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Understanding Bankruptcy Exemptions In Florida

The bankruptcy process is complicated and unclear. The last thing that an individual who is facing bankruptcy wants to do is lose all he or she owns.

However, exemptions do exist by law that protect the debtor’s property, and it is important that these exemptions be understood before they are used.

The Bankruptcy Estate

Before exemptions can be understood, the bankruptcy estate must first be understood. In order for debts to be discharged through a bankruptcy, many times, the debtor’s assets must be sold to pay off as much as can be paid on those debts.

This means that the bankruptcy trustee has the power to seize many of the debtor’s assets, and these become part of the bankruptcy estate. However, he or she should not be in fear of losing all property owned. Exemption laws exist to allow debtors to keep certain pieces of property free from bankruptcy.

Can Federal Bankruptcy Exemptions Be Used?

A list of federal bankruptcy exemptions are available in most situations, but the state’s bankruptcy law will first determine whether these federal exemptions can be used.

Several estates allow debtors to choose between using the federal and the state’s exemptions, but many states will require the debtor to utilize the state’s exemptions and not the federal. Florida does not allow residents to use the federal bankruptcy exemptions. No matter what, Floridians are required to use the state exemptions.

Requirements to Use Florida Exemptions

To use Florida exemptions, the filer must have been domiciled for at least 730 days before filing the bankruptcy petition.

If the debtor was not living in one specific state for the two-year period before filing the petition, the debtor would use the exemptions for the state where he or she lived for the most recent 180-days before the two-year period immediately before the filing.

Florida Homestead Exemption

The Florida Homestead Exemption allows the homeowner to exempt an unlimited amount of value in the home or property that is covered by the homestead exemption. One qualification is the property cannot be more than a half an acre in a municipality or 160 acres in another location.

Also, the debtor must have owned the property for at least 1,215 days before the bankruptcy filing. If the debtor is not able to meet these statutory requirements, then the exemption is limited by federal law.

Personal Property Exemptions

Debtors are also able to claim personal property exemptions, including the following:

• Debtors can exempt personal property up to $1,000 in value. This property can include artwork, electronics, and furniture.
• Tax credits and refunds can qualify as an exemption.
• Prepaid medical savings account and health savings account deposits are also included as an exemption, as well as prescribed health aids.
• Health savings accounts, hurricane savings and education savings accounts are similarly exempt.
• Funeral costs per the Florida Preneed Funeral Contract Consumer Protection Trust Fund are also included as an exemption.
• Under Fla. Stat. Ann. §§ 620.153, 620.8307, certain partnership property is also included.

Florida Motor Vehicle Exemption

A person filing for bankruptcy can exempt up to $1,000 in the equity in his or her car, meaning the difference between what the car is valued at and what is owed on the car.

Florida Wildcard Exemption

In addition, if the debtor does not have a home and did not use the homestead exemption, he or she can claim up to $4,000 for items of personal property.

Exemptions For Wages, Pensions

The wages of the head of a family are exempt up to $750 per week or the greater of 75 percent or 30 times the federal minimum wage. This exemption applies to both paid and unpaid wages that are deposited into a bank account during the last six months.

If someone is not a head-wage earner in the family, that person’s wages are protected by the higher of 75 percent or 30 times the federal minimum wage. Florida law also holds specific exemptions for pension payments that are needed to support the debtor, depending on when they were received and through what type of pension plan.

Exemptions For Child Support And Alimony

Florida also exempts money received for alimony and child support to the extent that money is reasonably necessary to support both the debtor and any dependent of the debtor.

Contact RLC Lawyers & Consultants Today

At RLC Lawyers & Consultants, we are here to walk you through the complicated process of bankruptcy. To schedule your free consultation, please call us at (561) 571-9610 today.