Do I Need to Know About Exemptions in a Reorganization Bankruptcy?
If you have started looking into a consumer bankruptcy filing, or if you have a friend or family member who recently filed for bankruptcy, you might know a little bit about the importance of bankruptcy in exemptions. In a Florida bankruptcy case, exemptions are available under state law, and they allow debtors to exempt certain assets, or up to a certain amount of particular assets, in their bankruptcy case. Many people who know about exemptions have heard of them in relation to liquidation bankruptcies. In a liquidation bankruptcy, exemptions allow debtors to keep exempt assets while other non-exempt assets are liquidated. While exemptions are extremely important in consumer liquidation bankruptcies, you should know that they are also relevant in reorganization bankruptcies filed by individuals.
Our West Palm Beach bankruptcy attorneys can say more about exemptions and reorganization bankruptcies in South Florida.
Exemptions Can Reduce the Total Amount Repaid through Your Repayment Plan
Since reorganization bankruptcies do not involve the liquidation of assets, how are exemptions relevant? Exemptions can be used to reduce the total amount repaid through a debtor’s repayment plan. Assets that are exempt will not need to be included in the total amount that must be repaid, and thus they can reduce a debtor’s monthly payments made during the course of the Chapter 13 bankruptcy.
Consumers Can Use Exemptions but Businesses Cannot
It is important to know that exemptions are only relevant for individual or consumer bankruptcy cases, regardless of whether you are filing for a liquidation bankruptcy under Chapter 7 or a type of reorganization bankruptcy like Chapter 13. Businesses cannot exempt assets.
Commonly Used Exemptions in Florida
There are a wide range of exemptions set forth in the Florida Statutes, so it is essential to speak with a lawyer about your circumstances to determine which exemptions are applicable to you. Some of the most commonly used exemptions include, for example:
- Homestead exemption, which allows a homeowner to exempt all of the equity in their home (without any limit);
- Motor vehicle equity exemption of up to $1,000;
- Personal property exemption of up to $1,000 (or up to $4,000 if you do not use the homestead exemption);
- Medical, education, and health savings accounts;
- Up to $750 per week in wages; and
- Pensions and retirement accounts.
In order to be eligible for Florida’s exemptions when filing for bankruptcy in Florida, you will need to have lived in Florida for at least 730 days before filing. Otherwise, you will typically need to use the exemptions of the last state in which you were a resident.
Contact Our West Palm Beach Bankruptcy Lawyers Today
Bankruptcy exemptions are very important in consumer bankruptcy cases. Whether you are filing for Chapter 7 bankruptcy, or Chapter 13 or Chapter 11 bankruptcy as an individual debtor, you should get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller today to discuss how Florida’s exemptions will impact your bankruptcy case. As we have discussed above, there are a wide range of exemptions under Florida law, so you will need to determine which of those exemptions are applicable to your situation (and to your particular assets). Our firm is here to help. Contact us today to get started.