Bankruptcy is a procedure designed to achieve relief to individuals or businesses that owe their creditors money. The ultimate goal of bankruptcy is to allow debtors to restructure their debt agreements, reduce the amount they are owed, or in some cases, eliminate part or all their debt. However, while bankruptcy can represent a clean slate to someone struggling to meet their debt obligations, bankruptcy can be an expensive and long process with many different payment variables.
Bankruptcy exemptions allow a debtor to keep certain property or assets, even after they have filed for bankruptcy. select laws that protect your property in bankruptcy. Exemption laws exist within the state and federal bankruptcy code. The exemptions contained in state laws vary depending on the jurisdiction and will often protect your property from creditors even if no bankruptcy case is filed. Exempt property cannot be sold for the benefit of your unsecured creditors.
However, if you want to protect your property, you have to claim an appropriate bankruptcy exemption when filing your bankruptcy petition. If you don’t claim any exemptions, or you claim the wrong exemption, the property will not be protected from bankruptcy. This is why it’s so important to consult a bankruptcy lawyer, before making any large decisions about the bankruptcy process.
The bankruptcy chapter you choose to file will determine what will happen to any property that is not exempt. If you file a Chapter 7 bankruptcy the bankruptcy trustee will sell any non-exempt property and distribute the proceeds to the creditors. In contrast, if filing a Chapter 13 bankruptcy you will be able to keep everything you own but have a repayment plan to pay back creditors.
What Are Florida’s Bankruptcy Exemptions?
The federal bankruptcy code has a list of exemptions; however, some states do not use these federal exemptions. Instead, they use their code and their state exemptions. For example, Florida, like many other states, uses their state exemptions. If you are filing for bankruptcy in Florida you will have to use the Florida exemptions in bankruptcy.
Florida has very favorable exemptions for property owners and therefore homeowners usually enjoy great relief when filing for bankruptcy in Florida. Florida also has very favorable exemptions for residential property and several other exemptions that may benefit you in your bankruptcy case. Because Florida has a large number of exemptions it is a great place to file for bankruptcy if you own a lot of assets. Listed below in more detail are examples of these exemptions.
Exemptions for wages- Wages ahead of the family are entirely exempt up to $750 per week, or the greater of 75% or 30 times the federal minimum wage. This applies to both paid and wages that are not paid as well as wages deposited in a bank account during the last six months. Earnings of a person other than the head of the family are protected by 75% or 30 times the federal minimum wage. Depending on the circumstances, Federal government employees are also exempt.
Homestead Exemption- A homestead exemption can help protect a home from creditors in the event of a spouse dying or a homeowner declaring bankruptcy. Florida has one of the most free-handed homestead exemptions in the country. You can exempt an unlimited amount of equity in your home or other property covered by the homestead exemption. This applies long as the debtor has lived in Florida for 40 months or and the property isn’t larger than half an acre in a municipality or 160 acres elsewhere. The homestead exemption also includes lots with separate legal descriptions.
Personal Property Exemptions- Below are the listed examples of personal property exemptions Personal property is any property that is not considered real estate:
- Personal property up to $1,000. Personal property can include things such as recreational items, art, electronics, and other equipment and up to $4,000 if the homestead exemption is not used
- Education savings, health savings, and any savings for a natural disaster like a hurricane
- Prescribed health aids
- Some medical savings account and health savings account deposits if prepaid
- Tax credits and refunds
- Particular partnership property
Vehicle Exemptions- The Florida motor vehicle bankruptcy exemption allows debtors to protect up to $1,000 for your car and is increased if the owner of the vehicle is married.
Exemptions for pensions– Listed below are the following types of pensions and retirement funds are exempt in Florida:
- Qualified retirement plans and pensions which includes 401ks,403b’s, profit sharing and other money purchase plans, and other defined benefit plans
- Public employee retirement benefits
- Firefighter pensions
- Municipal police pensions
- Teachers’ retirement benefits
Other exemptions- Above are some of the most commonly used exemptions in Florida. Because the facts of every case may vary may be other exemptions that apply to your situation. You’ll want to ensure that you’re declaring all of the exemptions you’re entitled to by contacting a bankruptcy lawyer.
What Are Some Examples of Exempt Properties?
Personal property would be an example of a type of exempt property. As stated above, personal property is anything that is not real estate. Personal property can be art, electronics, recreational items, or furniture. Other personal property exemptions include hurricane savings, health savings, any prescription health aids, health savings account deposits, and medical savings accounts. If applying for the homestead exemption, any type of real estate would be fit under this exemption category including someone’s residence.
How Can a Bankruptcy Lawyer Help?
Whether bankruptcy is the right solution for your financial problems could depend on your situation, the type of debts you have, and how much of your assets you need to protect. If you are considering bankruptcy, you should consider discussing your options with an experienced bankruptcy lawyer. While it is possible to represent yourself “pro se” the majority of people who file bankruptcy in the United States do so with the assistance of an attorney. There are several different types of bankruptcies, and rules that go along with each one. Therefore a knowledgeable attorney will be an invaluable resource.
Because filing for bankruptcy exemptions are complex legal matters, finding the right bankruptcy attorney is important. A bankruptcy attorney can help you decide whether or not to file for bankruptcy, and what type of bankruptcy you should file.
Furthermore, if you decide to file for bankruptcy, an attorney can help ensure that your property is protected, all of your dischargeable debts are discharged, and your creditors do not violate your rights. A bankruptcy attorney will also give you additional details on what exemptions you may be entitled to and ensure you are on the right path to financial recovery.
Do I Need a Florida Bankruptcy Lawyer?
Bankruptcy is a very complicated process and filing an exemption incorrectly can lead to that property being confiscated, even if the property would have been exempt had the exemption been filed correctly. The Florida bankruptcy exemption statute must be used when filing for exemptions.
A bankruptcy lawyer knows the particulars of filing for bankruptcy and will recommend what bankruptcy exemptions are right for you. Finally, a Florida bankruptcy lawyer will know the inner workings of the Florida bankruptcy code and all the exemptions associated with it.