People who are considering bankruptcy often look forward to the financial freedom that will come, but they may also have some concerns about how the filing will impact their lives. One question that often comes up has to do with the assets they’ve accumulated.
When a person files for a Chapter 7 bankruptcy, the bankruptcy trustee has the option to liquidate non-exempt assets to pay off the person’s debts. While it’s possible, it doesn’t always happen because the trustee may realize that the available assets won’t produce enough to warrant the liquidation.
What assets are exempt from a bankruptcy filing in Florida?
Some states allow bankruptcy filers to decide if they want to use state exemptions or federal exemptions, but Florida isn’t one of those states. This is an “opt-out” state, so the only option for people here is to use the Florida exemptions, but you must be a resident of the state for at least 730 days in order to be able to use them.
One of the most important assets for most people is their home. Florida’s homestead exemption is one of the strongest in the country. The full value of equity in a home is exempt as long as the property is under 160 acres if it’s located outside of a municipality or less than half an acre in a municipality. This only applies if you have owned the property for at least 1,215 days prior to the day you file for bankruptcy.
There are also other exemptions that filers in Florida may appreciate. You can protect up to $5,000 worth of equity in one vehicle and $1,000 in personal property. People who don’t claim the homestead exemption can access up to $4,000 for an individual or $8,000 as a married couple as a wildcard exemption.
The state also has exemptions for certain retirement accounts and benefits when a person files for bankruptcy. Additionally, a certain portion of wages is exempted. Determining exactly what property is exempt can be challenging, so it’s often best to work with someone who’s familiar with these matters.
