Bankruptcy law Changes in 2025

As of early this year there are notable updates to bankruptcy laws that will affect Washington state.

1. Federal Bankruptcy Dollar Amount Adjustments- Effective April 1, 2025. Every three years the federal government adjusts specific dollar amounts in the Bankruptcy code to account for inflation. On April 1st these amounts will increase by approximately 13.2%. This will impact the following aspects of bankruptcy filing;

   • Property exemptions: The value of property a debtor can exempt from the bankruptcy estate will rise, allowing individuals to protect more assets during bankruptcy proceedings.

   • Priority claims: The maximum amounts for certain priority claims, such as employee wages and consumer deposits, will increase.

   • Eligibility Thresholds: Debt limits determining eligibility for Chapter 13 and subchapter V of Chapter 11 bankruptcies will be adjusted upward.

2. Expiration of Temporary Increases in Washington State Exemptions: Effective July 1, 2025.

   • In 2023 Washington State enacted the Fair Shot Act which temporarily enhanced personal property exemptions for example the Motor Vehicle Exemption increased from $3,250 to $15,000 per debtor, the Wildcard Exemption raided from $3,000to $10,000 per debtor, and the Personal Injury Proceeds became fully exempt without limitations. These enhancements are set to expire on July 1, 2025. Post expiration the amounts will revert to their previous levels unless new legislation is enacted.

With the dynamic nature of bankruptcy law it is important for individuals considering bankruptcy to stay informed about current regulations. Consulting with a qualified Bankruptcy attorney is the best way to make sure you are taken care of. Earl and Edwards provides a free consultation, give us a call today to see what's right for you.