Your Property in a

Washington State Bankruptcy

Seattle Bankruptcy Attorneys

Washington State bankruptcy law and your assets.

Talk to a Seattle, WA bankruptcy attorney now!

Keeping Your Property in Bankruptcy:

Keep Your Home, Cars, Household Items, Retirement, Cash, and other assets

Washington State has exemptions that protect a generous amount of property for bankruptcy filers. The following are a list of property that corresponding values that bankruptcy filers can keep free and clear after filing consumer bankruptcy.

Real Estate as Your Primary Residence: Up to $125,000 of equity. You will have to keep your mortgages(s) current on your home to keep it in bankruptcy. Your mortgages are secured debts and cannot be discharged where you then own your home free and clear without paying off the loans.

Furniture and other household items: Up to $11,525. You can exempt (protect) up to double this amount if you are married and both spouses are filing a joint bankruptcy petition together.

Cars and motorcycles: $3,450 and $6,900 if married and filing jointly. Remember that these values are the equity in your motor vehicles, not the fair market value. Deducted any current loan on your vehicles from the fair market value to find the equity. For example, if your car is worth $15,000 but you still have an outstanding loan on it with a $12,000 balance, you have only $3,000 of equity and your car is fully protected in bankruptcy. Many cars have loans on them that are greater than the value of the car so that there is no equity.

Same as mortgages, will have to keep your car loan(s) to keep your vehicles in bankruptcy. Your car loans are also secured debts and cannot be discharged where you then own your vehicles free and clear without paying off the loans.

Jewelry: $1,450 and $2,900 if married and filing jointly.

Cash Value of Life Insurance Policies: Unlimited value

Pension and Other Retirement Plans: Unlimited Value.

Additional/Miscellaneous Items (the wild card exemption): $11,975 and $23,950 if married and filing jointly. This includes all property not covered by other exemptions, including cash or money in the bank, stocks, mutual funds, future stock options, etc. It can also be added to another property items to exempt additional value where you have used the value limit of anther exemption. Again, you can exempt (protect) up to double this amount if you are married and both spouses are filing a joint bankruptcy petition together.

How can I protect my property that exceeds the exemption limits? There are two common ways to keep your unexempt property in bankruptcy:

(1) Do an equity buy out with your Chapter 7 Bankruptcy Trustee: Your assigned Chapter 7 Bankruptcy will usually accept a buyout of an unexempt portion of your property if paid within 6 months. Many times people use their future tax to pay the bankruptcy trustee the unexempt value of their property. For example., if a single, unmarried, bankruptcy filer own a car with $10,000 of equity, have exhausted the $11,975 wildcard exemption on other items (possibly on another car you own free and clear), you can pay the bankruptcy trustee $3,100 to keep your car in bankruptcy.

(2) File a Chapter 13 and pay the liquidation value in your Chapter 13 Plan: Even if you qualify for Chapter 7 Bankruptcy, you should consider filing Chapter 13 bankruptcy where you own property that exceeds exemption limits. In a Chapter 13 bankruptcy, you can pay the unexempt/unprotected value into a Chapter 13 Plan and spread out this amount up to 5 years. For example, if you own a house with $140,000 of equity, you can exempt the first $125,00 in your bankruptcy case and pay the $15,000 unexempt amount of equity in your home in payments up to 5 years in a Chapter 13 Bankruptcy. Your Chapter 13 Plan payment would be less than $300 per month to pay this unexempt liquidation value over 5 years, If you have a large amount of unsecured debt (e.g. credit cards, medical bills, etc.) to discharge in bankruptcy where the payments on these debts are far greater than $300/month, filing a Chapter 13 Bankruptcy to pay the unexempt portion of your home would be far less per month than not filing for bankruptcy and continuing to try to pay high, unaffordable monthly payments on your unsecured debts.

Note: The exemption limits above vary between whether you choose to use either (1) The Washington State or (2) Federal exemptions. There are different exemption limits for different categories of property and thus and different reasons to use either set of exemptions. Our experienced Seattle Bankruptcy Attorneys will advise you which set of exemptions to use depending upon the types of property you own and their values/equity.

***There are other types of property that are also protected in bankruptcy. Please contact our experienced Seattle bankruptcy lawyers to discuss all of your property and corresponding values.