How Do Exemptions Work In A Chapter 13 Bankruptcy Case?
If you are thinking about filing for Chapter 13 bankruptcy, you may know that you will not need to worry about your assets being liquidated as you would in a Chapter 7 bankruptcy case. To be sure, under the U.S. Bankruptcy Code, a debtor’s assets are not subject to liquidation in a reorganization bankruptcy case like Chapter 13, which is also known as a wage earner’s plan. As such, you will not need to determine which assets you will be able to keep according to the exemptions listed in the Florida Statutes. At the same time, it is important to know that the Florida bankruptcy exemptions are not completely irrelevant in a Chapter 13 bankruptcy case. Although the exemptions will not determine which assets you can hold onto (since assets are not liquidated in these cases), they will likely play a role in your repayment plan.
In a Chapter 13 bankruptcy case, the debtor creates a repayment plan that is designed to last over a period of three to five years. That repayment plan considers the debts that will need to be repaid in full and the amount that the debtor will pay each month. Once the debtor has satisfied the terms of the repayment plan, any remaining debts can be eligible for discharge as long as they are dischargeable debts according to U.S. bankruptcy law. The exemptions ultimately can play a role in determining the amount of those repayment plan payments. Our West Palm Beach bankruptcy attorneys can provide you with more information.
Exemptions Are Used to Determine the Value of Non-Exempt Assets
In a Chapter 13 case, debtors are required to develop a repayment plan through which they will repay the amount of all non-exempt debt. Accordingly, the bankruptcy exemptions will be essential for determining the total amount of debt that must be repaid to unsecured creditors. Generally speaking, in a Chapter 13 bankruptcy case, a debtor is responsible for repaying unsecured debts (and the reorganization bankruptcy gives debtors a chance to reorganize debts and to catch up on missed payments on mortgages, for example). Then, a debtor is responsible for repaying the value of all non-exempt assets.
This is how the exemptions will come into play in your Chapter 13 bankruptcy case. In addition to determining the amount of your disposable income, which will impact your repayment plan terms, you will also need to determine the total value of your exempt assets. Then, you will need to add the value of your non-exempt assets to the amount of secured debt that must be repaid in full. That is usually the total amount that must be repaid at the end of the repayment plan.
Understanding Exempt Property in Florida
Florida law has a wide range of exemptions, including a homestead exemption that allows debtors to exempt all of the equity in a primary residence. Other exemptions include, for example, a possible wildcard exemption, retirement benefits, and many other assets.
Contact a West Palm Beach Bankruptcy Attorney
Do you have questions about exemptions and your Chapter 13 case? One of the experienced West Palm beach Chapter 13 bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller can help.