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Law Offices of Stephen Orchard Law Offices of Stephen Orchard

Florida Bankruptcy Exemptions You May Not Have Known Existed


In bankruptcy, the bankruptcy court can take a debtor’s property and sell it to satisfy debts owed to creditors. But in reality, for most debtors, property will never be taken because of exemptions. Exemptions allow a debtor to protect property from being taken by the trustee.

Some exemptions are relatively well known in Florida. For example, Florida has exemptions that protect a homestead and that protect income that is in a bank account of the debtor if he or she is the main wage earner of the household.

But other exemptions aren’t so well known or well publicized. Here are some exemptions that you may not realize exist, all of which can protect your property from being taken by a bankruptcy court.

Domestic support – Money paid to you pursuant to a divorce order—which includes an order of divorce, or an agreed upon marital settlement agreement which has support included in it—is exempt.

The exemption covers alimony and child support, but can even extend to other payments that aren’t specifically labeled as support—for example, if a spouse were to get property instead of alimony, the property can be exempted the same way that the support would have been had it been labeled as alimony or child support.

Proceeds from life insurance – The cash value of a life insurance policy is exempt from being taken. However, whole life insurance – a policy that allows the policyholder to withdraw money, and use the insurance as a type of savings account – can possibly be taken by the bankruptcy trustee. However, if you are receiving payments pursuant to any type of life insurance policy, the proceeds are exempt.

Income from Social Security – Social Security income is protected, and it maintains its protected status even if it is deposited in a bank account. Just be aware that this is strictly a bankruptcy exemption—Social Security is not exempt from being taken by the government to satisfy other kinds of debts.

Pensions – Almost every type of pension is exempt from being taken by the court.

Prepaid College – A legitimate prepaid college fund established under the Florida prepaid college fund cannot be taken in bankruptcy. Remember that the account must be one set up according to the prepaid college program. Simply putting money away in an account and saying you’re saving it for college won’t get you the exemption.

We can help you protect property and use your legal exemptions to the fullest extent possible. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 for help with your bankruptcy case.

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