One of the reasons people may hesitate from filing for bankruptcy when they are facing financial challenges is because they are afraid they might lose everything they own in the process and be left with nothing at the end. However, this is a myth as Washington offers many exemptions in bankruptcy. Exemptions are basically assets and property that the debtor can keep. Washington is one of the few states that allow debtors to choose between state exemptions or federal exemptions-this means they can choose the set that best fits their circumstances. However, debtors cannot choose both.
First of all, there is the homestead exemption. Homeowners may exempt up to $125,000 of their home or other property, as per Washington law. However, it is important to keep in mind that when the value of property is calculated, it is not what the debtor paid for the property but what it is currently worth.
In addition to the homestead exemption, exemptions are also applicable to bank deposits. If the creditor is a state agency, $200 is exempt and $500 for all other debts. A motor vehicle of up to $3,250 is also exempt if it is used for personal transportation or for maintaining employment. If a couple is filing jointly, then the value doubles and two vehicles may be exempted.
A number of items of personal property are also exempted, including clothing, books, and electronic media, child support, health aids, and personal injury proceeds. However, it is important to note that there are monetary limits on the exemptions and that they are not automatic-they must be listed on Schedule C. in order to qualify for Washington's liberal exemptions, a domicile requirement must be fulfilled as well.
Filing for bankruptcy can offer debtors a way out from overwhelming debt, while still allowing them to maintain ownership over a number of assets and property. In order to reap the benefits, however, it is important to ensure the documents are filed correctly and all the exemptions utilized. An experienced bankruptcy attorney may be able to guide Washington residents through the process.