If you file for bankruptcy in Washington state, the motor vehicle exemption allows you to protect up to $3,250 in car equity and more if you are married and filing jointly. You can also use Washington's wildcard exemption to protect additional equity in your car, truck, van, or other vehicle. Read on to learn more about using Washington's exemptions to protect car equity.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Washington’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Washington’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Washington's Motor Vehicle Exemption
In Washington, you can exempt up to $3,250 in equity in your car or other vehicle.
The Federal Motor Vehicle Exemption
Washington allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.
Using Washington's Wildcard Exemption to Protect Your Car
If the equity in your car is more than $3,450, you may be able to cover the extra equity by using a wildcard exemption. Washington's exemption statute allows you to protect up to $3,000 in any personal property not protected by other exemptions. For example, if the equity in your car is $7,000, you can use the motor vehicle exemption to protect $3,450 of that equity and the wildcard exemption to protect $3,000, leaving only $550 of nonexempt equity.
Can Married Couples Double Washington's Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Washington does not double the exemption for married couples, but it does allow married couples to protect two motor vehicles with a total exemption of $6,500. The wildcard exemption, however, does not double for married couples. As an example, if you and your spouse each own a car and you file joint bankruptcy, and the total equity in both cars together is $14,000, you can exempt $6,500 with the motor vehicle exemption but only $3,000 with the wildcard exemption, leaving $4,500 of non-exempt equity.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Washington motor vehicle exemption covers one motor vehicle used for personal transportation for an individual, or two motor vehicles for a married couple.
Checking Washington's Exemption Laws
You can find Washington’s motor vehicle exemption at Wash. Rev. Code Ann. 6.15.010.
When the Washington Exemption Amounts Are Updated
The exemption laws in Washington change periodically. Check the statute at http://apps.leg.wa.gov to confirm exemption amounts.