What Are The Bankruptcy Exemption Rules In Florida?

What Are The Bankruptcy Exemption Rules In Florida?

Congress’s intent when enacting the bankruptcy code was to balance the competing interests of the consumer receiving a resolution or reorganization of burdensome financial debt with the creditors’ interest in receiving payments for money loaned.   Congress when passing the bankruptcy code and rules balanced the principle of a debtor’s fresh start with the creditor’s right to get repaid and created a set of property exemptions. These exemptions place a limit on individuals filing bankruptcy and how much assets they can keep. The exemptions are generally separated into exemptions that affect the real property and personal property. Exemptions determine what property (such as a home, car, or retirement account) you can keep in a chapter 7 bankruptcy, and how much you must pay to certain creditors in a chapter 13 bankruptcy. The federal government created a set of exemptions intended to be used by all states under §522. However, they chose to include an opt-out provision for states that didn’t want to use the federal exemptions.

The Florida legislator in our state constitution chose to accept this opt-out provision meaning that bankruptcy filers in Florida are not bound by federal exemptions, but the ones chosen by state law. Most of the Florida exemptions can be found in Florida state statute chapter 222. Florida has one of the countries’ most favorable homestead exemptions. Florida law provides an unlimited amount of protection on a debtor homesteads positive equity. This protection also included mobile homes and condominiums.  The only restriction on Florida’s homestead exemption is the size of the property. In a municipality, a property can receive homestead protection as long as the property lot is ½ acre or less. Outside a municipality, the property size can be up to 120 acres of contiguous land. The spouse or child of a deceased owner can claim the protection as well. The Florida exemptions are available in both chapter 7 and chapter 13 and the difference of chapter filed does not affect the usage of these protections.

One of the most frequently used exemptions is the motor vehicle equity exemption. In Florida, each debtor can claim up to $1,000 of positive vehicle equity in a vehicle. An example of this is if your car is valued at $5,000 with no loan on the property, you can choose to protect up to $1,000 of the vehicle equity leaving $4,000.

Another popular exemption to use the general personal property exemption. Under this exemption, a debtor can choose to protect up to $1,000 of personal property. If you have joint debtors, you can double up on the previously mentioned exemptions except for the homestead exemption that only applies to one property you reside or dwell on.

If a debtor does not use their homestead property protection, as in the case of renters or individuals surrendering their real property, the debtors can chose to a special exemption called the wildcard exemption that allows for an additional $4,000 of personal property to be exempted. This also applies to mobile home homestead. Under that exemption, you can protect all the equity in your homestead property and still choose to elect to apply the wildcard exemption to get extra protection for your personal property. This can only be done if you own the mobile home but not the land underneath.

Florida property law also provides our state’s citizens with a special protection available to married spouses that jointly own property called tenancy by the entireties. Property, either real or personal, is fully exempt as to the creditors of a single spouse. This means that creditors of only one spouse cant attach to the property if the property is owned by both married spouses.

Lastly, one of the other most important bankruptcy exemptions used in bankruptcy is the retirement account exemption. Most retirement accounts whether voluntary or pensions are protected in Florida up to one million dollars. One of the requirements for a retirement account to be exempted is that the account must be ERISA qualified. There are many other property exemptions available in bankruptcy to filers in Florida this article only describes the most commonly and frequently used exemptions.

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