Are Federal Bankruptcy Exemptions Relevant to My Case?
If you are considering a personal bankruptcy filing in South Florida, and especially if you are planning to file for Chapter 7 bankruptcy, you may already know a little bit about exemptions. Exemptions serve different purposes in Chapter 13 and Chapter 7 cases. In Chapter 7 bankruptcies, exemptions allow the debtor to classify certain assets as exempt so that the debtor can keep those assets (exempt assets are not liquidated). In a Chapter 13 case, exemptions can impact the total amount that a debtor must repay over time, and thus the amount of the debtor’s regular payments as part of the repayment plan.
Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, you may be confused about the difference between state exemptions in Florida and federal bankruptcy exemptions. Are federal exemptions relevant to your case? In general, no, but there may be exceptions. Our West Palm Beach bankruptcy lawyers can explain.
Most Florida Bankruptcy Filers Will Use State Exemptions
Some states permit debtors who file for bankruptcy to choose between using state exemptions or federal exemptions, but Florida is not among those states. As such, if you are filing for bankruptcy in Florida, you will need to use Florida’s exemptions. At the same time, however, there are a few caveats to consider.
If You Have a Tax-Exempt Pension or Retirement Account
Federal law allows Floridians (and residents of any state) to exempt tax-exempt retirement accounts in bankruptcy up to a certain amount, including 401(k) accounts, 403(b) accounts, traditional IRAs, and Roth IRAs. Up to $1.711,975 is the amount that is exempt under federal law through March 2028, at which time the amount will likely increase.
If You Have Only Lived in Florida for a Short Time and Do Not Qualify for Florida’s Exemptions
If you have only lived in Florida long enough to file bankruptcy here (6 months) but have not lived in the state for a long enough time before filing such that you are eligible to use the state’s bankruptcy exemptions, you will need to use the state exemptions where you lived most recently before moving to Florida. If you have lived in multiple states over the last two years, you will use the exemptions for the state where you resided for the majority of the 180 days in the years prior to your bankruptcy filing.
If your state of “residency” for purposes of bankruptcy exemptions is a state that permits the debtor to choose between state and federal exemptions, then you could choose federal exemptions rather than state exemptions. You cannot mix and match exemptions, however. Rather, you will need to use either state exemptions in that case, or federal exemptions — you cannot use some of both.
Contact Our West Palm Beach Bankruptcy Attorneys Today
For any questions about personal bankruptcy, including issues pertaining to bankruptcy exemptions, it is important to seek advice from an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller. Contact our firm today to have your questions answered and to begin working with an attorney on your bankruptcy filing.
Sources:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.20.html
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.201.html
