When you file for bankruptcy in Washington, your assets go into what is called your bankruptcy estate. In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, property in the bankruptcy estate that is not exempt is subject to liquidation by the U.S. bankruptcy trustee.
Federal bankruptcy law provides for exemptions that protect some of your property in the bankruptcy estate from liquidation. Federal law also allows for state exemption laws, as long as these laws do not provide less protection to debtors in bankruptcy than the federal bankruptcy exemptions do.
Washington has enacted its own personal property exemptions. In this blog post, we cover the Washington state bankruptcy exemptions.
If you have questions about how Washington state bankruptcy exemptions work, call Stone Rose Law at (480) 739-2448 or use our online contact form to speak with one of our bankruptcy lawyers.
If you are eligible to use them, Washington’s exemptions compare favorably in several ways to their federal counterparts. Some important considerations to remember when you claim them include:
Here are some of the more significant provisions.
Homestead Exemption
The homestead exemption protects your primary residence.
The homestead exemption is limited to property not exceeding one acre or the lot size required by local zoning, whichever is more. The dollar amount is set to your county’s prior year median home price, which can range significantly.
Each person filing for bankruptcy in your household can exempt $15,000 of equity in a motor vehicle.
Washington State provides specific exemptions for wearing apparel, furs, and jewelry ($3,500); private libraries, including electronic media $3,500; and household goods ($6,500). In general, these exemptions apply to the following items:
Each married person in a spousal community is entitled to separate personal property exemptions. Thus, if you and your spouse declare bankruptcy jointly, your personal property exemptions effectively double.
The Washington wildcard exemption is a “catch-all” provision you can use toward bankruptcy estate property that is not covered by other exemption categories. The amount of this exemption limit you can use is determined as of the date of your bankruptcy petition filing, but it can be up to $10,000.
Other kinds of exemptions that Washington state law provides for include:
Bankruptcy filers in Washington must choose between federal bankruptcy exemptions and Washington state bankruptcy exemptions. You cannot “mix and match” these exemptions.
Sometimes, depending on your living situation in the state, you may not have a choice about which set of exemptions to use.
If you cannot qualify to use the Washington exemptions, you may need to use either the federal exemptions or those from your last state of residence for the past 180 days before Washington’s 730-day period begins.
Washington’s bankruptcy exemption availability does not apply automatically. You must list the assets you want to exempt on Schedule C of your bankruptcy paperwork. If you do not, the bankruptcy can sell them and use the sale proceeds to pay your creditors.
An experienced bankruptcy attorney can help you ensure that all your assets that can qualify for exemption get included on your Schedule C. For example, if you have a personal injury claim or other legal claim when you file your bankruptcy petition, you should include it even if you have not yet filed it in court.
Your creditors will have 30 days after your meeting of creditors, or within 30 days after you file an amended claim of exemption, whichever is later. If creditors raise no objections, these assets will not be a part of your bankruptcy estate and cannot be used to pay creditors.
Although we can say that in almost all cases you are better off claiming Washington state exemptions instead of using the default federal exemptions, the actual dollar amounts are subject to change, often on an annual basis.
To find out exactly how much you can claim in Washington state bankruptcy exemptions, speak with an experienced Stone Rose bankruptcy attorney at (480) 739-2448.
You can also use our bankruptcy calculator to help you estimate your expected debt repayment timeline outside of bankruptcy court or an alternative timeline if you use federal bankruptcy protection.
We have extensive legal experience with Chapter 7 and Chapter 13 bankruptcy cases under federal and Washington law. We can help find the best debt relief bankruptcy solution for you and your family. Call us or contact us online to schedule a free consultation today.
