When you file for Chapter 7 bankruptcy, you are to liquidate your assets to pay off your debts. But not all assets need to be sold; there are some assets that are exempted, and these vary from state to state. There are also exemptions in the federal system. Some states allow debtors to choose between the state exemption system and the federal bankruptcy exemptions. However, this does not apply to Florida. In Florida, you must use the state exemptions which I will list out here.
Your primary residence
This refers to real or personal property, including mobile homes and condominiums of unlimited value. If you are the spouse or the child of a deceased owner of a property, this exemption also applies to you. But the property cannot exceed half an acre in a municipality, or 160 acres elsewhere.
This would include motor vehicles up to $1,000, prescribed health aids, federal income tax credits or tax refunds, prepaid hurricane savings accounts, prepaid medical savings account deposits, prepaid college education trust deposits and any personal property up to $1,000 total or up to $4,000 if no homestead claimed.
If you are the head of your household, 100% of your wages is exempted up to $750 per week. This applies to either unpaid or paid wages, or wages deposited in a bank account for up to 6 months. Also exempted are federal government employees’ pension payments that are needed for support and that were received up to 3 months prior to the bankruptcy.
Your 401(k), 403(b), SEP, profit sharing and money purchase plans and defined benefit plans, IRAS and Roth IRAs up to $1,171,650 are exempted under Florida state bankruptcy laws. This also covers pensions of public servants like firefighters, police personnel, county and state government workers, and teachers.
Alimony and child support
Your bankruptcy trustee will not touch your alimony and/or child support.
This means any form of public assistance, reemployment assistance, Veterans’ benefits, and social security that you may be receiving. It also includes Worker’s compensation payments and crime victims’ compensation unless you’re seeking to discharge debt for treatment of crime related injury.
Your insurance claims such as the sum insured paid upon the death of your spouse is not subject to liquidation under Chapter 7. Likewise, annuity contract payments excluding lottery winnings and life insurance cash surrender values, sickness and disability insurance benefits, fraternal benefit society benefits are also exempt.
Any form of compensation or damages awarded to you for injuries sustained in a hazardous occupation is exempted.
These are the main exemptions in Florida. For a more detailed explanation of these, call us at (813) 200 4133 for a free consultation.