The bankruptcy exemptions are important parts of the bankruptcy system. During a Chapter 7 bankruptcy, exemptions determine what property you can keep when filing for bankruptcy. This includes things such as your home, auto, personal belongings, pension and other property.
If certain property is deemed exempt, you are allowed to keep it both during and after your bankruptcy. If the property is nonexempt, then the trustee can sell it off in order to pay your creditors. During a Chapter 13 bankruptcy, the exemptions determine what you have to pay to your nonpriority, unsecured creditors.
If you are thinking about filing bankruptcy, it is important to understand how exemptions work and learn what property is considered exempt.
Federal Bankruptcy Exemptions
While the bankruptcy code has established a list of federal bankruptcy exemptions, each individual states determine if residents can use them. Florida doesn’t allow residents to use the federal bankruptcy exemptions. Instead, you must use the Florida exemptions in your bankruptcy.
The good news is, Florida’s bankruptcy exemptions are favorable to residents of the state, and they include unlimited exemptions for the cash surrender value of their life insurance policy, annuities, and homestead.
Residency Requirement for Using Bankruptcy Exemptions
If you want to be eligible to use Florida’s exemptions, you have to have lived in the state for a period of at least 730 days before filing your petition. There is actually a complicated formula for determining this and if you have moved during the two to three year period before filing, then you will need a bankruptcy lawyer to help you make this determination.
The Homestead Exemption in Florida
The state of Florida has an extremely generous homestead exemption. You also have the ability to exempt an unlimited amount of value in the home, or in other property that is covered under the homestead exemption. That’s right – you could own a million dollar mansion and keep in in a bankruptcy!
However, there are limits on the size of the property: it cannot be bigger than a half of an acre in a municipality or 160 acres in other locations.
To claim the full value of the Florida homestead exemption, you have to have owned the property for a period of at least 1,215 days before filing for bankruptcy. If you are unable to meet this requirement, then the exemption is limited according to federal law. Again, if you have made a recent move, you will need the advice of an experienced bankruptcy lawyer to help you make the most of your homestead exemption.
Personal Property Exemptions in Florida
There are certain types of personal property that are exempt in the state of Florida, which include:
- Personal property of up to $1,000 including electronics, art, and furniture. This may not seem like much of an allowance, but all property is valued at garage sale value. How much money could you raise by selling everything in your house at a garage sale?
- Hurricane savings, health savings, and education savings – unlimited amount.
- All prescribed health aids
- Any prepaid medical savings accounts
Motor Vehicle Exemption in Florida
You also have the ability to exempt up to $1000 in your auto equity. If you are married and filing jointly, then the amount is more. This is the stingiest exemption and can create the most problems for individuals with paid off vehicles. All vehicles are valued by the NADA “blue book.” Check the value of your care at www.nada.com.
In Florida, there are other given exemptions for those filing bankruptcy, as well, which include:
- Wages – 100% for “head of household, ” otherwise up to 25% of your wages in most cases.
- Roth IRAs and IRAs are exempt up to a certain amount
- Firefighter pensions
- Teacher’s retirement benefits
- Municipal police pensions
- County and state officers retirement system benefits
- Benefits paid by the Florida retirement system
If you are thinking about filing for bankruptcy, it is best to retain the services of a bankruptcy attorney. You can learn more about bankruptcy by contacting Orlando personal injury attorney Badgley Law Group.