What are Bankruptcy Exemptions?

Bankruptcy Exemptions

What are bankruptcy exemptions? Exemptions specify property a debtor can keep in a Chapter 7 case outside reach of creditors and bankruptcy trustee, or how much a debtor must pay creditors in Chapter 13.

In Washington, debtors may either use the state's exemptions or the federal bankruptcy exemptions in the Bankruptcy Code. However, debtors cannot pick favorites from each list and combine or mix exemptions. If debtors opt to use the state's exemptions, they can use applicable federal non-bankruptcy exemptions, though.

Washington's state exemptions encompass homesteads, personal property, insurance, pensions, public benefits, tools of trade and wages, as well as miscellaneous categories. There are residency rules for state exemptions. They mandate you reside in the state for a required term. You usually have to live continuously in the state for two years before filing bankruptcy. There are also limits on homestead exemptions for property acquired less than four four years prior to bankruptcy.

Disclaimer

This article provides a brief, general introduction to filing for bankruptcy. You should contact a our office for legal advice regarding your case.

Mark A. Carter Law Office
2414 Main St. P.O. Box 61505
Vancouver, WA 98666
E -mail: banko341@netscape.net
 Phone: 360.694.8955
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Chapter 7 Bankruptcy Advantages and Disadvantages

Advantages to a Washington Chapter 7 filing:

1. You receive a complete fresh start. After the bankruptcy is discharged the only debts you owe will be for secured assets on which you choose to sign a "Reaffirmation Agreement."
2. You have immediate protection against creditor's collection efforts and wage garnishment on the date of filing.
3. Wages you earn and property you acquire (except for inheritances) after the bankruptcy filing date are yours, not the creditors or bankruptcy court.
4. There is no minimum amount of debt required.
5. Your case is often over and completely discharged in about 3-6 months.

Disadvantages to a Washington Chapter 7 filing:

1. You lose your non-exempt property which is sold by the trustee. If you want to keep a secured asset, such as a car or home, and it is not completely covered by your Washington bankruptcy exemptions then Chapter 7 is not an option.
2. If facing foreclosure on your home, the automatic stay created by your Chapter 7 filing only serves as a temporary defense against foreclosure.
3. Co-signors of a loan can be stuck with your debt unless they also file for bankruptcy protection.
4. You can file a Chapter 7 bankruptcy once every six years.

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Chapter 13 Bankruptcy Advantages and Disadvantages

Advantages to a Washington Chapter 13 payment plan:
If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.

While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.

You have immediate protection against creditor's collection efforts and wage garnishment.

More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items of $1,150 or more made within 60 days of filing).

If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.

You have more time to pay debts that can't be discharged by either chapter (like taxes or back child support).

• You can file a Chapter 13 at any time.
• You can file repeatedly.
• You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.

Disadvantages to a Washington Chapter 13 payment plan:
You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.

Legal fees are higher since a Chapter 13 filing is more complex.

Your debt must be under $1,000,000 (e.g., unsecured debts are less than $250,000 and secured debts less than $750,000).

Your plan and therefore your debt will last for 3 to five years.

You are involved in the bankruptcy court process for the term of the 3-5 year plan.

Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.

Visit us at http://www.markcarterlaw.com today and let us help you get started.

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Since 1994, Attorney Mark A. Carter has provided superior, cost-efficient and value-oriented legal services in a compassionate and respectful manner and Federal court specializing in Chapter 7 and Chapter 13 Bankruptcy in Washington State. I am dedicated to helping people deal effectively with financial difficulties and other legal problems and provide highly professional representation to people in need. I also offer a level of personal attention not found at larger law firms.When it comes to something as personal as handling your Bankruptcy, I will be your ally and advocate — working hard to achieve your goals every step of the way. Contact me to schedule a FREE initial consultation. Mark A. Carter Law Office is a Vancouver Washington based law firm serving Southwest Washington. We focus on bankruptcy protection and debt relief. Our services encompass Clark and Cowlitz Counties including the cities of Vancouver, Camas, Washougal, Ridgefield, Battleground, Woodland, Kelso, and Longview. Visit http://www.markcarterlaw.com for more information. Mark A. Carter Law Office 2414 Main St. P.O. Box 61505 Vancouver, WA 98666 E -mail: banko341@netscape.net  Phone: 360.694.8955 Fax: 360.695.5032 Get Directions