People always ask: “Can I keep my stuff if I file bankruptcy?
The answer is YES with proper bankruptcy planning you can keep all your things. If you have too many expensive assets bankruptcy may not be for you, but for most people we find a way. Sometimes the decision of whether to file a Chapter 7 (Fresh Start) or a Chapter 13 (plan of repayment over 3-5 years) depends on the assets you have.
I will focus on Chapter 7 in this post. The goal is to file what we call a “no asset” bankruptcy so you can discharge all your debt (with some limitations -for another post) and keep all your valuables). This is done by using the bankruptcy exemptions for your state. Exemptions are items or the value of those items up to a certain monetary limit. Some states have a choice between Florida exemptions and Federal. In Florida you have to use Florida Exemptions to protect your property.
For example, the main Florida Bankruptcy Exemptions as written very specifically on Nolo.com by by Kathleen Michon JD from Florida statutes, the Florida Constitution and the bankruptcy code are as follows with some edits by me:
1) Florida’s Homestead Exemption
Florida has one of the most generous homestead exemptions in the country. You can exempt an unlimited amount of value in your home or other property covered by the homestead exemption. However, the property cannot be larger than half an acre in a municipality or 160 acres elsewhere.
Length of Ownership Requirement for Homestead Exemption
In order to claim the full value of the homestead exemption in Florida, you must have owned the property for at least 1,215 days prior to the bankruptcy filing. If you can’t meet this requirement, your homestead exemption is limited by federal law.
2) Florida Personal Property Exemptions
The following categories of personal property are exempt:
Personal property up to $1,000. Personal property may include such items as furniture, art, and electronics. (Art. 10 Sec. 4, Fl. Constitution)
This is $4000 if you don’t need to use the homestead exemption (for example you rent and do not own your home). See Wild Card Exemption below for further detail.
These double for a joint husband and wife filing.
3) Education savings, health savings, and hurricane savings. (Fl. Stat. 222.22
4) Prescribed health aids. (Fl. Stat. 222.25)
5) Prepaid medical savings account and health savings account deposits (Fla. Stat. Ann. 222.22(2)
6) Florida Motor Vehicle Exemption
You can exempt up to $1,000 in motor vehicle equity, more if you are married and filing jointly.
7) Exemptions for Wages in Florida
Wages of a head of family are fully exempt up to $750 per week. This applies to paid and unpaid wages and wages deposited in a bank account during the last six months. (Fl. Stat. 222.11.) Earnings of a person other than the head of family are protected to a lesser amount under the Consumer Credit Protection Act, 15 U.S.C. 1673.
Federal government employees’ pension payments that are needed for support and were received up to three months prior to the bankruptcy. (Fl. Stat. 222.21.)
8) The Florida Wildcard Exemption
A debtor may claim up to $4,000 of personal property as exempt if the debtor does not use the homestead exemption. (Fl. Stat. 222.25.)
9) Exemptions for Pensions in Florida
The following types of pensions and retirement funds are exempt in Florida:
ERISA qualified retirement plans and pensions (including 401(k)’s, 403(b)’s, profit sharing and money purchase plans, SEP and SIMPLE IRA’s, and other defined benefit plans) are fully exempt. (11 U.S.C. Section 522 and Fl. Stat. 222.21.)
IRA’s and Roth IRA’s are exempt up to $1,171,650. (11 U.S.C. Section 522(b)(3)(C)(n).)
Benefits payable under the Florida Retirement System. (Fl. Stat. 121.131.)
State and County officers and employees retirement system benefits. (Fl. Stat. 122.15.)
Firefighter pensions. (Fl. Stat. 175.241.)
Municipal police pensions. (Fl. Stat. 185.25.)
Teachers’ retirement benefits. (Fl. Stat. 238.15.)
10) Exemptions for Public Benefits
Although Florida opted-out of the federal bankruptcy exemption scheme, Section 222.201 allows the federal exemptions listed under Section 522(d)(10) of the Bankruptcy Code. These exemptions include: veterans benefits, social security benefits, reemployment assistance, and local public assistance benefits. (Fl. Stat. 222.201
Workers compensation benefits are exempt. (Fl. Stat. 440.22.)
Crime victims’ compensation benefits are exempt, unless the debtor is seeking to discharge debt for treatment of related injury. (Fl. Stat. 960.14.)
11) Alimony and Child Support Exemptions
Alimony and child support, to the extent reasonably necessary for the support of the Debtor and any dependent of the Debtor, are exempt. (Fl. Stat. 222.201.)
12) Exemptions for Insurance Policies and Annuities
The proceeds of a life insurance policy payable to a specific beneficiary are fully exempt. (Fl. Stat. 222.13.)
The cash surrender value of a life insurance policy and the proceeds of an annuity contract are fully exempt. However, annuity proceeds resulting from lottery winnings are not exempt. (Fl. Stat. 222.14.)
Disability income benefits are exempt. (Fl. Stat. 222.18.)
Fraternal benefit society benefits are exempt. (Fl. Stat. 632.619.)
13) Personal Injury Exemptions
Damages to employees for injuries or death incurred in hazardous occupations are exempt. (Fl. Stat. 769.05.)
14) Other Exemptions
Above I have listed the most commonly used exemptions in Florida. There may be other exemptions that apply to your situation. To find out all that apply to you can discuss your situation with me. Please feel free to ask questions and contact me in any way if you need my help. More information to be continued….
