Are you financially struggling and looking for a way to break free of the never-ending cycle of debt that you’ve fallen into? If so, you’re probably wondering if bankruptcy is right for you. The process can provide real debt relief, even giving you a fresh financial start, but there are a lot of misconceptions out there about what the process can and can’t do for you.
One of the biggest misunderstandings is that the bankruptcy process will leave you with nothing. This simply isn’t true. Bankruptcy is aimed at getting you back on your feet so that you can continue to contribute to the economy. Therefore, to ensure that you have a minimum foundation of financial stability, you’re able to use a variety of bankruptcy exemptions.
Which bankruptcy exemptions can you use?
In Washington, you have the ability to use either state or federal bankruptcy exemptions. You have to go with one list or the other, meaning that you can’t pick and choose which exemptions to use from each list. Either way, you’ll be left with the financial resources that you’ll need to be stable as you start the next chapter of your life.
To give you a better idea of what these exemptions entail, let’s look at some of the exemptions allowable under state law:
- Homestead exemption: This provision under state law allows you to retain a certain amount of equity that you’ve built up in your primary place of residence. The exact exemption amount depends on the county you live in, but it can easily be upward of $300,000 or more. King County’s exemption is in excess of $700,000.
- Vehicle exemption: You can also protect some of the equity that you have in a car. Under state law, this exemption is $3,250. If you’re filing for bankruptcy jointly with your spouse, each of you can claim this exemption.
- Tools: If you work in a trade that requires you to use tools and other materials, you can exempt up to $10,000 worth of those items to ensure that you can continue working once your bankruptcy is finalized.
- Clothing: Under state law, you can keep up to $3,500 worth of clothing and jewelry.
- Keepsakes: You can also retain up to $3,500 worth of books, electronics, photographs and other keepsakes. This exemption is per person, too, so your spouse may be able to use it as well.
- Furniture: You and your spouse can each also exempt $6,500 in furnishings and other household goods.
- Retirement accounts: Many retirement accounts can’t be touched during the bankruptcy process, so make sure that you’re analyzing whether your retirement funds are exempt from the process.
- Wildcard exemption: The state also recognizes a wildcard exemption. Here, you can pick up to $3,000 worth of assets to remove from the bankruptcy process. This can include up to $1,500 in cash.
There are other exemptions out there that you might be able to use. You just need to educate yourself as much as possible so that you can make sure that you’re acting in your best interests.
Do you need additional guidance?
There are a lot of complexities to the bankruptcy process. But successfully completing bankruptcy can give you the fresh start that you’ve been longing for.
That’s why it might be best to turn to an experienced bankruptcy attorney for more information and guidance in securing the outcome that you want. Hopefully, after speaking to one of these legal professionals, you’ll feel better about what the future has in store for you.