Anyone can suffer from financial hardship, and some may have outstanding debt and wonder “Will a collection agency sue?”. It leaves us in an undesirable state where we’re considering options to get out of debt. And one of the options we’re left with is bankruptcy. However, before you embrace bankruptcy as an option to get out of debt, you need to first consider the assets you own. Why? This is because you may lose your assets in bankruptcy if they’re not covered by bankruptcy exceptions. Different states have different rules on what is exempt from bankruptcy and what is not, and Florida is no exception to this.
In this article, we’ll discuss Florida’s bankruptcy exemption as found on the Florida Statutes Government website in a way you can easily comprehend. Also, this article will help you with options that are available if your assets are above the exceptions. For example, even if you qualify for a Florida Chapter 7 bankruptcy, debt settlement or Chapter 13 bankruptcy in Florida may be a smarter choice if you’re at risk of losing your assets. Luckily, trustees in Florida rarely go after your home; as such, you shouldn’t have a problem with it. The only reason for a trustee to sell your home is if you recently moved into Florida, and you can’t use Florida’s bankruptcy exemptions.
2 Things to Know about Florida Bankruptcy Exemptions:
1. Before you can use Florida’s bankruptcy exemption, then you must be a resident of the state for at least 24 months. For those that haven’t, then you should read this excellent guide by John R. Bates.
2. In most states, you have the option to choose between state bankruptcy exceptions and federal bankruptcy exemptions. However, Florida only allows the state bankruptcy exemptions.
Before you file for bankruptcy in Florida, you must first consider its statutes and bankruptcy exemptions. Your assets could be liquidated if they’re above the exemptions. As such, you should really consider them before making your move.
Below are the common bankruptcy exemptions for Florida. Although we’ll discuss the most common ones, we still expect you to review all the data on the government website.
List of Florida’s Bankruptcy Exemptions
· Homestead Exemption: If you have owned the property for a period that’s more than 1,215 days, then you’ll enjoy an unlimited exemption on your property. But if you’ve owned the property for less than 1,215 days, you’ll only get an exemption of $170,350.
· Automobile Exemption: All debtors have an exemption of up to $1,000 on each vehicle they own. In a joint case, the couple gets an exemption of $2,000 on a vehicle but won’t get an exemption of $1,000 on two vehicles.
· Personal Property Exemption: If an individual does not benefit from the homestead exemption. Then you’ll get a personal property exemption that’s worth $4,000. This is very useful because Florida has a statute that gives full exemption for vessels and vehicles that qualify for homestead exemption. You can use both the expanded wildcard exemption and the statutory homestead exemption.
· IRA: Exempt
· Health Savings Account: Exempt
· Worker’s compensation: Exempt
· Unemployment benefit and compensation: Exempt
· Social Security Benefits: Exempt
· Disability income and benefits: Exempt
This is not an exhaustive list. You can research the more unique exemptions by visiting Florida Debt Statutes and Exemptions Government Website.
What to do if your assets are above Florida’s bankruptcy exemptions?
Although Florida has an array of generous bankruptcy laws, there are some instances where those laws may not protect your asset. For example, let’s assume that you qualify for a Chapter 7 bankruptcy and you own a car valued at $15,000. You will get a bankruptcy discharge certificate, but the bankruptcy trustee will liquidate your vehicle. As such, here are some top options to consider:
Chapter 13 Bankruptcy:
This type of bankruptcy is also known as the wage earner’s bankruptcy. Here, the bankruptcy court will ask you to propose a monthly payment of 3 or 5 years that’s based on your financial capacity. Here are things to consider in Chapter 13:
- Understanding Chapter 13 dismissal
- How to calculate the lowest Chapter 13 payment
- How Much Cash You Can Keep in a Chapter 13
In this method, a debt settlement company will help you negotiate with your creditors to pay lesser than you owe. For debt settlement, I would tend to look at reviews (ex: National Debt Relief Reddit, ClearOne Advantage reviews) as not all debt settlement companies are created equal.
Here, a debt management company will negotiate for an interest rate that’s less than you initially agreed on. For example, a debt management company may help you negotiate your credit card interest rate from 22% to 8%.
The Florida Bankruptcy exemptions can help you determine a bankruptcy in Florida. If you are trying to figure out a way to get out of debt with bad credit, then you may explore options such as bankruptcy.