Washington State Homestead Exemption Raised

I was interviewed by KOMO TV’s Connie Thompson for a March story on the recent change in Washington’s homestead exemption law. When a debtor files for bankruptcy, the homestead exemption protects the equity in the debtor’s home from creditors up to a maximum amount. Washington has some of the most expensive residential real estate in the country, yet for many years the homestead exemption law didn’t really reflect that fact. Before the law changed in 2007, the Washington state homestead exemption law only protected up to$40,000 in equity, which wasn’t enough for many homeowners. For example, if you entered bankruptcy with $75,000 equity in your home, creditors could pursue the $35,000 equity in excess of the exemption, which forced many people to sell their homes or refinance under unfavorable conditions. Under the new law, the exemption has been raised to $125,000, making bankruptcy a much more attractive option for many homeowners.