BANKRUPTCY EXEMPTIONS

WHY ARE BANKRUPTCY EXEMPTIONS IMPORTANT

Rules concerning exempt property impact every filer. These rules determine what property you may keep, lose, or be required to pay for.   


The most important exemptions are:

If you own a home you wish to keep:

Your home. ( But see comments below )

One Thousand Dollars of value in one car. 

One Thousand Dollars’ worth of other personal property (per Florida Constitution).  

Your IRAs, 401(k)s, other pension or retirement plans     

If you do not own a home or you own a mobile home on a rented lot.

Your mobile home 

One Thousand Dollars of value in one car. 

One Thousand Dollars’ worth of other personal property (per Florida Constitution).  

An additional Four Thousand Dollars’ worth of other personal property (per Florida Statute). 

Your IRAs, 401(k)s, other pension or retirement plans      

MARRIED COUPLES' JOINT PROPERTY

Similar to an exemption, a married couple owning property together (as entireties property) can sometimes claim the jointly owned property as exempt. Under Florida Law entireties property cannot be seized to pay claims owed individually (i.e. claims against one spouse but not the other).   

How to Apply Exemptions

Example1: Debtor is a single person, who owns a home worth $200k, a car worth $2k, an IRA worth $20k and nothing else (not even a bed, stove or refrigerator). This individual could keep his house and IRA, he could keep $1,000 value in the car and use his other personal property exemption on the car for a total of $2,000 value in the car and keep everything. 


Example 2: Same as above, but say Debtor owns a car worth $5k, and owes $3k on the car which is reaffirmed. The result is the same, the Debtor can keep his house, IRA, and car. Because the car has a $3k lien on it the value of the Debtor’s interest is $2k (the difference between the value of the car and the amount owed) the Debtor can stack his exemptions and keep all his property. 


Example 3: Debtor(s) are a married couple who own a home worth $600k, each spouse owns a car worth $20k, each with an $18k lien on it, and each has their own separate IRAs of $500k each and nothing else. Again, the house and IRAs are exempt and can be kept. Because each car is owned separately, each spouse can stack his or her exemptions and keep each car.

  

Example 4: Same as above but cars are owned jointly as Husband and Wife. Here, Husband can use both his exemptions on one car and the Wife can use both of hers on the other. 

 

Example 5: Same as above, but both cars are owned by the Husband. Here the house and IRAs are no problem, but the cars are not owned by the Wife, she cannot use her exemptions on his cars, and his exemptions are insufficient to protect both cars. One of the cars must be turned over to the trustee to be sold or repurchased by the Debtor.    


The way in which property is titled is very important, the assets owned by the parties in Examples 3 and 4 are identical to 5, but the results are very different. Also note that the values of some exemptions are not capped, for instance the value of a home or IRA. Finally, notice the assets which the Debtor may keep or lose do not depend on how much the Debtor may owe. 

Why are Exemptions Important  and How to Apply Exemptions in Fort Myers, Cape Coral and Lehigh Acres call (239) 334-7107  

Still have questions? Please call me at 239-334-7107 or email me at gynburns@gmail.com .

Homestead continued

What your Attorney does not know can hurt you

  

As mentioned above, the homestead exemption is not limited. It may be claimed on all of a debtor’s ownership interest in a home, no matter what that home may be worth. However, there are certain restrictions that are easily over looked and can have serious adverse consequences in a bankruptcy.


 You need to tell your lawyer if:

  • You are not a US Citizens. Your immigration status can affect your eligibility. 
  • You have moved from another State and have not lived in Florida for at least 2 years. If so, you must use the exemptions from the State you left. A homestead exemption may not have been available in that State or, even if it was, you may have lost it by moving.
  • Within the last 10 years, you have sold property that was not exempt and used the proceeds to purchase or improve a home or pay down a mortgage. If the court determines this was done to defraud creditors, your exemption may be reduced or disallowed. 
  • You purchased your home within 1215 days of filing. If so, your exemption may be limited to $160,375 (as of January 2019).


Homestead exemption continued and what you should tell your lawyer in Fort Myers, Cape Coral or Lehigh Acres Call 239-334-7107.

Still have Questions ? Please call me at 239-334-7107 or you can email me at gynburns@gmail.com