There is the so-called wildcard exemption, which allows you to protect $4,000 in personal property of your choosing, but only if you do not use your homestead exemption.
Miami, FL – Most people are terrified of going bankrupt. Yet, if you live in Florida, there’s no reason to be scared. Filing for bankruptcy in Miami doesn’t mean you’ll become destitute. All you need are good lawyers and a basic understanding of how bankruptcy exemptions work.
Read on to see how you can be relieved of debt and keep most of your assets.
What are bankruptcy exemptions?
Florida is one of the states that has chosen to “opt-out” of federal bankruptcy exemptions. This means that you will have to use the state’s bankruptcy exemptions as defined in Florida statutes. Basically, exempt assets will not be sold if you file for bankruptcy under Chapter 7. There’s a catch, though. These exemptions do not apply automatically. You have to claim them when filing your bankruptcy papers.
You should contact seasoned Miami bankruptcy lawyers to see the requirements for using Florida’s exemptions. If you do not meet them, they may advise you to wait a bit longer.
The most important requirement is that you must be a permanent resident of Florida. For instance, to be allowed to file for bankruptcy here you must prove you’ve been living in the Sunshine State for the past 180 days. But, to avail yourself of the state’s bankruptcy exemptions you must have lived here for 730 days before filing the bankruptcy petition.
Can I keep my house if I file for bankruptcy in Miami?
Experienced Florida bankruptcy lawyers say that most of their clients manage to keep their homes. This is because, in Florida, you can exempt all the equity in your home or another real estate that qualifies for a homestead exemption. Equity represents the difference between the market value of the house at the time of filing and the debt you still owe on the property. Keep in mind that most other states set low amounts for the money that can be exempted under a home equity.
How do I qualify for the homestead exemption?
Certain conditions do apply. For one thing, you must have owned that property for at least 1,215 days before filing for bankruptcy.
Also, there are limits as to how big your homestead can be – one-half acre in a municipality such as Miami or 160 acres if you live outside the city.
Other bankruptcy exemptions available in Florida
Knowledgeable Miami bankruptcy lawyers advise their clients to make use of all exemptions available, no matter how small.
The good thing is that under Florida laws, most retirement accounts, disability benefits, health savings accounts, and other public benefits are protected when you file for bankruptcy. This is why lawyers advise debtors not to use their retirement accounts to try to pay off their debts. Why lose the money when those accounts are exempt?
You can also exempt:
- $1,000 for personal property, such as clothing
- $1,000 in equity on your car
Unfortunately, Florida does not offer a tools-of-trade exemption. There is the so-called wildcard exemption, which allows you to protect $4,000 in personal property of your choosing, but only if you do not use your homestead exemption.
Tip: Since you’ll be dealing with lawyers and court clerks for the next few months, now would be a good time to educate yourself a bit on legal matters.