When filing for bankruptcy, you may be worried you will lose all your possessions. Good news for you! There are exemptions put in place to excuse certain assets from being taken. The 2 kinds of exemptions are federal and state. What you can claim as your exemption will vary from state to state. Some states offer both federal and state, and others require you only to use the state exemptions. Florida is a special state for many reasons, one of them being that you are not allowed to use federal exemptions and must use Florida bankruptcy exemptions. Let’s look at how the Florida bankruptcy exemptions work, what types there are, and what they cover.

How do the Florida Bankruptcy Exemptions work?

The type of bankruptcy you file will determine what will happen to any nonexempt assets. You will need to discuss with your lawyer which bankruptcy you are qualified for before planning on any exemptions. Although there are numerous types of bankruptcies you can file, the most common are chapter 7 and chapter 13.

• Chapter 7 Bankruptcy

When you file chapter 7 bankruptcy, your bankruptcy trustee (link to “What Is a Bankruptcy Trustee”) will collect any of the nonexempt property to sell and distribute the revenue to the creditors.

• Chapter 13 Bankruptcy

After filing chapter 13 bankruptcy, you will be able to keep your valuables, but you will be required to pay either the value of your disposable income or your nonexempt property items in your repayment plan (whichever is more).

The Residency Requirement

To qualify for the Florida bankruptcy exemptions, you must meet the residency requirements. The residency requires you to be a Florida resident for no less than the last 2 years—and in order to file the 2 years must be at least 720 days before filing. If you haven’t been a Florida resident for the past 2 years, then you can use the exemptions from the state you have lived in for the 6 months prior to 2 years ago.

For example, you just moved to the Sunshine State just over 1 year ago and are filing bankruptcy in Florida. Before you made your way here, you lived in Arkansas your entire life. When filing bankruptcy, you will need to use the Arkansas exemptions.

Types of Florida Bankruptcy Exemptions

The state of Florida has many different exemptions that could come into play if you are filing bankruptcy. Here are some of the most common ones you should know:

• Florida’s Homestead Exemption

If you are hoping to keep your house, this is the exemption you will want to claim. Florida’s bankruptcy exemption covers properties such as your home, mobile homes, burial grounds, etc. The great thing about Florida’s Homestead Exemption is that there is no limit on the equity you can have on a house as long as you have owned the property for almost 3.5 years and is no larger than ½ in the city or 160 acres outside the city.

• Florida Personal Property Exemption

The value of personal property (items such as furniture, art, electronics) are exempt up to $1000. The limit is $4000 if the homestead exemption is not used (see Wildcard Exemption). Additional personal property items that are exempt include:

  • Education savings, health savings, and hurricane savings
  • Prescribed hearing aids
  • Prepaid medical savings account and health savings account (HSA) deposits
  • Tax credits and refunds
  • Funeral costs
  • Certain items held in partnership

• Florida Motor Vehicle Exemption

Up to $1000 in equity on your motor vehicle can be exempted if you are single or filing separately. If you are married and filing jointly, this amount is higher.

Florida Wage Exemption
If you are the head of the household filing for bankruptcy, your wages will be exempt up to $750 per week or 30 times the federal minimum wage. If you are not the head of the household and are filing bankruptcy, your wages will be protected either 75% or 30 times the federal minimum wage.

Florida Wildcard Exemption
If you don’t own a home but have a lot of valuables you’d like to keep, the Wildcard Exemption might be your best bet. When you don’t own a home and file with this exemption, your personal property protection will increase from $1,000 to $4,000. You can protect and exempt items such as jewelry, savings, motor vehicles, household items, and more.

• Federal Nonbankruptcy Exemptions

Although Florida does not allow you to choose the federal bankruptcy exemptions, there are certain federal exemptions are allowed called federal nonbankruptcy exemptions. These apply to those in professions such as the military, government, or individuals who receive Social Security and they excuse the following:

  • Retirement benefits
  • Death or disability benefits
  • Survivor’s benefits

Understanding Florida Bankruptcy Exemptions

There are many Florida bankruptcy exemptions, and it’s best to speak with a lawyer to see which ones are best suited for your needs. With Parker & DuFresne, we understand every client has their own economic situation and personal needs, which is we offer an individualized approach. We work with you to provide short-term and long-term relief from filing bankruptcy to helping you rebuild your credit for future financial freedom. Contact us today for your complimentary consultation.