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Understanding exemptions for Chapter 7 bankruptcy

On Behalf of | Sep 16, 2021 | Chapter 7 Bankruptcy

If you are drowning in debt, filing bankruptcy may be an option for you. If a lot of your debt is of the unsecured type, Chapter 7 eliminates most of it.

You may fear losing all your property and assets if you file for bankruptcy. However, Florida allows for certain things to be exempt, which means you may get to keep those items at the end.

Secured vs unsecured debt

Before filing, it is important to understand the difference between secured and unsecured debt. According to FindLaw, unsecured debt is the kind that Chapter 7 bankruptcy will most likely eliminate or significantly reduce. Examples of this type of debt are credit cards, medical bills, court judgments and some income taxes. Bankruptcy does not eliminate certain unsecured debt, such as most student loans and unpaid child support.

Secured debt uses the property of some kind as insurance, and the bank can repossess the property for nonpayment. Examples of this debt are mortgages, car loans and jewelry loans. Taking advantage of the state’s exemption allowances may help you keep some of your secured debt.

Assets that are exempt

According to Tampa Bay Newswire, in order to qualify for the state’s exemptions, you must have been a resident for a minimum of 24 months. One of the advantages of Florida’s bankruptcy exemptions is the homestead exemption. You enjoy an unlimited exemption if you have owned the property for at least 1,215 days, and you get up to a $170,350 exemption if you have owned it for less time.

Other exemptions include:

  • $1,000 for personal property, or $4,000 if you do not use the homestead exemption
  • $1,000 for automobile
  • Most retirement accounts
  • Health savings accounts
  • Most government benefits
  • Disability benefits and income

If you owe more than the exemption allows, such as for a vehicle, the court will take away the property and liquidate it to help pay off your debts.


Kingcade & Garcia | A Miami Law Firm