Washington State Bankruptcy Exemptions | Patrick McBurney

Debt Relief: Washington State Bankruptcy Exemptions

Filing for Bankruptcy and Protecting Your Property

Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, Washington State offers a list of exempt properties that may provide you with some debt protection. As you move forward with your bankruptcy case, it’s essential to have a firm grasp on the laws surrounding these exemptions, such as what personal property is and is not exempt, exemption limits, and laws regarding bankruptcy/exemptions timing.

A Guide to Bankruptcy Exemptions in Washington State

Are you eligible for bankruptcy exemptions? Did you know that as a Washington State resident, you have a choice whether you would like to choose from the state or federal bankruptcy exemptions list? After careful review of each, you may choose which would benefit your case.

Note: if you choose the state exemptions list, you do have the ability to utilize the federal nonbankruptcy exemptions as well. These are protections already in place for your personal property even if bankruptcy hasn’t been filed. They offer the same benefit of protection from bankruptcy trustees and creditors, but can also be more difficult to qualify.

There are timeline requirements for you to have lived in Washington State to be eligible for following the state’s bankruptcy code. The requirement is 180 days…but the requirement for utilizing Washington State bankruptcy exemptions is 730 days. If you have not been a resident for the required period, you would use whichever state you lived in prior as the guide for exemptions available to you.

Personal Property Exemptions

Let’s take a look at some of the common and not-so-common bankruptcy exemptions in Washington State. Remember that married couples who are filing jointly for bankruptcy can be exempt twice the amount of most personal property. This is so long as each spouse has an ownership interest in said property.

Common Personal Property Exemptions in Washington State

Following are some of the most common personal property exemptions available to Washington State bankruptcy filers:

  • Homestead Exemption: The amount of the exemption for Washington State homestead exemptions is based on the home’s location. Rather than deciding the amount of the exemption based on the filer’s equity in the home, it is based on the median sale price in the same county as the home the year prior. The homestead can include a house, condo, mobile home, or manufactured home. It is also important to note that married couples are not able to claim twice the amount in the case of the homestead exemption.
  • Wage Exemption: In Washington State, you can calculate wage exemption by taking 75% of your weekly income (after taxes and bills) or by multiplying 35 by the federal hourly minimum wage. The choice between the two is decided by whichever is the larger amount.
  • Motor Vehicle Exemption: The laws regarding Washington State motor vehicle exemptions allow for one vehicle up to a certain value to be exempt. *If spouses are filing jointly, each person can exempt one vehicle.
  • Wildcard Exemption: The Washington State wildcard exemption allows for you to keep up to a certain amount in any personal property you may choose that is not included under another/not completely protected by another exemption. This may include a set amount of cash.
  • Personal Property Exemptions: For those household goods, bank accounts, and other items, there is a list provided by Washington State Legislature for a reference regarding which items are exempt along with exemption amounts.
  • Tools of the Trade Exemption: This Washington State exemption allows filers to keep up to a certain value in tools necessary for them to continue practicing their profession.
  • Pension and Retirement Account Exemptions: In Washington State, these exemptions include annuities, federal pension benefits, and retirement/pension benefits.
  • Public and Charitable Benefit Exemptions: These Washington State exemptions include benefits such as unemployment compensation, general assistance, public benefits, etc.

This list is not exhaustive, however, it is provided to give a general idea of bankruptcy exemptions you may qualify for in Washington State.

What if You Are a Business Owner?

Although you may be filing for personal consumer bankruptcy, it is still essential to ascertain the value of your business before filing for bankruptcy. This will allow you to know if your business is protected. It should be able to be covered under the personal property exemptions, otherwise, by law, it may be liquidated to reimburse creditors of your personal property.

Non-Exempt Property: How is it Handled?

In either case of chapter 7 or chapter 13 bankruptcy, the exempted property is treated the same. As long as it is listed as a Washington State exemption, that personal property will be protected. However, it is important to note that property that is not considered exempt will be handled differently depending on which form of bankruptcy case you intend to pursue. Either way, the process is set up to ensure that creditors are paid.

Non-Exempt Property: Filing Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy will most often allow an individual to experience freedom from their debts. Because of this, in this type of case, the person assigned to handle your estate throughout the bankruptcy (also known as the bankruptcy trustee) will oversee the sale of any personal property you possess that is deemed non-exempt. They will then take the proceeds from the sale and divide it up among the creditors for your debts.

Non-Exempt Property: Filing Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy will most often require a repayment plan, which is a strategy for paying back your debtors. When pursuing this type of bankruptcy case, you can keep all personal property.

But, the matter of the nonexempt property remains…you must pay however much the nonexempt property equity amounts to as part of your repayment plan. Otherwise, you must pay the value of your disposable income in your repayment plan. This is decided by whichever amount is more. That is the amount you will be required to pay.

Get Help with Exemptions: Protect Your Property

When filing for bankruptcy, it is essential to know all of your options regarding both Washington state and federal exemptions. You can refer to Washington State Legislature for all current laws, including bankruptcy filings and exemptions.

Feeling overwhelmed with all of the considerations surrounding bankruptcy? Our firm is here to assist you with putting a strategic plan together for filing either Chapter 7 or Chapter 13 bankruptcy, helping you on a path to freedom from both secured and unsecured debts in your financial future. All while maintaining as much of your personal property as you’re able.

We can help you avoid exemption issues by properly utilizing exemptions and ensuring you are covered when the bankruptcy trustee reviews your claims to exempt personal property.

Schedule a consultation with us to begin your journey to freedom today. We will ensure you maintain as much of your personal property as is available to you.

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