Understanding D.C. Bankruptcy Exemptions: What You Need to Know
The District of Columbia (D.C. bankruptcy exemptions) allows you to choose between the federal bankruptcy exemptions or the exemptions provided under D.C. law. While not common, there are also some states that allow you to choose between one or another. But you can’t pick and choose from both. Therefore, it’s critical to review both sets of exemptions and decide which exemptions better protect your assets.
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Whether it’s D.C. or a state, the Bankruptcy Code requires that you meet the residency requirements. There are two key dates to focus on: 180 days and 730 days.
The District of Columbia Residency Requirements
To determine if you can file for bankruptcy in D.C., you must have resided there for at least 91 days out of the last 60 months. This is commonly referred to as the 180-day rule. Once you meet that requirement, the next requirement is determining if you will use the D.C. bankruptcy exemptions. To do so, you must have resided in D.C. for at least 730 days.
If you haven’t lived in the District of Columbia for at least 730 days, you would apply the bankruptcy exemptions of the state you resided in previously. This is critical because each state offers different exemptions. So if you are moving to the D.C. area or relocating from D.C., you should compare the exemptions of the District of Columbia to those of that state. Based on the facts of your case, you should file accordingly.
Also, note that to have the full protection of the homestead protection, you must own your homestead for 1,215 days per Section 522 of the Bankruptcy Code.
Due to its size and the fact that a large number of people work in D.C. but reside elsewhere, the number of bankruptcies filed is relatively low. In 2024, 268 Chapter 7 bankruptcies were filed versus 108 Chapter 13 cases.
District of Columbia Homestead Exemptions
D.C., like Florida, protects 100% of the equity in your home, condominium, or co-op as long as you have owned the home for at least 1,215 days. Considering the cost of housing in D.C., that’s critical. Note that there is no specified dollar amount listed in the statute. § 15–501. Exempt property of householder; property in transitu; debt for wages.
Important Note: Throughout my blogs and YouTube videos, I have continually stated that AI (Artificial Intelligence), blogs, and even statutes are listing exemptions wrong. So always research from multiple sources.
Over and over again, some blogs referenced a 100% exemption for burial plots, while others didn’t. Statute 15-501(a)(1) kept being referenced. While it’s possible it was listed at some point, it’s not in the statute as of today. But you see how that simple mistake could cost you thousands if not tens of thousands of dollars.
Currently, Statute 15-501(a)(1) reads as follows:
- The following property of the head of a family or householder residing in the District of Columbia, or of a person who earns the major portion of his livelihood in the District of Columbia, being the head of a family or householder, regardless of his place of residence, is free and exempt from distraint, attachment, levy, or seizure and sale on execution or decree of any court in the District of Columbia:
However, there is reference to burial plots in subsection (14): the debtor’s aggregate interest in real property used as the residence of the debtor, or property that the debtor or a dependent of the debtor in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or dependent of the debtor, except nothing relative to these exemptions shall impair the following debt instruments on real property: deed of trust, mortgage, mechanic’s lien, or tax lien; and…
Subsection (14) is referenced in §15-501(a)(3), which references the wildcard exemption. You can read more about the wildcard exemption below, but here’s that section: (3) the debtor’s aggregate interest in any property, not to exceed $850 in value, plus up to $8,075 of any unused amount of the exemption provided under paragraph (14) of this subsection;…
Personal Property Exemptions
Besides homestead property, personal assets are also protected. This includes household goods such as clothing, household furnishings, appliances, household goods, animals, books, and musical instruments up to $425 per item, with a total aggregate limit of $8,625.
§15-501(a)(2): the debtor’s interest, not to exceed $425 in value, in any particular item or $8,625 in aggregate value in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal family or household use of the debtor or a dependent of the debtor. Your car is also exempt up to $2,575 per §15-501(a)(1). Note that you can double most of the exemptions if you are married and filing your bankruptcy petition jointly.
When valuating these items, it should be at the fair market value (FMV), which is another way of saying garage sale value. Let’s review an example of how exemptions would work.
Suppose your household goods are estimated at $14,000, but $8,625 is protected. If you subtract the value of your goods from the exemption amount ($14,000-$8,625), you have $5,375. That is the over-exempt amount of your assets. That is the amount that belongs to the bankruptcy estate.
This means the trustee could require that you pay back $5,375 to keep those assets, or you can surrender those assets, and the trustee sells them at auction, and any net proceeds are distributed to your creditors. If you are filing Chapter 13 bankruptcy instead of Chapter 7, you would also have to pay back the $5,375 through the bankruptcy plan.
The Tools of the Trade Exemptions
Some states, and D.C. as well, provide an additional exemption for what is known as tools of the trade. This means that business owners can exempt assets related to their business. For example, what are the tools of the trade for me? For lawyers, it’s basic: computers, printers, furniture, etc. But regardless of the business, up to $1,625 is exempt.
Statute 15-501 (a)(4) reads as follows: the debtor’s aggregate interest, not to exceed $1,625 in value, in any implements, professional books, or tools of the trade of the debtor or the trade of a dependent of the debtor (this exemption shall also apply to merchants).
The Wildcard Exemption
Some states offer what is known as the wildcard exemption. D.C. does as well. The wildcard exemption protects up to $8,075 if you did not claim the homestead exemption, $850 if you did.
Note that these are just some of the exemptions offered by D.C., so make sure to review the bankruptcy petition carefully, as well as the statutes, to make sure you protect all your assets.
For information regarding the D.C. bankruptcy trustees, follow this link. Courthouse information is available here.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
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