What are exemptions?

Exemptions are a way for individuals to protect certain assets from the claims of creditors in a bankruptcy. In Chapter 7 bankruptcy law, exemptions are determined by federal or state law, and they depend on which state the individual lives in. In Washington, the most commonly used exemption is the state homestead exemption, which allows individuals to keep their home up to a certain dollar amount. Other exemptions may be allowed for certain other assets, including household items, retirement accounts, and certain life insurance policies. Exemptions are designed to allow individuals to keep certain assets, which can be important for individuals and their families to maintain some financial stability. Exemptions also allow individuals to pay off their creditors over time, because they can use the funds from their exempt assets to repay what they owe. In some cases, individuals may be able to keep all of their assets if their exemptions are higher than their debt. In Washington, individuals have the option of using either the state exemptions or the federal exemptions for bankruptcy. Individuals should consult with an experienced bankruptcy attorney to learn more about the exemptions that are available in their state, as well as the process for claiming them.

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