In a Chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. Fundamentally, exemption or exempt property are the designations given to the property that the trustee is not permitted to liquidate and the debtor is permitted to retain in a bankruptcy case. They are usually items of property deemed essential to daily life, they help the debtor to obtain a fresh start by allowing the debtor to come out of the process with the essentials upon which to build a new life.It is important to check the exemptions that are available in the state where you live. If you moved to your current state from a different state within two years before your bankruptcy filing, you may be required to use the exemptions from the state where you lived just before the two-year period. In some states, you are given a choice when you file bankruptcy between using either the state exemptions or using the federal bankruptcy exemptions. If your state has “opted” out of the federal bankruptcy exemptions, you will be required to choose exemptions mostly under your state law. However, even in an “opt-out” state, you may use a special federal bankruptcy exemption that protects retirement funds in pension plans and individual retirement accounts (IRAs).
If you are allowed to use the Florida bankruptcy exemptions, they include but not limited to:
Wages: Fla. Stat. § 222.11.
• Compensation paid or payable in money of sum certain for personal services or labor whether called wages, salary, commission or bonus, of a head of family, defined as one who provides more than 50% of the support of a child or dependant.
• Amount: Head of family: $500 per week of disposable earnings exempt, unless debtor has agreed otherwise in writing. Amount garnished may not exceed that allowed by federal law. Disposable earnings are those left over after all deductions required by law.
• Survival after payment/deposit: Earnings remain exempt for 6 months in a bank account, even if commingled with other funds, so long as earnings can be traced and properly identified.
• Waiver: Wages of head of household in excess of $500 may be garnished with debtor’s written permission
Homestead: Fla. Const. art. X, § 4(a)(1); Fla. Stat. §§ 222.01 to 222.03, 222.05.
• Amount: Up to one-half acre inside a municipality or 160 acres outside a municipality is exempt under the Florida Constitution regardless of value, with exceptions for four types of debts (taxes, purchase money debts, services or labor for home repair or improvement, and other labor performed on real property). By statute, a manufactured home or modular home may be a homestead, whether or not the home owner owns the land. In addition, if the homestead is outside a municipality and includes less than 160 acres, the debtor may exempt non-homestead land to bring the total up to 160 acres.
Tangible personal property: Fla. Const. art. X, § 4(a)(2); Fla. Stat. §§ 222.061, 222.07, 222.25.
• Household goods: $1000 in any personal property.
o For a debtor who does not claim or receive the benefits of a homestead exemption, $4000 in any personal property (this exemption does not apply to a debt for child or spousal support).
• Motor vehicles: Up to $1000 in any one motor vehicle.
• Tools of trade: No exemption.
• Clothing and jewelry: See above.
Benefits, retirement plans, insurance, judgments, and other intangibles: Fla. Stat. §§ 222.13, 222.14, 222.18, 222.21, 222.22, 222.25; see Fla. Stat. §§ 121.131, 122.15, 175.241, 185.25, 222.21(2).
• Public benefits: Earned income tax credit, pursuant to the Internal Revenue Code, or a deposit in a financial institution traceable to an earned income tax credit.
• Pensions, retirement plans, and annuities: Public pension money received within 3 months before the attachment; certain tax qualified retirement plan (except as to claims of alternate payee under qualified domestic relations order).
• Other Pensions: All state officer and state employee pensions, county officers and county employee pensions, firefighter pensions, police officer pensions, IRAs, Roth IRAs, and ERISA qualified benefits, teacher pensions, etc. are fully exempt.
• Insurance, judgments, or other compensation for injury: Life insurance proceeds exempt as to creditors of the insured. Cash surrender values of insurance policies or annuities. Disability income benefits under any policy of life, health, accident or other insurance.
• Bank accounts: Money paid into or out of a medical savings account or hurricane savings account. Monies paid into or out of prepaid postsecondary education expense trust fund are not subject to attachment, garnishment or legal process by creditors of either purchaser or beneficiary of contract.
• Alimony, child support: Pension funds received by alternate payee under qualified domestic relations order.
• Survival after payment or deposit: Not specified in exemption statute, except as to tax refunds attributable to earned income tax credit, public pension money received within 3 months, or payments into or out of medical savings or prepaid college trust fund accounts.
In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth when your bankruptcy case is filed. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.
You also only need to look at your equity in property. That means you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you have only $10,000 in equity. You can fully protect the $50,000 home with a $10,000 exemption.
While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.