Filing bankruptcy in Florida is largely the same as every other state. In case you are unfamiliar with Federal bankruptcy laws, below is a quick overview of what to expect in Florida, and what makes filing for bankruptcy unique in Florida.
Who is eligible to file for Chapter 7 in Florida
In order to file for Chapter 7 bankruptcy in Florida, your household income level must be below the median state income level. As of 2013 (the most recent year with data), the median household income in Florida state is $47,114. If you fall below this threshold than you may be eligible to file for Chapter 7 bankruptcy in Florida. If you have an income greater than the median income than you must pass a means test to determine eligibility.
Chapter 13 Repayment in Florida
60 months is the longest repayment term in Florida and may be shorter depending on your average income. If your average income over the previous six months is greater than the median household income in Florida then you will usually be required to adhere to a 60 month plan. However, if your income is less than the median household level in Florida than you can request a 36 month plan even if that means you might not repay all of your debts.
Property Exemptions Unique to Florida Residents
The bankruptcy code has outlined a number of federal bankruptcy exemptions that specifically allow an individual to keep property up to a certain value while still erasing all of their unsecured debt. However, Florida was among a handful of states that refuses to use these exemptions. Therefore, for residents of Florida, only Florida bankruptcy exemptions apply. To use Florida’s exemptions, one must be a resident of the state for at least 730 days prior to filing bankruptcy.
Florida Homestead Exemption
Florida bankruptcy exemptions are very generous—individuals receive unlimited exemptions for annuities and homesteads. This means that your house is protected 100% from being taken by creditors when you file for bankruptcy. However, there are several limitations to the Homestead Exemption.
- The property in question cannot be more than half an acre in a municipality or one hundred and sixty acres elsewhere. They must also have owned this property for a minimum of 1,215 days prior to their bankruptcy petition being filed. If they do not meet this condition, their homestead exemption will be limited to a much smaller amount.
- The debtor must also have lived in Florida for at least two-years before they filed for bankruptcy. If this is not the case, the debtor is required to use the property exemption rules that apply in the state they lived in for a majority of the 180 days prior to the two years before they filed for bankruptcy, or be subject to a much smaller homestead exemption in Florida that changes on a yearly basis.
Personal Property Exemptions
The state laws of Florida allow debtors to exempt their personal property up to the value of $1,000. Personal property can include furniture, electronics, and art. Other exemptions apply to education savings, hurricane savings, as well as health savings and health aids.
Residents of Florida can also exempt up to $1,000 in automobile equity, or more if they file jointly as a married couple.
Heads of families have a wages exemption of up to $750 a week. This exemption applies to all paid and unpaid wages that were deposited into their account for up to six months before they filed for bankruptcy. Individuals who are not the head of the household have a lower exemption.
Pension and Retirement Exemptions
Pension payments for government employees that were received up to three months before the bankruptcy petition was filed and that are necessary for support are also exempted. Other pensions and retirement benefits that are exempted include 401k, 403b, Simple IRAs and SEP.
In Florida, police pensions, retirement benefits for teachers, firefighters’ pensions, and retirement benefits for state and county officers as well as any benefits that are paid to the Florida retirement system are exempt in bankruptcy. Also, Roth IRAs and IRAs that are worth $1,171,650 or less are exempted.
Other Florida Property Exemptions
Workers’ compensation awards are exempt in the State of Florida when a person files for bankruptcy. Victims of crime can also exempt the benefits that they receive, unless they decide to discharge a debt treatment of an injury that is related to those benefits. Though Florida does not use the Federal exemptions, it allows one of the exemptions that are listed in the Federal Bankruptcy Code. Residents of Florida can exempt Social Security benefits, veterans’ benefits, local assistance benefits and re-employment assistance.
Any alimony or child support that the debtor receives and that is necessary for their support can be exempted. Debtors who are beneficiaries of life insurance will also benefit from exemption. Debtors can also get an exemption for disability benefits and fraternal society benefits. If an individual prefers to get the cash surrender value for their life insurance, this amount will be fully exempted. Proceeds from an annuity are usually exempted, unless the annuity proceeds are from lottery winnings.
Any damages that are paid to employees due to injuries or a death that occurred in a dangerous occupation are exempted. Debtors can also get a wildcard exemption of up to $4,000 of their personal property if they do not use their homestead exemption.
Exemptions are very beneficial in a Florida Chapter 7 bankruptcy case as it protects a person’s property in bankruptcy. A bankruptcy trustee is expected to sell non-exempt property and to use the proceeds from this sale to repay creditors in order of priority. Some exempt property is only protected up to a certain amount. For example, the limit for personal belongings is $1,000. This means that personal property can be evaluated, and the debtor will be left with personal property that is worth $1,000. The rest will be sold, and the proceeds will be used to pay their unsecured debts.
Chapter 13 Florida bankruptcy exemptions are used to determine how the debtor’s unsecured loans will be paid. For example, if the debtor has personal property worth $2000, only $1,000 is exempted and $1,000 is not exempted. The total amount of non-exempt property will be calculated. This value will determine the amount that unsecured creditors will receive.