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Which Bankruptcy Exemptions Will You Be Able To Use?


Florida has very generous bankruptcy exemptions. If you live in Florida, you get the benefit of all those exemptions, right? Well, the answer is a bit more complex than that, because there are residency requirements that you must meet first, before you can qualify to take advantage of Florida’s bankruptcy exemptions.

Choosing Exemptions

As a general rule, states can choose between using bankruptcy exemptions that are allowed by federal law, or states can opt to use their own exemptions, which are in state law. Florida has chosen the latter, to utilize their own exemptions, meaning that a filer in Florida must use Florida’s exemptions-a filer cannot use federal bankruptcy exemptions.

Homestead Issues

This can be a good thing, especially if you have a home, and want to take advantage of Florida’s very generous, practically unlimited homestead exemption. With certain limited exceptions, all of the equity in your home is protected and safe, and can never be taken by the bankruptcy court (what qualifies as a “home” or “homestead,” is a separate legal topic, but generally so long as you reside in the property, it is your homestead for bankruptcy purposes).

Residency Time Requirements

To use Florida’s exemptions, you must have lived in the state for 2 years prior to your filing for bankruptcy. If you lived in Florida for less than that time, you must use the bankruptcy exemptions that applied in whatever state you most recently lived in.

However, some states say you can’t use their exemptions, unless you currently live in that state.

So, let’s say that 6 months ago you moved from State A, to Florida. Because this is less than 2 years, State A’s bankruptcy exemptions would apply. However, State A says that you need to live in the state to use their exemptions.

This would mean that you would “default” to using the federal bankruptcy exemptions.

This can also happen if the state whose bankruptcy laws applied, automatically used federal exemption laws, in which case, you too would have to use the federal exemptions, again, assuming you haven’t lived in Florida for two years prior to filing your bankruptcy case.

Federal Exemptions May Be Just Fine

If you do end up having to use federal bankruptcy exemptions, it’s not all bad news. Federal exemptions do provide some protections that Florida law does not. For example, federal law allows you to have a jewelry exemption, exemption for work equipment or tools, and for health devices, none of which Florida law provides.

This means that if you have lived in Florida for just under 2 years, and you are thinking of filing for bankruptcy, now may be the time to see a bankruptcy attorney. You may be in a special place where you can time your filing, based on which exemptions work best for your particular situation.

The timing of your bankruptcy case can make a big difference to you. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today.

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