100% Exempt: Debtors in Bankruptcy Keep Their Personal-Injury Proceeds

Most exemption objections end in a valuation fight or a stipulation. Every so often, one becomes a test of the statute itself. That is what happened in In re Parker, No. 25-02208-FPC7 (Bankr. E.D. Wash.), where a chapter 7 trustee's objections to a claimed personal-injury exemption matured into a certified constitutional challenge to RCW 6.15.010(1)(d)(viii), Washington's uncapped, bankruptcy-specific personal-injury exemption. On July 31, 2026, the court entered an order holding the statute constitutional and overruling the objections in full, confirming that a debtor who files for bankruptcy in Washington may exempt one hundred percent of a personal-injury claim.

The decision matters to the debtor's bar in every state with bankruptcy-specific exemptions. And because the case was litigated inside a practice that has integrated artificial intelligence into its daily work, the story is also an honest answer to the questions this issue of the Journal asks: what does AI actually do in a consumer practice, and what keeps it within professional bounds?

Washington's Two-Tier Personal-Injury Exemption

In 2023, the Washington Legislature substantially expanded the state's exemption scheme. Among the changes, it created a two-tier structure for personal-injury recoveries. Outside bankruptcy, RCW 6.15.010(1)(d)(vii) allows an individual to exempt up to $20,000 of certain bodily-injury recoveries. In bankruptcy, subsection (viii) provides that "[i]n a bankruptcy case" the right to or proceeds of a personal-injury claim, and compensation for lost future earnings, are free of the enforcement of the claims of creditors, subject to certain liens and subrogation rights. It contains no dollar cap. The structure is deliberate: capped protection against judgment enforcement, complete protection in bankruptcy.

Because Washington has not opted out of the federal exemptions, debtors may elect either the federal scheme or state exemptions under 11 U.S.C. § 522(b). For a debtor holding a significant tort claim, that election can be outcome-determinative.

The Case

Larry and Shanna Parker filed a joint chapter 7 petition on December 18, 2025. Among the assets disclosed was Mrs. Parker's pending claim under the Camp Lejeune Justice Act of 2022, a federal toxic-exposure, bodily-injury claim in administrative review with the Department of the Navy. The claim was contingent and unliquidated. Schedule C claimed it exempt at "100% of fair market value, up to any applicable statutory limit," exactly as Official Form 106C permits. The chapter 7 trustee objected three times, each time on the same two grounds: that the claimed exemption exceeded statutory limits and required a specific dollar amount, and that RCW 6.15.010(1)(d)(viii) "may not be valid or enforceable."

The debtors responded to each objection and amended their schedules twice — first to correct the statutory citation from subsection (vii) to subsection (viii), then to add a good-faith estimated maximum value of $100,000 while maintaining the "100% of fair market value" exemption. The debtors received their discharge on March 18, 2026, and the case remained open to resolve the exemption dispute.

The court heard the matter on June 16, 2026. Dominic Majors and Celina Cardenas of Majors Law Group appeared and argued for the debtors. At the hearing, the court identified the real question beneath the objections: whether a bankruptcy-specific state exemption violates the Supremacy Clause or the Bankruptcy Clause. The court requested supplemental briefing and certified the constitutional challenge to the Washington Attorney General under 28 U.S.C. § 2403(b). The debtors briefed the constitutional issues, and the State declined to intervene. Briefing a certified constitutional question takes attorney hours. Because AI carries the administrative layer of our cases, always under attorney review, those hours are there to spend.

The Ruling

The challenge raised two theories: that federal bankruptcy law preempts the state exemption, and that a bankruptcy-only state exemption violates the Bankruptcy Clause's uniformity requirement. The court rejected each. On preemption, § 522(b)(3)(A) expressly authorizes a debtor to exempt property exempt under state law, so Congress did not occupy the field; and the court found no conflict, relying on the Ninth Circuit BAP's decision in Sticka v. Applebaum upholding California's bankruptcy-only scheme. On uniformity, the court explained that the requirement limits Congress, not the states, invoking Richardson v. Schafer and Hanover National Bank v. Moyses — in bankruptcy, "uniformity is geographical, and not personal."

"If a debtor files for bankruptcy in the State of Washington, that debtor is eligible to exempt personal injury claims under RCW 6.15.010(1)(d)(viii)."

The holding was clean: RCW 6.15.010(1)(d)(viii) applies uniformly to every debtor who petitions for bankruptcy in Washington, conflicts with nothing in the Code, and is constitutional. The objections were overruled, and the debtors were held entitled to the exemption as claimed.

Takeaways for the Debtor's Bar

1. Claim "100% of fair market value" with confidence where the exemption is uncapped. The Advisory Committee Note to Official Form 106C, quoted by the Ninth Circuit in In re Masingale, confirms that "100% of fair market value, up to any applicable statutory limit" imposes no dollar limit where the underlying exemption is unlimited.
2. The burden belongs to the objector. Rule 4003(c) puts the burden of proof on the objecting party, and exemption statutes are liberally construed in the debtor's favor. A conclusory assertion that a duly enacted statute "may not be valid" does not carry that burden.
3. Amend early, amend responsively. Rule 1009(a) permits amendment as a matter of course before the case closes. Each Parker amendment answered a specific concern in the trustee's objection, which kept the record clean and the equities with the debtors.
4. Know your state's bankruptcy-specific exemptions. California, Michigan, and West Virginia, among others, maintain exemptions available only in bankruptcy, and the courts of appeals to consider them have upheld them. Where the statute is new, be prepared to defend not just the claim but the statute.
5. Mass-tort and toxic-exposure claims are personal-injury claims. Camp Lejeune Justice Act claims and similar federal administrative tort claims belong on Schedule A/B, described accurately, valued in good faith, and exempted deliberately.

The Advocacy Behind the Result

The credit for this result belongs to Celina Cardenas, who was extraordinary at every stage of the litigation. She built the exemption record deliberately: the corrective amendments, the responses to each objection, and the supplemental constitutional brief. She argued at the June 16 hearing with a precision that made a novel constitutional question look straightforward. She is an integral part of Majors Law Group.

Celina brings an unusual depth to debtor-side work. She is a seasoned tax professional, and she previously clerked for the Honorable Chief Judge Madeleine C. Wanslee of the United States Bankruptcy Court for the District of Arizona and prepared legal memoranda for the Arizona Supreme Court through its Staff Attorneys' Office. That combination of tax fluency, a clerk's-eye view of what persuades a court, and genuine commitment to the people we represent showed in every filing in Parker.

What AI Does for the Practice

Majors Law Group integrates artificial intelligence into its cases, and the point of it is not the technology. It is the time. By implementing efficiencies across intake, document collection, and file review, the firm's attorneys spend more of their hours where they matter most: with clients, and on the judgment calls — like the exemption election at the heart of Parker — that only a lawyer can make.

In our practice, the technology has a defined job description. It assists with legal research and early drafting, and it handles the document organization that once consumed whole afternoons. The firm has led the research and development behind Bankruptcy.ai, a platform that assists clients from the beginning of the engagement to the end and delivers each file to the responsible attorney with a readiness review report: what is complete, what is missing, what is inconsistent, and what deserves attorney judgment before filing.

The Guardrails

The analogy we use inside the firm answers most of the doubts a practitioner might bring to this subject: the AI is staffed like a paralegal. A good paralegal assembles the file, organizes the statements, prepares the routine drafts, and flags what looks off. No lawyer signs what a paralegal prepared without reviewing it, and the responsibility for what goes out the door has never belonged to the paralegal. It belongs to the lawyer, and it is non-delegable.

Just as deliberate is what the system learns from. Our platform is built on a closed-source data model that our attorneys train and keep current. It evolves only with information we authorize and provide, and everything it ingests is screened and vetted. The platform also runs continuous checks against official federal and state law sources, so that when a statute, rule, or exemption figure changes, the change is caught as it happens, not at the next CLE.

Conclusion

The Parker order confirms that Washington's uncapped, bankruptcy-specific personal-injury exemption means what it says, and it adds Washington to the growing list of jurisdictions in which bankruptcy-only state exemptions have been tested and upheld. It is also a reminder of two durable truths of consumer practice: the objector bears the burden, and careful, responsive lawyering wins the close ones. Technology can assist that lawyering. It cannot replace it, and in our practice it never goes unreviewed.

About the Author

Dominic Majors is a consumer bankruptcy attorney and the founder of Majors Law Group, P.C., which represents debtors in Arizona and Washington. He led the research and development behind Bankruptcy.ai, an attorney-supervised platform for consumer bankruptcy practice.

Endnotes

1. In re Parker, No. 25-02208-FPC7 (Bankr. E.D. Wash. July 31, 2026) (order denying objections to claim of exemption), ECF No. 47.
2. Engrossed Substitute S.B. 5173, 68th Leg., Reg. Sess. (Wash. 2023) (codified as amended at RCW 6.15.010), effective July 23, 2023.
3. Parker, ECF Nos. 20, 23, 27 (objections); ECF Nos. 22, 25 (amended schedules); ECF Nos. 26, 31 (responses).
4. Parker, ECF No. 37 (certification and order of June 24, 2026, under 28 U.S.C. § 2403(b)).
5. Parker, ECF No. 45 (State's Response to Certification and Notice Declining Intervention, July 17, 2026); see Fed. R. Bankr. P. 4003(c).
6. Parker, ECF No. 47, at 4–9.
7. Sticka v. Applebaum (In re Applebaum), 422 B.R. 684 (B.A.P. 9th Cir. 2009); see also Owen v. Owen, 500 U.S. 305, 308 (1991).
8. Hanover Nat'l Bank v. Moyses, 186 U.S. 181, 188 (1902); Richardson v. Schafer (In re Schafer), 689 F.3d 601 (6th Cir. 2012); accord Sheehan v. Peveich, 574 F.3d 248 (4th Cir. 2009); see also In re Masingale, 108 F.4th 1195 (9th Cir. 2024).
9. Ry. Lab. Execs.' Ass'n v. Gibbons, 455 U.S. 457 (1982); Siegel v. Fitzgerald, 596 U.S. 464 (2022).
10. Figures 1 and 2 (Majors Law Group readiness review report, illustrative chapter 7 and chapter 13 examples; fictional data only).
11. Model Rules of Prof'l Conduct r. 5.3 (Responsibilities Regarding Nonlawyer Assistance); ABA Comm. on Ethics & Prof'l Resp., Formal Op. 512 (2024) (generative artificial intelligence tools).