Why Does It Matter If My Property Is Exempt?
When you are thinking about filing for bankruptcy and conducting initial research into the bankruptcy process, you will likely come across information about exemptions and both exempt and non-exempt property. You may be wondering what makes certain property exempt or non-exempt, and what impact that classification will have on your bankruptcy case. In short, you are likely seeking the answer to this question: why does it matter if my property is exempt? Our West Palm Beach bankruptcy lawyers can clarify that exemptions have different implications depending upon the type of bankruptcy you are planning to file for, including in both liquidation and reorganization bankruptcy cases. We can provide you with some basic information about why exemptions matter in bankruptcy cases in Florida.
Determines Assets You Can Keep in a Liquidation Bankruptcy
Anyone who is planning to file for Chapter 7 bankruptcy should know that exemptions determine what assets you can keep and what assets will need to be liquidated in order for creditors to be repaid and for you to receive a discharge. Although some states allow debtors who are filing for bankruptcy to use federal exemptions, it is essential for everyone in South Florida to know that they will likely need to use state-specific Florida exemptions found in the Florida Statutes. There are a wide range of Florida exemptions, including but not limited to the following:
- Homestead exemption, which allows debtors in Florida who own a home (as long as you file for bankruptcy after living in Florida for 730 days or longer) to exempt all of the equity in their home;
- Up to $1,000 of personal property, or up to $4,000 if you do not use Florida’s homestead exemption;
- Various savings accounts for education, health, and hurricane disasters;
- Up to $1,000 of equity in a motor vehicle;
- Wages of up to $750 per week or 75 percent of the federal minimum wage;
- Pensions and retirement benefits;
- Various types of public benefits; and
- Family support payments.
Can Determine Terms of Your Repayment Plan in a Reorganization Bankruptcy
Since Chapter 13 bankruptcy and other types of reorganization bankruptcies do not involve the liquidation of assets, exemptions do not determine what property a debtor can keep. However, exemptions are still important. In reorganization bankruptcy cases, exemptions often play a role in determining the total amount of debt that must be repaid in a repayment plan. The value of exempt property can be deducted from the total amount of debt that must be repaid over the length of the repayment plan.
Contact Our Bankruptcy Lawyers in West Palm Beach
Understanding bankruptcy exemptions is essential for Floridians who are filing for bankruptcy. As we explain above, exemptions are relevant to both liquidation and reorganization bankruptcies, and it is critical to understand how exemptions work and which of your assets will be classified as exempt in your bankruptcy case. Do not hesitate to get in touch with our experienced West Palm Beach bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller to learn more about exemptions and to get started on your bankruptcy case.