Q: I hear there's a new homestead exemption in Washington State. What are the benefits for homeowners?

A: Washington, like other states, has long had a homestead exemption. Enacted into law, this exemption protects a certain amount of home equity from creditors and is intended to help keep families from losing their homes in hard times, according to a recent state senate report.

The legislature increased the homestead exemption from $40,000 to $120,000 effective July 22. While other states require homeowners to file paperwork in order to be eligible for this exemption, Washington grants it automatically to all homeowners.

Most homeowners never utilize the exemption, but it can be helpful to those in financial distress.

"It helps people in bankruptcy because it protects equity in their home," says Seattle attorney Christina Latta of Seattle Debt Law. "They could file (bankruptcy) and they wouldn't have to pay the equivalent of that available equity to creditors."