Should I Plan to Use Florida’s Homestead Exemption?

Are you considering a personal bankruptcy filing in South Florida and wondering if it makes sense for you to claim certain exemptions? The homestead exemption in Florida, which is available under the Florida Statutes, is among the most generous homestead exemptions in the country. For homeowners who are filing for bankruptcy and have a substantial amount of equity in their home, it will almost always make sense to use the homestead exemption. However, if you are not a homeowner, the homestead exemption will not be relevant. And if you are a homeowner but have limited equity in your home, it might make sense for you to take advantage of a more robust wildcard exemption rather than claiming the homestead exemption. Our West Palm Beach bankruptcy lawyers can explain in more detail.

What is the Homestead Exemption?

Exemptions in a bankruptcy case serve different purposes depending on whether you are filing for a liquidation bankruptcy (under Chapter 7) or a reorganization bankruptcy (usually under Chapter 13 for individuals). In a liquidation bankruptcy, exemptions allow the debtor to keep assets that are exempt; exempt assets will not be liquidated. In a reorganization bankruptcy, exemptions can play a role in determining the total amount that will need to be repaid during the length of the repayment plan (over three to five years, typically).

Florida’s homestead exemption allows eligible debtors to exempt all of the equity in their home. In order to be eligible, you must have owned the property for 1,215 days or more prior to filing for bankruptcy. The property also must be under half an acre if it is located in a municipality, or under 160 acres if located elsewhere.

Who Should Claim the Homestead Exemption?

If you have equity in your home and are filing for bankruptcy, you should most likely claim the homestead exemption if you are eligible. For debtors with a substantial amount of equity in their home, the exemption can amount to tens of thousands of dollars.

One of the only reasons you might decide against claiming the homestead exemption is if you have very limited equity in your home. By claiming the homestead exemption, you will only be able to claim a wildcard exemption (exempting any property of your choosing) of up to $1,000. If you do not claim the homestead exemption, your wildcard exemption will increase to $4,000. Accordingly, if you could benefit significantly from the additional $3,000 of the wildcard exemption and have similar or less equity in your home, it might make sense for you to not claim the homestead exemption. You should only make a decision about this after you have spoken with a bankruptcy attorney to ensure that you are using the Florida bankruptcy exemptions in a way that benefits you the most.

Contact Our West Palm Beach Bankruptcy Attorneys Today

Do you have questions about claiming the homestead exemption in your Florida bankruptcy case? An experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can speak with you today. Contact us for more information.

Source:

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