Terrific But Complicated Increased Homestead Exemptions in Washington

The homestead exemption in Washington protects the value of your equity in your primary Washington State residence. That amount has a terrific increase since the prior $125,000 amount. This consists of real or personal property that the OWNER or DEPENDENT of the OWNER uses as a residence. If you or your dependent do not reside there yet, speak to an attorney on filing a declaration of homestead. (A “dependent” is defined as the meaning in 11 U.S.C. Sec. 522(a)(1). A mobile home whether or not permanently affixed to the underlying land and whether or not the mobile home is placed upon a lot owned by the mobile home owner or a dependent of the owner. Such property must be actually intended or used as the principal home for the owner.

How much is protected:
How much is exempt depends on what county you in fact reside in. Thus, in North-Western Washington, the exemption amounts listed by counties are as follows for bankruptcy filings in 2021 since the law passed:

Clallam $352,600
Grays Harbor $251,100
Island $442,700
Jefferson $455,900
King $729,600
Kitsap $425,100
Lewis $304,100
Mason $319,600
Pacific $234,200
Pierce $424,300
San Juan $694,800
Skagit $421,800
Snohomish $549,400
Thurston $383,600
Whatcom $444,400

The Exemptions Change Yearly So Essential Possibly to Calculate near end of year.
The County Exemptions change yearly and match the median sales price of a single family home in that specific County from the prior calendar year. Thus, if considering filing a case near the end of the year it is crucial as some medians may astonishingly increase (or decrease is possible in years to come).

Increases in Homestead Value After Filing Bankruptcy Benefits the Homeowner now.
The increase after the date of any bankruptcy filing in the value of a homestead is for the benefit of the homeowner not the bankruptcy court trustee under the new laws, unlike previously.

Beware Jaw Dropping Exception to Homestead Exemptions:
If you file bankruptcy, it is crucial that you have lived in Washington non-stop for the last 2 years in a row. Why? Because you cannot use our Washington State exemptions if you in fact lived in another state for more than 90 days for the time period immediately preceding that 2 year rule. (For example, if you moved to and resided in Washington from California on October 1, 2019 and file bankruptcy before October 2, 2021, and lived in California for the 91 or more days before the October, 1, 2019 then California laws must be examined or another state’s law depending on residence dates) .

You might read blogs in which it states you can claim the substantial new homestead bankruptcy exemptions. Do not become an infuriated debtor who is mislead by such statements as exceptions are crucial. And it is the law at the time of the petition date that governs and thus determinative. Thus, call a careful attorney such as The Law Offices of Richard D. Granvold PS so that you are not surprised with and exception. You do not want a demoralizing dream lost based on bad advice which does not carefully list exceptions to the rules.

Other Staggering Exceptions to the Homestead Rules
What if you acquired your house in last 3 years and 4 months before the bankruptcy petition date? (family farmer’s personal residence is exception to this rule) Then it may smash your dreams on protecting the equity depending on the facts: did you acquire an interest exceeding $170,350 in equity? Or if married $340,700? If yes, then even more issues can shatter your dreams: what if you sold a house in another state to buy the present one in Washington? Then you may be limited in how much homestead exemption you can claim (or choose to wait till you have been residing in Washington more than 3 years and 4 months since you acquired your homestead). As you can see, without careful attorney advice, your dreams of protecting all your homestead could be slaughtered. Thus, find and employ a careful bankruptcy attorney to protect your dreams and assets.

Warning: Partial loss of Homestead under other exceptions exist?
Do NOT assume your homestead is fully protected until you have checked off other exceptions to the law too. Thus, I quote those significant exceptions for you next (discuss with your attorney though all exceptions):

Thus, if the equity exceeds $125,000 you may be repulsed if you don’t review other possible exceptions I point out next. Thus,

(1)As a result of electing under subsection (b)(3)(A) to exempt property under State or local law, a debtor may not exempt any amount of an interest in property described in subparagraphs (A), (B), (C), and (D) of subsection (p)(1) which exceeds in the aggregate $125,000 1 if—

(A)the court determines, after notice and a hearing, that the debtor has been convicted of a felony (as defined in section 3156 of title 18), which under the circumstances, demonstrates that the filing of the case was an abuse of the provisions of this title; or

(B)the debtor owes a debt arising from—

(i)any violation of the Federal securities laws (as defined in section 3(a)(47) of the Securities Exchange Act of 1934), any State securities laws, or any regulation or order issued under Federal securities laws or State securities laws;

(ii)fraud, deceit, or manipulation in a fiduciary capacity or in connection with the purchase or sale of any security registered under section 12 or 15(d) of the Securities Exchange Act of 1934 or under section 6 of the Securities Act of 1933;

(iii)any civil remedy under section 1964 of title 18; or (this is a racketeering exception).

(iv)any criminal act, intentional tort, or willful or reckless misconduct that caused serious physical injury or death to another individual in the preceding 5 years.

(Thus, when did act occur? Do you need to wait to file? Do any of 4 above apply? ) These are all questions you must want to assure do not exist to prevent your Homestead.

And even if one of the above 4 exceptions apply, then another exception to that exception: available? If the homestead is deemed reasonably necessary for support debtor and dependents (q)(2) or some extent it could be still protected.

What Creditors is the Homestead Protected against?
In general, creditors whom were provided valid enforceable liens/ deeds of trust can proceed absent bankruptcy on enforcing any valid liens. Certain taxes, debts for child support, etc. and other debts owed the State should be discussed with an attorney in detail under the cumbersome homestead laws .

Reliance only on your own employed attorney’s advice should be made in order to determine your rights. No entity or person should rely on the above homestead statements or assume there have never been any changes to said law, but rather to use this information to discuss and obtain legal advice from your attorney on your assets, and rely only on your attorneys advice on protection of all your assets including your Homestead.

The Law Offices of Richard D. Granvold PS .