Understanding Florida's Bankruptcy Exemptions
When I filed bankruptcy back in 2008, I was so glad I did not listen to people that tried to scare me about filing bankruptcy or debt settlement scams on the web that warned me that it was the worst thing to do. Were they ever wrong! One of the main concerns people have when it comes to filing for bankruptcy is the fear of losing their assets, such as homes, cars and valuables. But in fact, the majority of Chapter 7 cases are ‘no-asset cases,’ which means you do not have to turn over any property or cash to the bankruptcy trustee. The stigma surrounding bankruptcy can sometimes be what keeps people from filing for bankruptcy, oftentimes those who need it the most. In a recent blog, I shared my own personal bankruptcy story,, and the day I became true with myself about my debt and a reflection of where I am today.
All states have their own set of bankruptcy exemptions, which cover certain property that is otherwise “exempt” from liquidation in Chapter 7 or Chapter 13 bankruptcy. The federal government has a set of exemptions, and while many states allow you to choose between the state or federal exemptions, in the State of Florida, you can only use the Florida bankruptcy exemptions. However, this works to your favor, as a Florida resident, since our state’s exemptions tend to be very favorable to its residents.
Requirement for Using Florida Bankruptcy Exemptions
Certain requirements do exist for an individual filing for bankruptcy in the State of Florida to claim any of the state’s exemptions. You must reside in Florida for at least 730 days prior to filing the bankruptcy petition. Occasionally, someone may not have been living in any one state during this two-year period, so they are required to use the exemptions of the state he or she lived in for most of the 180-day period of time immediately before filing for bankruptcy.
Florida Homestead Exemption
It has been said that the State of Florida has one of the most generous homestead exemptions out of all 50 states. Under the Florida homestead exemption, you can exempt an unlimited value in your home or other property that would be covered by the homestead exemption. To be allowed to utilize the Florida homestead exemption, you must have owned the property for at least 1,215 days prior to filing for bankruptcy, which is just over three years. If you have not owned the property for that long, you can utilize the federal exemption cap.
Florida Personal Property Exemptions
The State of Florida also offers certain personal property exemptions for various categories, including furniture, electronics, and other items of personal property. These exemptions include:
- Personal property, including furniture, art or electronics, up to $1,000 in value;
- Health savings;
- Hurricane savings;
- Education savings;
- Prescribed health aids;
- Money in a health savings account;
- Tax refunds or credits;
- Funeral costs.
Florida Motor Vehicle Exemptions
If you are facing financial struggles and are considering filing for bankruptcy, odds are you will need access to your car between work and home. Florida does allow for a motor vehicle exemption, which allows the car’s owner to exempt up to $1,000 in equity in the car. This amount may be more if you are married and file for bankruptcy jointly. Most people either owe more than the car is worth or are even upside down so the Court does not care about the vehicle and the client can keep paying it with no problem.
The State of Florida also exempts wages if you are the head of the household, in the amount of up to $750 per week, or the greater of 75 percent or 30 times the federal minimum wage. This exemption will apply to wages that are both paid and unpaid, as well as wages that have been deposited into your bank account anytime during the last six months.
Florida offers various exemptions for those with pensions or retirement funds, including IRAs, ERISA qualified retirement plans and pensions, 401(k)s, 403(b)s, public employee retirement benefits, pensions for municipal police officers and firefighters, state and county officer retirement benefits, and teacher retirement benefits. If you have any retirement benefits or pensions, talk with a bankruptcy attorney on what can be done to protect these assets.
Public Benefit Exemptions
Florida offers exemptions for various public benefits, including veterans’ benefits, social security, reemployment assistance, workers’ compensation and unemployment compensation benefits, and crime victims’ benefits.
Exemptions for Family Law Orders
Because certain family law orders are considered important as a matter of public policy, alimony and child support are considered exempt to the extent that they are reasonably necessary for the support of the filer and any of his or her dependents.
Personal Injury Lawsuit Exemptions
If you were injured as an employee working in a hazardous occupation, the damages you received for your injuries may be exempt under Florida bankruptcy exemptions. Any proceeds that you may receive from a lawsuit or pending legal claim is not exempt, however, unless you choose to apply these proceeds under the wildcard exemption.
Insurance Policies and Annuities Exemptions
Florida exemptions allow filers to exempt proceeds of a life insurance policy that is payable to a specific beneficiary, proceeds of an annuity contract or cash surrender value of a life insurance policy, except for annuity proceeds from a lottery win, disability income benefits, and fraternal society benefits.
The Wildcard Exemption
The wildcard exemption can be quite helpful for any additional property that does not otherwise fall under one of the previously-mentioned exemptions. Under Florida law, you may claim up to $4,000 of other personal property as exempt, but this exemption only qualifies if you did not otherwise use the homestead exemption.
If you have questions on this topic or are struggling with insurmountable debt, we advise sitting down with an experienced Orlando bankruptcy attorney for a free consultation- particularly if you are facing wage garnishment or have a collection lawsuit pending. A bankruptcy attorney can advise you as to all the options available to you and detail the pros and cons of each, giving you the best advise based on years of experience helping those in similar financial circumstances.