Washington Homestead Bankruptcy Exemption

Washington bankruptcy exemptions are in place to help individuals to protect property, both real and personal property. When filing Chapter 7 bankruptcy, the court looks at the assets the individual owns. If he or she has too many assets or as a high value of equity in those assets, the court may determine the property should be sold to repay creditors. However, Washington bankruptcy exemptions are available to protect a good deal of the property, including homesteads.

What Is Homestead Exemption?

In the state of Washington, the homestead exemption is rather liberal, but there are some circumstances in which the property must meet specific requirements. Consider the following:

The homestead exemption protects most property.
If the property was purchased in the last 1215 days, (3.3 years) there is a value cap in place. In Washington this cap is $125,000. This cap is not applied, though, if any interest transferred from the individual’s previous residence prior to this period.
The value of the homestead exemption can be reduced by any additional debt brought on by the disposition of nonexempt property. For example, if you sell property that is not protected by another asset and apply those funds to your home’s mortgage, this amount is not protected.
Individuals convicted of a felony in which the individual’s filing of a bankruptcy case is fraudulent, the cap of $125,000 applies.
Any instance where the individual owes a debt that comes from racketeering, fiduciary fraud or other types of federal and state securities, the cap applies to the bankruptcy filing.

It is also important to keep in mind you can only use Washington bankruptcy exemptions if you have lived in the state for two years prior to filing bankruptcy. There are numerous other bankruptcy exemptions available to individuals as well, such as apparel, personal property, motor vehicles and cash. In addition, tools of the trade are protected as are pensions.

The homestead exemption in Washington is one of the most liberal available because of its high value in most situations. In many cases, the property of the bankruptcy filer is protected, assuming that property is his or her primary residence. Second properties may not be protected.

Hiring an Attorney to Handle Bankruptcy

When an individual is filing bankruptcy, he or she should hire an attorney to help them through the process. The attorney will ensure that all applicable Washington bankruptcy exemptions apply to their filing so that as much property as is possible can be protected under these exemptions.

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