Chapter 7 bankruptcy provides a way of paying off unsecured debts, including credit card debts and medical bills, by liquidating non-exempt assets. Individuals who consider filing for Chapter 7 bankruptcy in Florida often have questions concerning property that is exempt. According to the Florida bankruptcy law, individuals can protect some of their property prior to filing for a Chapter 7.
What Are Some Of The Florida Bankruptcy Exemptions I Can Use To Protect Property?
How Bankruptcy Saved My Family And How It May Save Yours
An exemption refers to a special kind of protection from liquidation in bankruptcy. While the bankruptcy code has various federal bankruptcy exemptions, individuals filing for Chapter 7 bankruptcy in Florida are expected to use the state exemptions. These federal and state exemptions mainly differ in the dollar value of the assets being protected.
Florida Domicile Rules for Bankruptcy Exemptions
To qualify for the Florida bankruptcy exemptions, you must have lived in Florida for at least 730 days (2 years) before filing the bankruptcy petition. A different rule applies to individuals who lived in two or more states during the two-year period before filing for bankruptcy. Such individuals would use exemptions of the state they lived in for most of the 180 days prior to the two-year period before filing for bankruptcy. Individuals who are ineligible for any state’s exemptions are allowed to use the federal bankruptcy exemptions.
Florida residents can protect some of their property in Chapter 7 bankruptcy. Some of the exemptions available include:
Florida Homestead Exemption
If you are a Florida resident and have equity in your home, that is, your home is worth more than what you owe on it, you can keep your home in Chapter 7 bankruptcy. Under the Florida bankruptcy laws, it is possible to exempt an unlimited amount of equity in your home and any other property that falls under the homestead exemption. For this exemption to apply, your property must not be larger than half an acre in a municipality or 160 acres elsewhere.
Another condition to the homestead exemption is that you must have owned the property for a minimum of 1,215 days before the date of filing for Chapter 7 bankruptcy. Failure to meet this requirement, an individual’s homestead exemption is limited by federal law. Under the Florida homestead exemption, any property purchased as a future residence is unprotected until it is occupied as a permanent residence.
It is also important to note that second homes or investment properties are not protected by the Florida homestead exemption and may be liquidated on filing for Chapter 7 bankruptcy. What’s more, only “natural persons” can exercise the Florida homestead exemption. It follows that any properties titled under a corporation, LLC, partnership, or irrevocable trust aren’t protected. For homes that weren’t occupied continuously for the stipulated period, the homestead exemption is capped at $146,450 or $292,900 for a co-owned homestead.
Florida Motor Vehicle Exemption
Individuals planning to file for Chapter 7 bankruptcy in Florida can exempt up to $1,000 in motor vehicle equity. According to the Florida statutes, this amount goes up for spouses who are filing for bankruptcy jointly.
To put this exemption into perspective, a debtor who owns a car worth $15,000 and owes $14,000 on the car loan has a $1,000 equity in the car. In this case, the debtor can protect all of the equity in the car using the Florida motor vehicle exemption. For a debtor who has paid off all of the car loan, any value above $1,000 becomes the bankruptcy’s estate property.
Debtors who don’t use the homestead exemption may use it to exempt up to $4,000 of additional equity in the motor vehicle. In most cases, debtors will owe more than the car is worth, and chances are they’ll keep it when filing for Chapter 7 bankruptcy without a problem.
Florida Personal Property Exemptions
Personal property is defined as anything other than real estate. Under the Florida bankruptcy laws, the following categories of personal property are exempt:
- Personal property, including furniture, electronics, and collectibles, up to $1,000. This exemption may rise to $4,000 if the homestead exemption is not used.
- Health savings
- Education savings
- Hurricane savings
- Health savings account deposits and prepaid medical savings account
- Tax credits and refunds
- Prescribed health aids
- Certain partnership property
Florida Exemptions for Wages
The wages of the head of a family are completely exempt up to $750 every week, or the greater of 30 times or 75% the federal minimum wage. This pertains to paid and unpaid wages, along with wages deposited in a bank account in the last six months. For earnings of any other member other than the family head, the exemptions apply as follows: The greater of 30 times or 75% the federal minimum wage.
Florida Exemptions for Pensions
Very often, when people face hardship, they rely on credit cards to help make ends meet. Unfortunately, the ease and convenience of those cards usually comes with a high interest rate, upwards of twenty-one percent, and during times of financial struggle, it is increasingly difficult to repay the entire balance every month to avoid interest charges, or on time to avoid late charges. This causes people’s debt to become out of control, and many times the credit card company files a lawsuit against the person who has failed to repay the card according to its terms.
An experienced lawyer can help negotiate a payment plan for you to repay the debt, often at a lower interest rate, or can help negotiate a lower lump sum payment to satisfy the debt in full. Whether your debt is $500 or $50,000, the attorneys at The DeVries Law Firm, P.A., are here to help.
Debtors applying for bankruptcy in Florida will have the following types of pensions and retirement funds fully protected:
- Public employee retirement benefits
- ERISA qualified pensions and retirement plans, including 401(k), 403(b), SEP, SIMPLE IRAs, profit sharing, and money purchase pension plans
- Firefighter pensions
- State and County pensions
- Employees retirement system benefits
- Teachers’ retirement benefits
- Municipal police pensions
Florida Exemptions for Public Benefits
The following public benefits are exempt when filing for a Chapter 7 Bankruptcy:
- Social security benefits
- Veteran benefits
- Local public assistance benefits
- Reemployment assistance
- Workers’ compensation and unemployment compensation benefits
- Crime victims’ compensation benefits. An exception to this is when the debtor seeks a debt discharge for treatment of a resultant injury
Florida Exemptions for Annuities and Insurance Policies
Debtors can also protect the following:
- Life insurance policy proceeds payable to a particular beneficiary
- Life insurance policy’s cash surrender value, as well as proceeds of an annuity contract. However, annuity proceeds from lottery winnings are non-exempt
- Fraternal benefit society benefits
- Disability income benefits
Florida Child Support and Alimony Exemptions
Child support and alimony of a reasonably necessary amount for the debtor’s support (and any dependent) are exempt.
Florida Exemptions for Personal Injury and Lawsuits
Damages awarded by a court for a worker’s injuries or death while on the clock in a hazardous work environment are fully exempt. Any other proceeds from a lawsuit or unsettled legal claim may be used to pay off unsecured creditors. However, debtors can use other exemptions like the wildcard exemption to protect such proceeds.
Florida Wildcard Exemption
The wildcard exemption is one through which a debtor can protect personal property up to $4,000 if they don’t use the homestead exemption.
While these are the most commonly used exemptions in Florida, other exemptions may apply to specific situations. A Florida bankruptcy attorney may help ensure that you declare all the exemptions you are entitled to according to the Florida Constitution, Statutes, and Bankruptcy Code.