Florida Or Federal Bankruptcy Exemptions? Which Will Apply To My Case?
Florida has very generous bankruptcy exemptions, especially when it comes to things like homesteads, where there is practically an unlimited homestead exemption. But because of these exemptions, many people try to move to Florida and then file for bankruptcy, just to get the benefit of Florida’s exemptions.
To avoid that, federal bankruptcy law requires that you live in the state for a period of time, before you can use Florida’s bankruptcy exemptions. To use Florida’s bankruptcy exemptions, you must have been continuously domiciled in the state for two (2) years (730 days). If you were not domiciled in the same state for two years, then you must use the exemptions of the state where you were domiciled for the greater portion of the 6 months prior to the two years preceding your bankruptcy.
Remember that this 2 year requirement is to use Florida’s exemptions. You can always file for bankruptcy no matter how long you’ve lived in Florida—the question is what laws (exemptions) will apply to your bankruptcy case, and thus, what property will and will not be protected.
What if You Don’t Meet the Requirement?
If you don’t meet the 2 year requirement, the court will apply the exemption laws for whatever state you lived in for the six months before whenever you came to live in Florida.
But what law applies gets a bit more complex than that. That’s because the state you last lived in may only allow you to use their laws if you live there, which you do not, because you now live in or moved to Florida.
So, let’s assume that you moved to Florida 8 months ago. Before that, you lived in State X. State X’s laws would apply to your case. But if State X requires you live there in that state to get their bankruptcy exemptions, what then?
In that case, you would apply federal bankruptcy laws. Additionally, many states don’t even have their own bankruptcy laws—they use federal bankruptcy laws instead. Other states do have their own, but they let you choose between their laws, and federal laws.
So, as you can see, if you have lived in Florida for less than 2 years before filing, you may end up using federal bankruptcy exemptions.
Is Federal Better?
Federal laws may be better for you than Florida’s exemptions, depending on your situation.
For example, Florida’s laws are much better than federal laws when it comes to your homestead, which is limited under federal laws. But federal law does allow you a jewelry exemption, a large household goods exemption, and an exemption for work equipment, and health devices or aids, which Florida law doesn’t provide.
Federal law even allows you to protect up to $25,000 in money from an expected personal injury case.
If you are just on the border of the 2-year mark, you may want to see a bankruptcy attorney immediately, to see if filing sooner, to possibly use federal exemptions, would be better or worse for you than using Florida’s exemptions.