Washington State Bankruptcy Exemptions

Like all states, Washington has a set of exemptions you can use to protect property when filing for bankruptcy, such as a home, car, and retirement account. In this article, you'll learn:

• how long you must live in Washington before using its exemptions
• whether Washington exemptions will protect all of your property, and
• what will happen to any property you can't exempt.

If you have more questions, read How to File Bankruptcy in Washington State. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz. Or, try the start-to-finish bankruptcy guide, What You Need to Know to File for Bankruptcy in 2021.

How Washington State Bankruptcy Exemptions Work

You can protect property covered by an exemption regardless of whether you file for Chapter 7 or 13. But each chapter treats nonexempt property—things not covered by an exemption—differently.

• In Chapter 7 bankruptcy, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors.
• In Chapter 13 bankruptcy, you keep everything you own. However, you must pay the value of the nonexempt property equity in your repayment plan, or your disposable income, whichever is more.

The different approaches ensure that creditors receive the same amount regardless of the chapter filed.

Choosing the Best Exemption System

Washington is one of the few states that let you choose between state and federal bankruptcy exemptions. You won't be able to select exemptions from each list—you must pick the system that will work best overall. If you choose the Washington exemptions, you can also use the federal nonbankruptcy exemptions.

Common Washington State Bankruptcy Exemptions

Here are some commonly-used Washington exemptions. Keep in mind that married couples filing together in a joint bankruptcy can double most exemption amounts if both spouses have an ownership interest in the exempt property.

Washington State Homestead Exemption

The Washington homestead exemption is generous—much more so than the federal homestead exemption. You can use it to protect a house, condominium, mobile, or manufactured home serving as your principal residence; however, spouses can't double the amount. The exemption amount will depend on the home's location:

(Wash. Rev. Code Ann. § 6.13.030.) To learn more, see The Washington Homestead Exemption.

Washington State Motor Vehicle Exemption

A filer can exempt the equity in one motor vehicle up to $3,250 in value. Spouses filing jointly can each exempt a vehicle. (RCW § 6.15.010(1)(d)(iii).) Find out how the motor vehicle exemption works in a Chapter 7 case.

Washington State Wildcard Exemption

A filer can exempt up to $3,000 worth of any type of personal property other than wages with the following limitations: no more than $1,500 total in cash and $500 total in bank accounts (with the exception that you can have $2,000 in bank accounts for consumer debt and $2,500 for educational loans). (RCW § 6.15.010(1)(d)(ii).)

Washington State Tools of the Trade Exemption

A debtor can exempt up to $10,000 in tools, instruments, and materials used to carry on his or her trade. Special exemptions are available for farmers, physicians, attorneys, and clergymen. (RCW § 6.15.010(1)(e)(i)-(iii).)

Washington State Pension and Retirement Exemptions

A debtor may exempt federal pension benefits except for child support, and retirement disability benefits except for alimony and child support. (RCW §§ 6.15.020(2), (3).) Police and firefighter retirement benefits are exempt. (RCW §§ 41.26.053, 41.20.180, 41.24.240, 43.43.310.) Retirement benefits of teachers are exempt. (RCW §§ 41.32.590, 41.32.052, 41.32.055.) City employee retirement benefits are exempt. (RCW §§ 41.44.240, 41.28.200.)

Tax-exempt retirement accounts such as 401ks and IRAS are exempt under the federal rules, even if you use Washington exemptions. For current amounts, see Your Retirement Plan in Bankruptcy.

Washington State Personal Property Exemptions

You can exempt the following personal property:

• Clothing. No more than $3,500 for furs, jewelry, and personal ornaments per person (RCW § 6.15.010(1)(a).)
• Family pictures and keepsakes. Books and electronic media to $3,500 per person (RCW § 6.15.010(1)(b).)
• Cell phone, personal computer, and printer. (RCW § 6.15.010(1)(c).)
• Household goods, furniture, and provisions. Not to exceed $6,500 per individual or $13,000 per married couple, with no single item to exceed $750 (RCW § 6.15.010(1)(d)(i).)
• Child support. (RCW § 6.15.010(1)(d)(iv).)
• Professionally prescribed health aids. (RCW § 6.15.010(1)(d)(v).)
• Personal injury recovery. Not to exceed $20,000 per individual or loss of future income payments to the extent reasonably necessary. (RCW § 6.15.010(1)(d)(vi).)
• Tuition units. Must be purchased more than two years before filing. (RCW § 6.15.010(1)(f).)
• Annuities. (RCW § 6.15.020(1).)

Other Washington State Exemptions

• Fire insurance proceeds from exempt property. (RCW § 6.15.030.)
• Some separate property of a spouse. (RCW §§ 6.15.040, 26.16.200.)
• Wages, salary, and personal services compensation. (RCW § 6.27.150.)
• Trust income. (RCW § 6.32.250.)
• Crime victim compensation. (RCW §§ 7.68.070, 51.32.040.)
• Some partnership property. (RCW § 25.04.250.)
• Uniforms and firearms. (RCW § 38.40.150.)
• Police and fire retirement.
• Disability benefits. (RCW § 48.18.400.)
• Individual and group life insurance proceeds. (RCW §§ 48.18.410-420.)
• Annuity contract benefits. Up to $3,000 per month. (RCW § 48.18.430.)
• Fraternal benefit society benefits. (RCW § 48.36A.180.)
• Burial lots. Must be sold by a nonprofit association. (RCW §§ 68.20.120, 68.24.220.)
• Work release earnings. (RCW § 72.65.060.)
• Public assistance. (RCW §§ 74.04.280, 74.08.210, 40.020, 51.32.040)

When You Can Use Washington State Bankruptcy Exemptions

You can file for bankruptcy in Washington after living there for more than 180 days. However, you must live in Washington much longer before using Washington exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.

But suppose you weren't living in any particular state during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.

Also, to claim the total value of the Washington homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption is limited by federal law to $170,350 (this figure will adjust on April 1, 2022).

Avoiding Exemption Issues in Washington State

If you don't exempt your property carefully, you could lose it. Answers to these questions might help you steer clear of common issues.

Do I automatically get to keep exempt property? Generally, no. Here's the procedure you'll need to follow: You'll select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.

Will someone check my exemptions? The bankruptcy trustee—the court-appointed official tasked with managing your case—will review Schedule C to ensure that you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.

Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption won't adequately protect it. Believing that the car qualifies as art—at least in his mind—Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.

What if I make a mistake? Most trustees won't file an objection unless it's clear that the debtor is trying to pull something over on the court. At least not without trying to resolve the issue first. If there's a minor exemption problem, the trustee will likely call you to work out the matter informally.

It's worth noting that it's not a good idea to finesse exemptions. Not only do you have an obligation to supply correct information on your bankruptcy forms, purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Confirming Washington State Bankruptcy Exemptions

You'll find the Washington Revised Code on the Washington State Legislature webpage. You should be aware that Washington's exemption amounts adjust periodically. Consider consulting with a local bankruptcy lawyer.

This overview cannot provide all of the information you'll need to file a bankruptcy case. For more detailed information, consider buying a self-help book such as How to File Chapter 7 Bankruptcy by Attorney Cara O'Neill and Albin Renauer J.D.

Updated July 13, 2021