Florida Bankruptcy Exemptions
Chapter 7 bankruptcy is what most people would think of when they think “bankruptcy.” It is the process by which individuals have many or all of their debts discharged. This is achieved through a liquidation process by which many of the debtor’s assets are sold. The proceeds from this liquidation are then used to satisfy creditors. Whatever debt is leftover is, in many cases, then wiped out, giving the debtor a clean slate.
This process may seem frightening, having many of your possessions sold off to pay creditors. However, many of your assets may actually be protected from liquidation by Florida bankruptcy exemptions. This should give comfort to those considering bankruptcy as an option. While it is true that some of your assets will be sold, many will not be giving you the tools you need to reshape your future.
The most important Florida bankruptcy exemption is the homestead exemption with roots in Florida’s Constitution. Florida’s exemption for equity in your home is extremely friendly to debtors. It exempts an unlimited amount of home equity from the liquidation process. This means that, in most cases, you will get to keep your home and everything that you have paid into it. There are some limitations, however. The property must be your primary residence, you must have owned a home in Florida for at least 40 months, and the property may not exceed one half acre in size inside of a municipality, or 160 acres outside of a municipality. Even if you have not owned a home in Florida for the requisite 40 months, you are still entitled to have home equity exempted up to $146,500.
Also important to someone trying to recover from a precarious financial situation is the fact that up to $750 in wages per week may be exempted from the process. Likewise, equity in an automobile up to $1,000 and all personal property with value not exceeding $1,000.
Don’t fear that your planning and saving for the future will be for naught, either. Prepaid medical savings accounts, health savings accounts (HSA), funeral deposits, and college trust accounts are exempted as well, in addition to other similar types of accounts. Furthermore, many types of retirement accounts such as 401(k)s are also protected, so don’t worry that you are giving up your future in pursuing bankruptcy.
Even hurricane savings are exempted from the liquidation process, to give the whole thing a very Floridian twist (and raising some interesting asset protection questions).
And in the spirit of keeping things fair, many pensions are exempt, as are alimony and child support payments to the extent that they are necessary for your support. Likewise, worker’s compensation benefits, disability benefits, veteran’s benefits, and social security benefits are in most cases protected by Florida bankruptcy exemptions as well. So if you worked for many years an earned your pension, or were injured and are being compensated for your lost earnings capacity, do not fear bankruptcy.
Given the multiplicity of these Florida bankruptcy exemptions and the importance of keeping as many assets as possible, anyone considering a Chapter 7 bankruptcy should hire experienced counsel. If you, or someone you know, are considering a Chapter 7 bankruptcy, or are struggling with excessive debt, contact the Jacksonville bankruptcy attorneys at the Adam Law Group to discuss your situation.