What Are Bankruptcy Exemptions?
If you are considering the possibility of filing for personal bankruptcy, you might have encountered information about bankruptcy exemptions. It is critical to understand what bankruptcy exemptions are and how bankruptcy exemptions function in Chapter 7 and Chapter 13 bankruptcy cases. Whether you are filing for bankruptcy in Florida or in another state, you will need to work with a bankruptcy attorney to determine which of your assets are exempt and how the exemptions will impact your bankruptcy case. If you have questions, or to get started on your bankruptcy case, you should get in touch with a bankruptcy attorney for assistance.
Understanding Bankruptcy Exemptions
Bankruptcy exemptions are designed to protect a debtor’s property in a bankruptcy case. There are federal bankruptcy exemptions, and then states have their own bankruptcy exemptions. Some states allow debtors to choose between the state exemptions and federal exemptions, but most states require debtors to use the state exemptions. In Florida, debtors must use the Florida bankruptcy exemptions.
How Bankruptcy Exemptions Function in Chapter 7 and Chapter 13 Cases
The exemptions serve different functions in Chapter 7 bankruptcy cases and Chapter 13 bankruptcy cases. Since Chapter 7 bankruptcy is a type of liquidation bankruptcy, all non-exempt assets will be liquidated (i.e., sold) in order to repay creditors. In a Chapter 7 bankruptcy case, bankruptcy exemptions are used to exempt certain assets from liquidation. In other words, any exempt property according to the Florida bankruptcy exemptions will not be liquidated.
In a Chapter 13 bankruptcy case, differently, property is not liquidated in order to repay creditors. Instead, debtors develop a debt reorganization plan that includes a repayment plan that lasts anywhere from three to five years. Rather than exempt property determining which assets will not be liquidated, bankruptcy exemptions are used in a Chapter 13 case to determine how much money the debtor will need to repay as part of the repayment plan. Exempt property does not have to be included as part of the repayment plan.
What Are the Florida Bankruptcy Exemptions?
Since Florida bankruptcy exemptions are distinct from the federal exemptions and from exemptions in other states, it is important to learn more about the exemptions that may allow you to protect certain assets. Examples of Florida bankruptcy exemptions include but are not limited to:
- Homestead exemption, which allows you to exempt an unlimited amount of equity in your house;
- Motor vehicle exemption up to $1,000 in motor vehicle equity;
- Personal property exemption up to $1,000 (increases to $4,000 if you do not use the homestead exemption);
- Education savings;
- Health savings;
- Home health aids;
- Tax refunds;
- Certain public benefits;
- Wages up to $750 per week;
- Alimony and child support; and
- Personal injury damages.
Contact a Bankruptcy Lawyer in St. Petersburg
If you have questions about filing for bankruptcy, or if you want more information about how the Florida bankruptcy exemptions will apply in your case, do not hesitate to get in touch with our experienced St. Petersburg bankruptcy attorneys. Our firm is here to assist you. Contact the Law Offices of Stephen Barszcz today to learn more about the services we provide.