Keep Your House and Car When You File Bankruptcy
One of the biggest bankruptcy misconceptions I come across when I meet with clients for the first time for a bankruptcy consultation is their fear that if they file for bankruptcy, they are going to lose everything and be left on the street destitute. That is simply not the case, and in Florida you have the ability to not only keep your home, but keep your car and personal belongings. In this article, I will review some of the main exemptions that are provided under Florida law, and how they can be used to help you get a fresh start.
The best exemption we have here in Florida is the Homestead Exemption. It exempts your home and any equity you have in it. Therefore, if you have a house that is paid for, it is worth $150,000, and you have $25,000 in credit card debt, you are able to keep your home whether you file bankruptcy or not, and under the Florida Constitution, your creditors cannot touch your home.
If you do not own a homestead property, then you get to keep $5,000 worth of personal property, such as clothes, furniture, jewelry, cash, stocks and bonds, as well as a $1,000 exemption for a vehicle. You can also use some of that $5,000 exemption for personal property toward your vehicle.
If you are a husband and wife, you get to double the amounts. Therefore, if you are a married couple, you could qualify to keep up to $12,000 worth of your assets if you do not have a homestead. If you do claim the Homestead Exemption, then you get a $1,000 exemption toward your personal property, and $1,000 exemption towards a motor vehicle. Additionally, if you have a Tax qualified 401-K or IRA, generally all of your funds in those accounts are also exempt.
As you can see, bankruptcy does not leave you destitute and on the street. However, sometimes we have situations where clients may have more than the $12,000 in assets. What happens then? Well, in that case, you can still keep everything but you would have to buy it back from the Trustee.
Let’s say for example you have $18,000 worth of assets. Since we can exempt $12,000, if you are a married couple, that would leave $6,000 of non-exempt assets. If you are in the Fort Myers Division of the Bankruptcy Court, we can enter into a Stipulation where you pay that $6,000 back over 12 months, or $500.00 a month. You would then be able to keep all of your assets and even get your Discharge prior to completing all of the payments.
If you cannot afford $500 a month, we could then file a Chapter 13 Bankruptcy, where you could make payments over 60 months, or $100 a month in this example. Each situation is unique and this article is not exhaustive with regard to all of the exemptions that may be available.
Also, if you have not lived in Florida for at least two years, different exemptions may apply based upon the state you moved from. However, fear of losing everything should not cause you to not meet with a bankruptcy attorney for a complimentary, initial consultation.
If you have a friend or family member facing financial challenges, they can call us at: (941) 206-3700 to arrange for a free, initial, confidential, consultation or request our FREE Special Report on the “Seven Biggest Mistakes People Make before Filing for Bankruptcy and How to Avoid Them.”
Contact a Bankruptcy Attorney
If you have a situation as we described in this article and have questions or concerns, please don’t hesitate to contact us to answer your bankruptcy legal questions.
Martella Law Firm
18501 Murdock Circle, Suite 304
Port Charlotte, FL 33948