One of the first questions that a potential bankruptcy petitioner asks is “will I lose my property?” The answer to this question is generally “No.” While neither Chapter 7 nor Chapter 13 necessarily results in the loss of all—or even most—of the bankrupt property, the United States Bankruptcy Code and Florida Statutes contain various provisions that protect some of the petitioner’s assets from attachment or liquidation by creditors.
Property that is protected from creditors’ claims is generally referred to as “exempt” property; property that can be seized or liquidated to satisfy a debt is generally referred to as “non-exempt.” Florida does not permit its residents to choose their exemptions from the exemptions enumerated in the Bankruptcy Code, but the good news is that Florida’s exemptions are relatively generous.
The basics of Florida’s exemptions
In order to use exemptions listed in Florida’s statutes, the bankruptcy petitioner must have been a Florida resident for at least two years. The principal concern of most bankruptcy petitioners is the effect of filing on the family home. Unlike most states, Florida allows a homeowner to protect 100% of the equity in the family home. The requirements for this favorable treatment are simple: the petitioner must have owned the home for 1,215 days prior to filing the petition; the property cannot exceed ½ an acre in size if the land is urban; rural property cannot exceed 160 acres. A married couple that is filing a joint petition may double these allowances. Floridians are also allowed to protect up to $1,000 of personal property from creditors.
The Florida wildcard exemption
The Florida wildcard exemption allows debtors to identify up to $4,000 worth of personal property as exempt from creditors’ claims. This exemption often helps a debtor protect an automobile from seizure. If the debtor has $2,000 equity in the car, the motor vehicle exemption of $1,000 is insufficient. By using a portion of the wildcard exemption, the debtor can protect the entire equity of $2,000.
Other Florida exemptions
Florida allows a debtor to claim the following exemptions:
- $1,000 for personal property
- Wages up to $750 per week or 30 times the federal minimum wage, whichever is greater
- $1,000 in equity for an automobile
- Pensions and retirement accounts
Federal non-bankruptcy exemptions
Federal law protects certain assets from creditors even though the exemptions are not listed in the Bankruptcy Code. These exemptions are called Federal non-bankruptcy exemptions. They include retirement benefits, death or disability benefits and survivor’s benefits. A person must have served in the military or worked for the government to be eligible for these exemptions. Social security benefits are also exempt from creditors’ claims.
Solid legal advice from a knowledgeable attorney
Even though the Florida list of exemptions is relatively straightforward and the federal list of exemptions is not an option, consultation with an experienced bankruptcy attorney is a wise option before submitting the bankruptcy petition to the court.