Bankruptcy Exemptions
An “exemption” is an asset or benefit that is exempt from liquidation and distribution to creditors. In other words, exempt assets are those that you get to keep in the bankruptcy process. When you file bankruptcy in Washington you are allowed to choose between a list of exemptions under federal law or state law. You cannot pick and choose among exemp assets from each list – either you choose the federal exemption list or the Washington state exemption list.
Federal Bankruptcy Exemptions
The Federal bankruptcy exemptions are set forth in Title 11 of the United States Code. They can be doubled by a husband and wife filing together. This list is current as of January 2009.
Homestead:
522(d)(1) Real property, including mobile homes and co-ops, or burial plots up to $20,200. Unused portion of homestead, up to $10,125, may be used for other property.
Personal Property:
522(d)(2) – Motor vehicle up to $3,225.
522(d)(3) – Animals, crops, clothing, appliances and furnishings, books, household goods, and musical instruments up to $525 per item, and up to $10,775 total.
522(d)(4) – Jewelry up to $1,350.
522(d)(5) – $1,075 of any property, and unused portion of homestead up to $10,125.
522(d)(9) – Health aids.
522(d)(11)(B) – Wrongful death recovery for person you depended upon.
522(d)(11)(D) – Personal injury recovery up to $20,200 except for pain and suffering or for pecuniary loss.
522(d)(11)(E) – Lost earnings payments.
Pensions:
522(b)(3)(C) – Tax exempt retirement accounts; IRAs and Roth IRAs up to $1,095,000 per person.
Public Benefits:
522(d)(10)(A) – Public assistance, Social Security, Veteran’s benefits, Unemployment Compensation.
522(d)(11)(A) – Crime victim’s compensation
Tools of Trade:
522(d)(6) – Implements, books and tools of trade, up to $2,025.
Alimony and Child Support:
522(d)(10)(D) – Alimony and child support needed for support
Insurance:
522(d)(7) – Unmatured life insurance policy except credit insurance.
522(d)(8) – Life insurance policy with loan value up to $10,775.
522(d)(10)( C ) – Disability, unemployment or illness benefits
522(d)(11)( C ) – Life insurance payments for a person you depended on, which you need for support
Washington Bankruptcy Exemptions
All statutory references are to Revised Code of Washington unless otherwise noted. You can find the Revised Code of Washington here.
Homestead
6.13.010 – Real property or mobile home up to $125,000. If property is unimproved but intended to be occupied at time of filing bankruptcy up to $15,000. Before sale of home if the property is unoccupied or unimproved, a homestead declaration must be filed (6.15.040)
Personal Property
6.15.010 – Motor vehicle up to $2,500 if single or 2 vehicles up to $5,000 if community; clothing, but furs, jewelry & ornaments limited to $1,000; household goods, furniture, appliances, home and yard equipment up to $2,700 ($5,400 for husband and wife); pictures and keepsakes; private libraries up to $1,500; food and fuel for comfortable maintenance; prescribed health aids; $2,000 of any other personal property, but not more than $200 of it in cash, bank deposits, stocks, bonds, or other securities; and personal injury awards up to $16,150.
6.15.030 – Fire insurance for lost, stolen or destroyed exempt property.
68.20.120 – Burial plots if sold by a nonprofit cemetery association.
68.24.220 – Burial plot.
Wages
6.27.150 – The greater of the following: 30 times the federal hourly minimum wage or minimum of 75% of disposable earnings. Judge may approve more for low income debtor.
Pensions
11 U.S.C. § 522 – Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000 per person.
2.10.180 – Judges.
6.15.020 – ERISA-qualified benefits, including IRAs and Keoghs.
41.24.240 – Volunteer firefighters.
41.26.053 – Law enforcement officials and firefighters.
41.28.200 – City employees.
41.32.052 – Teachers.
41.40.050 – Public employees and state employees.
43.43.310 – State patrol officers.
Public Benefits
7.68.070 – Crime victims’ compensation.
50.40.020 – Unemployment compensation.
51.32.040 – Industrial insurance (workers’ compensation).
74.04.280 – General assistance.
74.08.210 – Old-age assistance.
74.13.070 – Child welfare.
Tools of Trade
6.15.010 – Tools and materials used in any trade up to $5,000; library, office furniture, equipment and supplies of a physician, surgeon, attorney, clergyman or other professional up to $5,000; farm trucks, tools, equipment, supplies, stock and seed of a farmer up to $5,000. .
Alimony and Child Support
6.15.010 – Child support payments.
Insurance
48.36A.180 – Disability benefits, proceeds, dividends, interest, loan, cash, or surrender value.
48.18.410 – Life insurance proceeds, dividends, interest, loan, cash, or surrender value if the insured is not the beneficiary.
46.18.420 – Group life insurance policy or proceeds.
46.18.430 – Annuity contract proceeds up to $2,500 per month.
48.18.400 – Fraternal benefit society benefits.