Property and Bankruptcy

What Happens to My Property if I File Bankruptcy?

 

Bankruptcy laws exist to give an honest, unfortunate person a fresh financial start when their debts become so unexpectedly huge they cannot pay them back. An important part of this fresh start is the ability to keep the property necessary to continue living with dignity and stability.

The bankruptcy laws that protect property are called “exemptions.” In Washington you can choose between federal and state exemptions. Most people who file bankruptcy do not have to give up any property because the exemptions for cars, homes, and personal goods are fairly generous. Retirement plans are 100% exempt.

If you are making payments on a car or a house, you can almost always keep the property if you can keep making the payments. In a Chapter 7 you make these payments directly. In a Chapter 13, you keep making payments through a bankruptcy plan that consolidates all your debt.