When you decide to file for Florida bankruptcy, you may be worried about your personal assets, such as your home and motor vehicle. Most people would like to keep those items and, therefore, worry about how bankruptcy will affect ownership. However, most people have little to worry about. Florida exemptions are in place and can be used to protect property during the bankruptcy process.

A bankruptcy exemption dictates that filers can keep the asset in question, also known as “exempt” property.

Florida Exemptions vs. Federal Exemptions

Although the federal Bankruptcy Code has specified bankruptcy exemptions, these exemptions aren’t applicable in Florida.
Florida residents must use the state exemptions.

Caveat: If an individual has not been a permanent Florida resident for the 2-year period immediately before a Chapter 7 bankruptcy filing, the exemption laws of the state where they lived prior apply – and federal exemptions may apply.

Florida Bankruptcy Exemptions: Filing bankruptcy rarely leaves the filing party penniless and without personal belongings. Filers are permitted to keep some property to assist with a successful fresh start once the bankruptcy is complete. Florida exemptions nearly always prevent assets such as a car and bank account from being sold.

In a Chapter 13 bankruptcy, individuals may also reduce the amount due to unsecured creditors by exempting the equity in the property.

The Florida Homestead Exemption

One of Florida’s most renowned and generous exemptions is the homestead exemption. This exemption allows residents to protect an unlimited amount of home value. Therefore, if an individual has equity in their home (the home is worth more than the owed amount), Florida’s homestead exemption allows them to keep their home under a Chapter 7 bankruptcy. The Florida Homestead Exemption Statute is the main legislation that determines eligibility for retaining a home.

There are conditions:

  • The property can’t be larger than a half-acre in a municipality OR 160 acres if located elsewhere
  • the filing party must have owned the property for 1,215 days before the bankruptcy filing
  • only “natural persons” can use the bankruptcy homestead protection in Florida. (no properties owned by corporations, partnerships, LLCs, or irrevocable trust)

Wild Card Florida Exemptions

Those who do not benefit from the Florida homestead exemption may claim a personal property exemption. The exemption is up to $4,000 for an individual filer and $8,000 for joint filers. Known as the “bankruptcy wildcard exemption,” filers have the discretion to select any property they wish to exempt.

Personal Property Exemptions

Personal property exemptions cover your vehicle, non-retirement bank accounts, and most personal possessions (other than the home).
Some of the exemptions that Florida filers may access in a Chapter 7 bankruptcy or Chapter 13 case include:

Motor Vehicle: If you are struggling financially, you will likely need ongoing access to your vehicle for job interviews or getting to and from a job. Florida has a motor vehicle exemption that permits up to $1,000 in equity in the vehicle. If you have over $1,000 in equity in your car, you might be able to cover the additional amount with the wildcard exemption. Be sure to ask your bankruptcy attorney about eligibility. (Joint filers can typically receive $2,000 in exemptions.)

As of this writing, Florida courts utilize the Kelley Blue Book when determining a vehicle’s value. If the car is sold before a bankruptcy filing, this value will be utilized to determine if the vehicle was sold for approximate fair market value – in other words, to prove that the “sale” wasn’t an attempt to simply transfer the vehicle out of your name to protect it from creditors.

You can also protect the following personal property under Florida bankruptcy exemptions:

  • Personal property is exempt up to $1,000, or $4,000 if the homestead exemption was not used. Personal property often includes items such as electronics and furniture.
  • Education savings, hurricane savings, and health savings
  • Prescribed health aids
  • Tax refunds and credits
  • Prepaid medical savings account/health savings account deposits

Click here to read Florida Statutes pertaining to Bankruptcy.

Financial Exemptions

Pension Exemption: This exemption may apply to pensions or retirement funds, such as IRAs, ERISA-qualified pensions and retirement plans, 403(b)s, 401(k)s, and public employee retirement benefits. Typically, any pension that is covered under federal tax exemptions is considered fully exempt under Florida law as well.

Wage Exemption: If the filing party is the head of their household, Florida laws protect their wages up to $750 a week/75% of the paycheck/30 times the federal minimum wage (whichever is highest). The exemption includes wages that have been deposited into the filer’s bank account at any time during the last six months.

Public Benefit Exemptions: Bankruptcy exemptions in Florida protect public benefits, such as social security, veterans’ benefits, reemployment assistance, unemployment compensation benefits, workers’ compensation, and crime victims’ benefits.

Insurance: Under Florida statute, death benefits payable to a specific beneficiary, annuity contract proceeds (excluding lottery winnings), life insurance, disability, and/or illness benefits are exempt.

Alimony and Child Support: These payments are reasonably necessary for the ongoing support of the bankruptcy filer and any of their dependents and are therefore exempt.

These exemptions do not represent the full roster of exemptions available to Florida residents, and some have eligibility restrictions. Therefore, anyone considering filing for bankruptcy in Florida should strongly consider hiring a qualified bankruptcy attorney to guide them through the process.

Experienced Sarasota, Florida Bankruptcy Attorneys

Richard V. Ellis has been helping Sarasota residents navigate bankruptcy successfully for decades. When you file for bankruptcy, you want to make sure that you are taking advantage of every benefit the state provides—call today to learn more.