When you feel overwhelmed with debt, you may feel like there’s no way out. You are struggling to pay your bills each month. Your credit card debt has dramatically increased because your employer laid you off earlier this year. Now, you’re in danger of foreclosing on your house.
You’re thinking about if filing bankruptcy is the answer. Yet, will you get to keep your house if you file bankruptcy?
What you may not realize is that Washington offers exemptions if you file Chapter 7 bankruptcy. That means you can keep some property instead of having to sell it to pay your debts.
Washington’s homestead exemption
If you own a home, you can keep it if you owe less than $125,000 on it. Also, keep in mind, if you’ve owned a home for a while, you may want to look into refinancing it and using some of its equity to reach that $125,000. What you owe on your home isn’t the same amount as you bought it for: It’s what you owe to pay off your mortgage or a second mortgage.
The Evergreen state also offers exemption for other property in a Chapter 7 bankruptcy. These include the following:
- $4,000 for a vehicle (that doubles for married couples, who can keep two vehicles)
- $1,700 for jewelry
- $13,400 for household goods (furniture, electronics, clothes)
However, to file for Chapter 7, you must meet certain income limits, as it allows you to discharge thousands in consumer debt.
What about Chapter 13?
If you seek a Chapter 13 bankruptcy, you won’t automatically have debts discharged. Instead, you’ll work to set up a payment plan to pay off your debt within three to five years. As a result, you can keep your property, as long as you can continue to make the mortgage payments or other property debt payments.
When you are considering bankruptcy, you should consult an experienced attorney. A bankruptcy attorney can help you decide which bankruptcy might be best for your situation and handle the paperwork so your bankruptcy is granted.