One of the most common concerns when people file for bankruptcy relief is whether they will lose their property. The U.S. Bankruptcy Code was designed to help people who could not afford to pay their debts. It includes exemptions that protect the property people need to recover and rebuild after a financial crisis. In this blog, our Florida bankruptcy lawyer discusses asset protection when filing for bankruptcy.
What Property Can I Keep When Filing Bankruptcy in Florida?
When you file for bankruptcy relief in Florida, you can claim specific property as exempt. You get to keep exempt property at the end of your bankruptcy case. The exempt property in your bankruptcy case depends on several factors, including the type of property, the chapter of bankruptcy you file, the asset’s value, and whether bankruptcy exemptions protect the property.
What Are Bankruptcy Exemptions in Florida Chapter 7 and Chapter 13 Cases?
Bankruptcy exemptions protect specific assets from being used to pay your creditors in a bankruptcy case. For example, in a Chapter 7 case, exempt property is the property you get to keep while you wipe out your unsecured debts. You get a fresh start without losing all of your property.
In Chapter 13, bankruptcy exemptions protect a specific amount of equity in the debtor’s assets from being used to calculate the monthly play payments. Chapter 13 payments are divided among your creditors to repay debts over time. Exemptions in a Chapter 13 case can help lower your monthly Chapter 13 payments to make them affordable.
What Types of Exemptions Are Available to Protect Property in a Florida Bankruptcy Case?
The U.S. Bankruptcy Code includes federal bankruptcy exemptions that include property such as a home, vehicle, and household goods. However, the law allows states to enact state bankruptcy exemptions. States have the option of enacting their own bankruptcy exemptions. The state can then allow debtors to choose between federal and state exemptions or force debtors to use state bankruptcy exemptions.
Florida chooses to “opt out” of using federal bankruptcy exemptions. You must use Florida state bankruptcy exemptions if you file for bankruptcy relief in Florida. However, that is not necessarily a bad thing.
Florida’s bankruptcy exemptions cover a wide range of property in bankruptcy. One of the most generous bankruptcy exemptions in Florida is the homestead exemption. Florida’s homestead exemption allows many debts to protect all of the equity in their home if they meet specific requirements. Most states limit the amount of equity in your home you can protect when filing Chapter 7 or Chapter 13. If you don’t own a home, Florida bankruptcy exemptions give you a wild card you can use to protect equity in other assets.
Florida bankruptcy exemptions protect equity in property, including household goods, vehicles, tools of the trade, retirement accounts, life insurance policies, and many other assets.
Could I Lose Property if I File Bankruptcy in Florida?
Some debtors have assets with equity that exceed the exemption amount. In a Chapter 7 case, a trustee could sell an asset with non-exempt equity, but it depends on many factors. If the benefit to the estate is inconsequential, the trustee may abandon the asset (i.e., let you keep it.). In a Chapter 13 case, you could keep the property by increasing the monthly plan payment to cover the excess equity.
There are strategies for filing bankruptcy to get rid of debt while protecting your property from the court and your creditors. An experienced Florida bankruptcy lawyer can analyze your case to determine if any of your assets are in jeopardy and devise a plan to give you the best option to protect your property while filing for bankruptcy in Florida.
Contact Our Florida Bankruptcy Lawyers for a Consultation
You may qualify to get rid of all or most of your debts while keeping your property in a Chapter 7 or Chapter 13 bankruptcy case. Call Law Offices Of Jeffrey A. Herzog, P.A. to schedule a meeting with a Florida bankruptcy attorney to discuss your legal options for debt relief in Florida.