Washington Bankruptcy Exemptions — What You Keep

Exemptions are the legal rules that determine what property you can keep when you file for bankruptcy. In Washington, exemptions are critically important because they define the line between protected and at-risk assets §6.13.030; §6.13.040.

Washington allows debtors to choose between state exemptions and the federal bankruptcy exemptions under §11 U.S.C. § 522(d). An attorney can help determine which set protects more of your property.

Homestead §6.13.030; §6.13.040

the greater of $125,000 or the county median sale price of a single-family home in the preceding calendar year. The exemption amount is the greater of $125,000 or the preceding calendar year's county median sale price of a single-family home, which a court determines using data from the Washington center for real estate research (or a successor entity designated by the office of financial management). There is no dollar limit where the judgment is another state's income tax on pension or other retirement plan benefits received while a Washington resident. Protection is automatic from the time the property is occupied as a principal residence; unimproved or improved land not yet occupied as a homestead requires a declaration of homestead filed for record (and, if the owner claims a homestead elsewhere, a declaration of abandonment on that other property). This protects equity in your primary residence — if your home equity is within this limit, you keep the house in bankruptcy.

Personal property §6.15.010

$6,500 in household goods, furniture, and personal effects. This covers household goods, furnishings, clothing, and everyday personal items.

Vehicle §6.15.010(1)(d)(iv)

$15,000 in aggregate value in one motor vehicle. This protects equity in your car — meaning the value of the vehicle minus what you owe on it.

Wages §6.27.150

Generally the greater of 75% of disposable earnings or 35× federal minimum wage per week; for consumer debt, the greater of 80% of disposable earnings or 35× state minimum wage; for private student loan debt, the greater of 85% of disposable earnings or 50× the highest state minimum wage. This applies to wages already earned but not yet paid at the time of filing.

Wildcard §6.15.010(1)(d)(ii)

$10,000 in any other personal property in a bankruptcy case (excluding personal earnings), valued as of the petition filing date. A wildcard exemption can be applied to any property not fully covered by other exemptions.

Retirement accounts §6.15.020

ERISA-qualified plans, IRAs, Keogh plans, and other tax-qualified retirement accounts are exempt. Washington State Department of Retirement Systems (DRS) plans and RCW 41.50.770 deferred compensation are expressly excluded from this section's definition of 'employee benefit plan'. Retirement accounts receive strong protection in bankruptcy — both under state law and federal law §29 U.S.C. § 1056 (ERISA).

Tools of trade §6.15.010(1)(e)

$15,000 in tools, instruments, materials, and supplies used in trade. This protects the equipment you need to earn a living.

• In Chapter 7, non-exempt property can be liquidated by the trustee. High exemptions mean you keep more.
• In Chapter 13, the "best interests of creditors" test means your plan must pay unsecured creditors at least what they would have received if non-exempt assets were liquidated in Chapter 7. Higher exemptions can reduce your required plan payment.

• Is your home equity within the homestead limit, or does it exceed the cap?
• Do you have a vehicle loan that reduces your equity below the exemption?
• Are there assets that could be reclassified or converted to exempt form before filing?
• Would waiting to file change the exemption calculation (e.g., recent large deposit, bonus, tax refund)?