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Bankruptcy Exemptions in Florida

One of the underlying themes of the bankruptcy laws in Florida is that a debtor should be allowed a “fresh start” after successfully completing the bankruptcy process. Consistent with this theme has been the development of Florida’s bankruptcy exemptions. When an individual files for bankruptcy, a bankruptcy estate is created. When an item is claimed as exempt, in essence that item is removed from the bankruptcy estate and is no longer available to satisfy the claims of the creditors.

Many people go into the bankruptcy process terrified that they will lose their home, cars, or other personal property. Exemption statutes permit a debtor to keep a certain amount of property, and are one way that individuals can protect their assets when they file for a Chapter 7 or 13 bankruptcy.

Although the Federal bankruptcy law provides a list of uniform exemptions, it allows for individual states to opt out of these exemptions. Florida has taken advantage of this provision and has developed its own exemptions independent of the bankruptcy code. In order to be eligible for Florida’s bankruptcy exemptions, an individual needs to have been a permanent resident of the state of Florida for two years immediately preceding the bankruptcy filing date. If you have not been a permanent Florida resident for this time period, your bankruptcy exemptions will be those from the state in which you were previously domiciled.

Florida is considered by many to have generous bankruptcy exemptions. The most notable of which is Florida’s Homestead Exemption. Guaranteed in the state constitution, with some exceptions, Florida has an unlimited homestead exemption which allows you to keep your home out of the bankruptcy estate. In order to qualify for this exemption, you must have owned your home for more than 1,215 days. If you have not owned your residence for this amount of time, Florida still allows you to claim this exemption, however this amount is limited to $136,875 of equity per person. If a married couple files together, and they both are on the deed to the house, this amount is doubled. The Homestead Exemption, however, is limited to homes that are situated on a ½ an acre of land if you live in a municipality or 160 acres if you live outside of a municipality.

Florida law also provides for an automobile exemption which allows you to keep $1,000 worth of equity in a vehicle. There is also a general exemption which can be applied to any of your personal property. The value of this exemption depends on whether you take advantage of the Homestead Exemption or not.

If you use the Homestead Exemption to keep your home, you are limited to $1,000 of personal property per person. However, if you are surrendering your home, you are given an additional exemption of $4,000 for a total exemption of $5,000 for personal property.

Our clients are often surprised to learn that a lot of other property interests are also exempt from the bankruptcy estate, and thus protected from creditors. Certain types of life insurance policies along with retirement plans might be exempt from the bankruptcy estate. With some exceptions, this includes 401k, IRAs, and most pension plans. Bankruptcy laws can also prevent creditors from seizing your retirement, disability, and other types of government assistance that you might receive in the future.

Although Florida does have generous bankruptcy exemptions, in many cases there will be non-exempt property. The non-exempt property becomes part of the bankruptcy estate and a trustee will be appointed to administer it. The non-exempt property that has any value will then be sold and repaid back to the creditors.

Applying exemptions correctly is one of the most important aspects of preparing a bankruptcy petition. At the Martin Law Firm we analyze every case carefully in order to maximize the amount of property that you are allowed to keep under the bankruptcy laws. Making sure that you receive the maximum amount of exemptions is just one of the ways that we can protect your assets when you file for Chapter 7 or Chapter 13 bankruptcy.

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