Law

The Code of VA provides in § 34-8: "If the estate so set apart be held by the householder as joint tenant, coparcener or tenant in common, partition or sale may be had as provided by Article 11 (§ 8.01-96 et seq.) of Chapter 3 of Title 8.01 and in case of sale the share of the proceeds to which the householder is entitled shall be paid to the householder and invested by him in such other property as he may select. " The Code of VA also provides in § 34-9: "Real estate set apart as aforesaid may be sold and conveyed as other real estate held by the householder and the proceeds invested in other property, or it may in like manner be exchanged for other property, but in no case shall the purchaser be bound to see to the application of the purchase money."

In Practice:

In practice, creditors may file objections with Virginia bankruptcy courts regarding the extent of the exemption, designation, and liens which arise through operation of law. Virginia bankruptcy courts are wary of all sales to insiders before and during the pendency of all cases. Also, home improvement loans which draw down equity before filing are scrutinized under both the state fraudulent conveyance statutes and federal fraudulent conversion statutes. A trustee, creditor, party in interest, or the court on it's own motion may file objections.

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