Washington State residents struggling with overwhelming debt may want to file for bankruptcy to alleviate their debt, but hesitate from doing so because they do not want to lose everything. What they may not know is that it is possible to keep some property and a portion of the proceeds from the bankruptcy, depending on one’s individual circumstances.
When is property exempt?
To determine if a property is exempt or not, its value is considered. This does not mean what one paid for it, but what it is worth right now. Other than cars and furniture, the value will have most likely gone down considerably since when the asset was bought. If the value is more than the amount allowed by the exemption, then the trustee can sell it and give the filer only the exempt value. Where an item is exempt, the interest a secured creditor owes on it is not exempt. For example, if an asset was bought through a loan, the filer might have to continue making those payments to the financial institutional.
Different laws apply to each bankruptcy
Exemptions are found in state and federal law. While a filer can choose which law to apply, it is not possible to mix and match the laws. However, to qualify for Washington exemptions, the filer must have been domiciled in the state for 730 days right before filing the bankruptcy petition. If this is not possible, then the law of the state where the filer lived for the 180 days before those 730 days will be applied.
Though bankruptcy can be daunting, it can provide much needed financial relief to struggling individuals. To understand which bankruptcy and what law applies best to one’s individual circumstances, it might be helpful to consult an experienced lawyer for guidance.