The purpose of bankruptcy is to allow a debtor to work out his finances without an overwhelming burden. But how will a debtor improve his finances if he loses all his property when he files for bankruptcy?
How to Use Bankruptcy Exemptions for Protecting your Property
Your property will become a part of your bankruptcy estate when you file a Chapter 7 or a Chapter 13 case. That means an individual can prevent their property through bankruptcy exemptions. Furthermore, they can also slash the amount they need to hand over to unsecured creditors as per a Chapter 13 repayment plan by exempting the equity in their property.
But to receive these benefits, you must ‘claim’ the exemptions when you are filing for bankruptcy. When claiming the exemptions, you need to list each of these exemptions. While an amendment can correct wrong omissions or exemptions, a trustee could object to the amended exemptions if he believes a debtor is attempting to hide the property. Hence, it is crucial that you work with expert bankruptcy lawyers who have a complete understanding of bankruptcy laws who understand how to use bankruptcy exemptions to receive the maximum protection of property, as per Florida law.
While a few states allow debtors to choose between state and federal exemptions, Florida ‘opts out’ of federal bankruptcy exemptions. That means debtors living in Florida can choose bankruptcy exemptions only when they qualify for state exemptions.
Who Can Make a claim?
A debtor must be a Florida resident for a minimum of 730 days before he can file a bankruptcy case to become eligible for the state’s bankruptcy exemptions. In case a resident does not comply with the residency requirement, his residency during the 180 days before the two-year period will evaluate the bankruptcy exemptions he has to use in his bankruptcy case.
That means you may file a bankruptcy case in Florida while using exemptions from another state.
How to Protect Property in Bankruptcy with Florida Exemptions
Bankruptcy exemptions in states vary from other state exemptions and federal exemptions. However, other states often criticize Florida’s homestead exemption. Florida laws allow an individual to exempt all the equity in his home or other real estates eligible for a homestead exemption.
To qualify for unlimited homestead exceptions, there are two primary requirements. First, you must be the owner of the property for at least 1,215 days before you file for the bankruptcy claim. Second, your property should not exceed half an acre in a municipality or 160 acres anywhere else. You can claim the homestead exemption if you meet these requirements.
Apart from protecting your home, you can also safeguard wages and retirement accounts through Florida bankruptcy exemptions. Some of the bankruptcy exemptions you can utilize for protecting your property in Chapter 13 of Chapter 7 are:
- $4,000 in personal property (in case you don’t use your homestead exemption)
- $1,000 for a motor vehicle
- $1,000 for personal property
- Most retirement accounts
- Disability income and benefits
- A majority of government benefits and public benefits
- Health savings accounts
Debtors who file bankruptcy in Florida get to keep their property in most cases. But remember to choose professional and expert bankruptcy lawyers when filing a claim to avoid making any mistakes.
Remember that filing bankruptcy may not result in losing your property. You can protect your property from creditors when you file for bankruptcy in Florida.
Are you looking for professional advice to file a bankruptcy claim? Get in touch with Dsouza and Strachan Law. Our team of experienced attorneys will be happy to guide you so you can choose the best possible solutions.