Your primary residence or homestead is likely the most valuable asset you own. Beyond that, it is your home where you have made memories and invested much of your money and time. The common concern that prevents people from considering bankruptcy when they would obviously benefit from the discharge of their unsecured debt is worry about what will happen to their home in Chapter 7 bankruptcy proceedings.
After all, Chapter 7 bankruptcy is also called liquidation bankruptcy because the courts can seize and sell your property to cover your debts. People don’t want to lose their home or the equity they have spent a lifetime building.
Provided that you can pass the means test and qualify for Chapter 7 bankruptcy in Florida, you will likely worry about whether you will have to liquidate your real property as part of the bankruptcy proceedings. For those who qualify for Florida’s homestead exemptions, their investment in their home will likely remain protected.
Who can file for bankruptcy in Florida?
Given how generous Florida’s state exemptions for bankruptcy are, it’s not surprising that there are strict limitations on who can access those exemptions. In most cases, individuals who have lived in Florida for at least two years can file for bankruptcy using the Florida courts.
However, you must have lived in Florida for at least 40 months in order to claim the homestead exemption on your primary residence. If you have lived in Florida for less than that length of time, there are different, more restrictive limits to the amount of equity you can exempt.
For those who qualify, Florida has an unlimited homestead exemption
As previously mentioned, your home can represent years of investments and payments, and Florida allows you to protect all of that accumulated equity in many cases. The overall value of your home will not affect whether or not you can exempt the property, nor will the amount of equity you hold. You could exempt seven figures in equity in theory provided that your property is on a half-acre or less within city limits or on 160 acres or less in the countryside.
Protecting your home is often an important consideration in bankruptcy proceedings, which is one reason why learning as much as you can about bankruptcy ahead of time and help you.