You Won't Lose Everything in Chapter 7

Buchalter & Pelphrey Attorneys At Law

For most people, liquidation is the most intimidating aspect of Chapter 7 bankruptcy. This isn’t without good reason, either. When you possess a lot of property of considerable value or luxury goods, these items can be liquidated in Chapter 7. This means the bankruptcy trustee will seize the property in question and turn it into cash to pay off your creditors.

A common fear people have about bankruptcy is that they’ll lose everything, but this simply isn’t the case. In any Chapter 7 bankruptcy case in Florida, filers can take advantage of many different exemptions that can help them hold onto certain kinds of property. This property can include equity in a home and/or vehicle, personal property, retirement accounts, and more.

Florida’s Chapter 7 Bankruptcy Exemptions

When you file for Chapter 7 bankruptcy in Florida, you’ll have an opportunity to protect certain property by leveraging specific exemptions.

A few of these exemptions include the following:

  • Homestead
  • Motor Vehicle
  • Wild Card
  • Personal Property
  • Retirement Accounts & Pensions
  • Wages
  • Alimony & Child Support
  • Lawsuit Awards

We’ll discuss these important exemptions below. Should you wish to learn more or have any questions, we encourage you to seek experienced legal counsel for guidance.

Florida’s Homestead Exemption

The equity in your home has value that you can protect from liquidation. Remember that you have equity in your home when it’s worth more than the remainder of your mortgage. The difference between these values is your equity, and the good news is that there’s no limit on how much equity you can protect.

More importantly, when you own equity in your home, you don’t have to give your home up when you file for Chapter 7. This allows you to keep your roof above your head or consider cashing out your equity by selling your home to start over again.

If you wish to keep your home, you must also meet the following requirements:

  • If your property is in a municipality, it’s no larger than a half-acre.
  • If your property is located outside of a municipality, it’s no larger than 160 acres.
  • You’ve owned your property for at least 1,215 days prior to filing for Chapter 7 bankruptcy.
  • You are listed as the owner on your property’s title (as opposed to an LLC, corporation, or another individual or entity)

If a lot of your debt is due to mortgage arrears, however, Chapter 13 bankruptcy might be a better way to go. This type of bankruptcy can allow you to keep your home while paying off your mortgage arrears in a structured manner over time.

Florida’s Motor Vehicle Exemption

Florida also allows Chapter 7 filers to protect equity in the primary motor vehicle they drive. The amount of equity that they can claim, however, is limited to $1,000 or up to $2,000 if a married couple files jointly.

Should the value of your vehicle (usually ascertained by using NadaGuides) exceed your equity, your car may be liquidated and you’ll receive your equity as cash. If you wish to protect your car or truck from liquidation, however, you may be able to protect enough equity by utilizing the wildcard exemption, which we’ll explain below.

Protecting Personal Property

Chapter 7 filers can protect up to $1,000 in personal property from liquidation. This can include home appliances, personal effects, electronics, furniture, art, etc. as well as savings or checking accounts.

Need to protect more of this property? You can use the bankruptcy wild card exemption.

The Bankruptcy Wild Card Exemption

If you don’t use the Florida homestead exemption (either by choice or because you have no home equity to protect) you can use Florida’s wild card exemption in its place.

This exemption allows bankruptcy filers to protect up to $4,000 in personal property or up to $8,000 if you’re filing as a married couple. You have the full discretion of which property you wish to protect, so you may be able to keep your car and other items.

Pensions & Retirement Accounts

If you have any retirement accounts or a pension, these are also protected from liquidation. Specifically, you can protect ERISA-qualified pensions, IRAs, and retirement plans such as 401(k)s, 403(b)s, and retirement benefits for public employees.

Are You the Head of the Household?

If you file your taxes as the head of the household, you can also protect your wages by exempting up to $750 a week, up to 75% of your paychecks, or up to 30 times the federal minimum wage (whichever is greater).

Child Support & Alimony

If you receive alimony or child support payments, you may be able to protect these. Chapter 7 bankruptcy allows filers to exempt what is “reasonably necessary” to provide ongoing support for the bankruptcy filer and their dependents.

Lawsuit Awards & Settlements

Most monetary awards or settlements won in civil lawsuits before filing for bankruptcy usually belong to the bankruptcy estate. That said, you can protect compensation for an injury you sustained at work or a loved one who died at work.

If you become injured in an accident that occurs after you file for bankruptcy, the good news is that any settlement or award you get in the end can’t be claimed by the bankruptcy estate. The same goes for other causes for other types of lawsuits, as long as it can be sufficiently argued that such causes arose after the bankruptcy filing.

If you have property from a lawsuit award or settlement you wish to protect, consider leveraging the wildcard exemption to do so.

Contact Us Online for Additional Help!

If you are considering bankruptcy, you can get the legal guidance and support you need from Buchalter & Pelphrey Attorneys At Law. Our skilled advocates help our clients navigate the bankruptcy process, which can be made much less intimidating with our help.

By advising you of your options along the way, we can help you better understand bankruptcy and how it can help you get the fresh start you need.

For more information, contact Buchalter & Pelphrey Attorneys At Law online now!

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