What Are the Washington Bankruptcy Exemptions?
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In Washington, you can choose between federal and state exemptions when filing for bankruptcy so long as you’ve lived in the state for at least two years. Washington has a very generous homestead and motor vehicle exemption — more generous than the federal government. You’ll need to look at the property you own and want to protect to decide which set of exemptions will help you most when filing Chapter 7.
Written by Attorney Karra Kingston.
Updated October 2, 2024
Why Are Exemptions Important in Chapter 7 Bankruptcy in Washington?
Bankruptcy exemptions are important because they allow you to protect your property through the bankruptcy process. If you don’t claim exemptions, the bankruptcy trustee is allowed to take your property and sell it for the benefit of your creditors. Luckily, this very rarely happens. If you apply the exemptions correctly and you don’t own any expensive or luxury items, you’re likely to keep everything you own while getting a financial fresh start.
Does Washington Allow Filers To Use Federal Bankruptcy Exemptions?
Yes. Washington residents get to choose between the state’s exemptions and federal bankruptcy exemptions.
If you decide to use the state exemptions, you will be able to use the federal non-bankruptcy exemptions to protect certain retirement accounts and disability benefits.
To benefit from the Washington bankruptcy exemptions, you must be a Washington resident for at least 730 days (two years) when your bankruptcy case is filed. Congress proposed this law to prevent people from moving to a different state for more favorable exemptions.
Which Are Better: Washington’s Exemptions or Federal Exemptions?
The answer to this question will depend on your personal circumstances. That said, Washington’s state exemptions are much more generous than the federal exemptions for two of the most valuable types of personal property: a home and a car.
Washington also has a generous wildcard exemption, which can help you protect any property that isn’t covered by an exemption or whose exemption isn’t large enough to cover the value of what you own. If you’re using federal exemption and you don’t use the homestead exemption, you get access to an even more generous wildcard exemption.
Here’s a quick comparison of some of the most common exemptions:
Washington Exemption | Federal Exemption | |
---|---|---|
Homestead Exemption | $125,000 (can’t be doubled if married, filing jointly) | $27,900 (can be doubled if married, filing jointly) |
Motor Vehicle | $15,000 | $4,450 |
Wildcard | $10,000 (some limits on cash in bank accounts) | $1,475 plus $13,950 of unused homestead exemption |
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1,914+ Members OnlineWhat Are the Washington Bankruptcy Exemptions?
Washington bankruptcy exemptions protect three categories of property:
Real property such as your home
Personal property such as your car and home goods
Intangible property and money benefits such as retirement accounts and government assistance
You can find the Washington state exemptions under the Revised Code of Washington.
Real Property Exemptions: Washington Homestead Exemption
The Washington homestead exemption is generous. It allows you to protect up to $125,000 of equity in your home or the county’s median home price. Unlike some other exemptions, you can’t double this exemption amount if you’re married.
To figure out the equity you have in your home, you’ll need to know your home’s current fair market value. Subtract what you still owe on your mortgage from the fair market value to get your equity. For example, if your home is valued at $450,000 and you still owe $350,000 on it, you have $100,000 in equity. In this case, your home should be fully protected by the state homestead exemption.
However, it would not be protected if you chose to use the federal bankruptcy exemptions instead. The federal homestead exemption is only $27,900 for single filers, or double that for married people who are filing jointly and co-own the home.
Source: RCW § 6.13.030 and 11 U.S.C. § 522(d)(1)
Personal Property Exemptions
Personal property exemptions help individuals filing bankruptcy protect several different kinds of items, including the following:
Clothing is fully exempt, though furs, jewelry, and personal ornaments are only exempt up to $3,500 per person
Family pictures/keepsakes, books, and electronic media are exempt up to $3,500 per person
Cellphones, personal computers, and printers are exempt up to their full value
Household goods and furniture are exempt up to $6,500 per individual, though no single item can be valued at more than $750
Professionally prescribed health aids are fully exempt
Burial plots are fully exempt
Tools of the trade are exempt up to $1,500
Source: RCW §§ 6.15.010(1)(a), 6.15.010(1)(b), 6.15.010(1)(c), RCW § 6.15.010(1)(d)(v)
Washington’s Motor Vehicle Exemption
The Washington motor vehicle exemption is a generous $15,000 for a single vehicle. If you file as a married couple, each person can exempt one vehicle up to that amount.
The $15,000 exemption applies to equity you have in your car. To calculate your equity, you’ll need to know your car’s current fair market value from a site like Kelley Blue Book. If you own the car outright, your equity is equal to the current market value. If you’re financing the car, your equity is equal to the market value minus what you still owe on the loan. If you want to keep your financed car, you'll need to be up to date on payments and reaffirm the vehicle in the bankruptcy.
Source: RCW § 6.15.010(1)(d)(iii)
Washington’s Wildcard Exemption
The wildcard exemption is an important one as it can help you protect property that isn’t otherwise covered by an exemption. In Washington, the wildcard exemption is $10,000 with some limitations on cash and money in your bank account. See the state statute to learn more.
Source: RCW § 6.15.010(1)(d)(ii)
Money Benefit Exemptions
Not all property is tangible. Washington exemptions can also help you protect intangible assets such as retirement accounts, government assistance, and other money benefits as indicated below.
Wages, Income, and Tuition Protection
Personal injury recovery: up to $20,000 per individual or loss of future income payments
Wages: equal to 30 times the federal hourly minimum wage or a minimum of 75% of disposable earnings, whichever is greater
Tuition contributions: exempt for qualified tuition programs under 26 U.S.C. Sec. 529 if contributions were made more than two years prior to a bankruptcy filing
Source: RCW §§ 6.15.010(1)(d)(vi), 6.15.010(1)(f), 11 USC § 522(d)(11)(D)
Retirement and Pension Exemptions
Pensions:fully exempt for volunteer firefighters, law enforcement officials, city employees, teachers, and state patrol officers
Retirement Accounts: tax-exempt retirement accounts, including 401(k)s, 403(b)s, SEP and SIMPLE IRAs, Roth IRAs, and ERISA-qualified benefits, up to $1,512,350
Annuities: up to $3,000 per month
Source: RCW §§ 6.15.020(1), 41.26.053, 41.20.180, 41.24.240, 43.43.310, 41.32.590, 41.32.052, 41.32.055, 41.44.240, 41.28.200 and 11 USC 522(b)(3)(C); (n)
Child Support and Public Assistance
Child support: fully exempt
Public assistance: fully exempt for unemployment compensation, workers' compensation, general assistance, and other public benefits
Charitable society benefits: fully exempt
Source: RCW §§ 6.15.010(1)(d)(iv), 74.04.280, 74.08.210, 40.020, 51.32.040
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