Bankruptcy Exemptions in Florida

Anyone facing insurmountable debt knows that it can feel like there’s no way out.  However, for some, filing bankruptcy can provide some relief.  Chapter 7 bankruptcy is the simplest, although the most thorough, form of bankruptcy.  Some property may have to be liquidated, but in return, most consumer debt can be erased, generally except for child support payments, alimony, tax debts, and most school loans. 

However, there are exemptions available, at both the federal and state level, that can help debtors protect some, or in some cases all, of their property.  Florida requires that residents use the state exemptions; but debtors should understand those exemptions before they decide to take advantage of this process.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Florida state exemption – $1,000

If that vehicle is securing a loan, the debtor must be sure to maintain those payments or the lien holder may still be able to repossess the vehicle.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Florida state exemption – unlimited for any real or personal property, mobile home, modular home, or condominium
  • Property is limited to ½ acre within the limits of a municipality or 160 acres outside of such boundaries
  • The spouse or child of a deceased owner may also claim exemption
  • Property held by a married couple under tenancy by the entirety may be exempt if only one of the partners owes a debt.  If both owe the debt, standard homestead exemptions apply.

If the property is security for a loan or mortgage, the homeowner must continue to make the agreed-upon payments or they could face foreclosure by the lien holder.

Florida allows exemptions for other forms of personal property:

• Prepaid hurricane savings accounts
• Prepaid medical savings accounts
• Prepaid college education trust accounts
• Health aids prescribed by a medical professional
• Federal income tax credits or refunds
• Funeral contract deposits (pre-need)
• Any other personal property  - up to $1,000 (subject to doubling)

Filing Schedule C of a Bankruptcy Petition

For a Florida resident to claim these exemptions, they must outline them in Schedule C, which then must be attached to the bankruptcy petition.  Details required on Schedule C include:

• A list of each property exemption claim
• The Florida statutes that apply to each exemption
• The exemption value of each claim
• The current assessed value of each claim (not the market value)

Talk to a Florida Bankruptcy Lawyer

While bankruptcy can be a solution for some consumers whose debt is out of control, there are drawbacks and the process can be complicated and difficult.  In order to realize the greatest benefit and to ensure that a petition is not delayed or any exemptions are rejected, the advice of a Florida bankruptcy lawyer can be essential.  Not only are they experts in bankruptcy law, they understand financial issues and can help debtors make wise choices throughout the process.