A widespread misconception about filing Chapter 7 bankruptcy is that you will lose everything. However, that’s not the case. You can exempt some of your assets and protect them from liquidation in the bankruptcy.
Every state has its own bankruptcy exemption laws, while you can choose between state and federal laws in some. Here is what you need to know about bankruptcy exemptions in Florida.
What can be exempted from bankruptcy?
Broadly speaking, only assets considered necessities are eligible for exemption. For instance, you cannot exempt a vacation home, a second car or collectibles from bankruptcy discharge since they are not considered essentials.
Some of the assets that you can exempt include:
- Your homestead
- Your motor vehicle
- Reasonable wages
- Disability income and Social Security benefits
- Personal property like clothes, furniture or electronics
- Tax refunds
It is important to note that bankruptcy exemptions only apply up to a specific value, among other requirements. For instance, you cannot exempt a motor vehicle valued over or with equity exceeding $1,000 unless you don’t claim the homestead exemption. Wages, too, are exempt to a certain amount.
You must meet Florida’s residency requirements
To qualify for bankruptcy exemptions in Florida, you must meet the state’s strict residency requirements. You must have lived in the state during the two years preceding filing for bankruptcy. Otherwise, your former state exemptions will apply even if you filed in Florida.
Making the most of the bankruptcy exemptions
It is crucial to understand what exemptions you may be eligible for in Florida if you are thinking of filing for bankruptcy. You may be surprised by how much you can protect from the bankruptcy trustee, giving you a much-needed head start as you reorganize your finances.