Florida has a very generous homestead exemption for people who live in this state and need financial relief.
To review, an exemption gives a debtor a legal right to protect his property from creditors. A valid exemption can apply both during a bankruptcy proceeding and in other cases involving debt collection.
The so-called homestead exemption allows a Florida resident to claim as exempt the entire value of his or her home, meaning she can keep it free and clear of sale by the bankruptcy trustee in order to satisfy debts.
There are some important limits to this exemption. For example, it only applies to up to 160 acres of land in rural areas and to much less acreage in urban areas. Someone who has questions about how this exemption might apply to their unique circumstances should speak with an experienced bankruptcy attorney.
There are still some limits on what bankruptcy can accomplish
However, the homestead exemption does not erase the lien of a bank or mortgage lending company. In other words, after a Chapter 7 bankruptcy concludes, the bank may still foreclose on the home and sell it at auction.
The bank may even be able to do so during the bankruptcy if it gets permission from the court.
The good news is that the discharge in bankruptcy will prevent the bank from pursuing the debtor’s other assets, including bank accounts, wages and other homes that were not mortgaged.
Moreover, a debtor who is behind in loan payments but who wants to try to protect the family home may consider filing a Chapter 13 bankruptcy. Through a Chapter 13, the debtor can propose a payment plan that will include catch-up payments on the delinquent loan.
