Bankruptcy Exemptions In Florida Part 1 - Homestead
When you file for bankruptcy, a bankruptcy estate is created (11 U.S.C. 541). Individuals are allowed to protect items of personal property, cars and equity in real estate from their creditors. The process is called claiming an exemption or exemption planning. When an item is claimed as exempt, the property is theoretically removed from the bankruptcy estate and is no longer available to pay the claims of creditors.
If you are a Florida resident or have lived here for at least two years prior to the date of filing for bankruptcy protection, you must use the Florida Exemptions to protect your personal property in a Chapter 13 or a Chapter 7.
Even if you are just falling behind on your bills or have lost your job and think you may have some financial troubles, knowing the Florida Exemptions is important. In a nutshell, exempt property is protected from liquidation by a creditor. So, if you have a creditor or creditors coming after you, you know that your property is safe because it is exempt.
Florida's most significant exemption is the Homestead Exemption because it is unlimited. The reason it is significant is because the protection arises in the Florida Constitution. Therefore, the homestead exemption cannot be altered without a constitutional amendment. The exemption extends to real property of 1/2 acre within a municipality and 160 acres outside a municipality. Accordingly, a person can own up to 160 acres outside of a municipality with a house with no mortgage and a creditor cannot touch the place. This exemption was limited by the 2005 Bankruptcy Amendments.
In Bankruptcy, to qualify for the unlimited Florida Homestead Exemption, you must own the residence for 40 months. Or, if you owned your current home for less than 40 months, you must have owned a previous home in Florida for 40 months total. If you have owned a home(s) in Florida for less than 40 months, then you are only allowed to exempt $136,875.00 of equity per person.
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, Naples and Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog and the firm's mortgage modification blog.
