Certain Types of Savings Accounts Are Exempt in Bankruptcy

Planning ahead with particular kinds of savings accounts can allow Florida residents to be prepared for major financial expenditures in the future. For example, health savings accounts (HSAs) can allow Floridians to be prepared in the event of a medical emergency, while educational savings accounts can allow parents in Florida to ensure that they are able to help their child afford the high costs of college. If you are considering filing for personal bankruptcy and have savings accounts, you are likely concerned about whether these accounts will need to be liquidated as part of your bankruptcy case.

To be clear, assets are only liquidated in Chapter 7 bankruptcy cases. Accordingly, if you are filing for Chapter 13 bankruptcy, this will not be an issue (although exemptions are still relevant for determining the total amount of your repayment plan). Yet even if you are considering Chapter 7 bankruptcy, there are various types of savings accounts that can be exempted under the Florida Statutes. When an asset is “exempt,” it will not be liquidated in your bankruptcy case — that is an asset you can keep. Consider the following information from our West Palm Beach bankruptcy attorneys about savings account exemptions.

Qualified Tuition Program Savings Accounts

Qualified tuition program payments are exempt. This exemption focuses on payments made into the Florida Prepaid College Trust Fund, according to the Florida Statutes.

Medical Savings Accounts

A couple of different types of medical savings accounts are exempt under the Florida Statutes, including the funds in a health savings account (HSA) or medical savings account.

Education Savings Accounts

In addition to qualified tuition program payments, funds associated with a Coverdell educational savings account (also known as a Coverdell IRA) are exempt.

Hurricane Savings Accounts

Florida residents can also exempt funds in a hurricane savings account. According to the Florida Statutes, a hurricane savings account is “an account established by the owner of residential real estate in this state, which meets the requirements of the homestead exemption…who specifies that the purpose of the account is to cover the amount of insurance deductibles and other uninsured portions of risks of loss from hurricanes, rising flood waters, or other catastrophic windstorm events.”

Exempting Assets in Other Types of Savings Accounts

Most people will also be able to exempt their retirement accounts and pensions in a bankruptcy case, which are a type of savings account in that they are a way of saving or preparing for a future during retirement.

Other types of savings accounts, including standard savings accounts through your bank, are not exempt. However, you may be able to use Florida’s wildcard exemption to exempt assets in savings accounts that are not already exempt. Or, you may be able to move those assets into exempt accounts, such as the savings accounts discussed above. You should discuss any plans to move assets with a bankruptcy lawyer to ensure that you will be in compliance with bankruptcy requirements under the US Bankruptcy Code.

Contact Our West Palm Beach Bankruptcy Lawyers Today

Whether you have questions about the savings account exemptions discussed above, or you want to find out more about bankruptcy exemptions or the bankruptcy process in general, an experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller can assist you. Contact us today to discuss your financial circumstances and to find out more about your options for a bankruptcy filing.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.22.html