Understanding Florida’s Bankruptcy Exemptions
Florida has specific bankruptcy exemptions that allow bankruptcy filers to protect certain assets when filing for bankruptcy. Also, Florida only allows state exemptions to be used. To take advantage of Florida’s bankruptcy exemptions, you must satisfy the residency requirements. If you don’t, then you have to use the exemptions of the state you previously resided in.
How Many Bankruptcies Were Filed in Florida?
Unfortunately, with the high costs of property taxes and home insurance, living in Florida has become more expensive. Because of that, we are even looking to relocate out west. We are also tired of dealing with hurricanes and want to experience cooler weather.
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In the Northern District of Florida, a total of 2,099 bankruptcies were filed. For Chapter 7, 1,535 bankruptcies were filed, and 515 Chapter 13 cases. The Middle District, which is the largest district, had 21,094 bankruptcies filed, with 15,761 being Chapter 7 and 4,858 being Chapter 13.
Most of my career was in the Southern District of Florida, which includes Miami, Broward, and Palm Beach County. In the Southern District of Florida, 13,963 total bankruptcies were filed, with 7,387 filings for Chapter 7 and 6,268 for Chapter 13.
These are the year-end figures for 2024.
The 730-Day Rule and the 180-Day Rule
If you have lived in Florida for more than 730 days, you would use the state’s bankruptcy exemptions, which are referred to as the 730-day rule. If you do not meet this residency requirement but have lived in Florida for at least 91 days, you would apply the exemptions from your previous state of residence. This is known as the 180-day rule.
This is crucial because whether you are moving to or from Florida, you need to evaluate which state offers better exemptions based on your specific situation. To learn more about exemptions under the Bankruptcy Code, see §522(b)(3)(A).)
Florida Homestead Exemption
Once you have confirmed you meet the 2-year residency requirement, you will apply the Florida exemptions to your assets. This helps determine what is exempt. Let’s start with the homestead exemption as an example.
Florida offers an unlimited exemption for your primary residence, meaning you can protect all the equity in your home as long as it meets certain requirements. However, you must own the home for a total of 1,215 days. See Section 522 of the Bankruptcy Code.
Article X of the Florida Constitution, in part, reads as follows:
SECTION 4. Homestead; exemptions.—
(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:
(1) a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner’s consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family;
The unlimited homestead exemption can be seen in Fla. Const. Art. X, § 4(a)(1); Fla Stat Ann Secs. 222.01 & 222.02.
Personal Property Exemptions
Florida’s bankruptcy exemptions for personal property protect other assets as well, but those protections are minimal. I would guess that, because of the unlimited homestead exemption, protection for other assets is less. However, this makes it unfair for non-homeowners, but they do get a small increase in protections known as the wildcard exemption.
In Florida, you can exempt up to $1,000 worth of personal property, such as furniture, electronics, and clothing. If you don’t use the homestead exemption, this increases to $4,000. This is explained below with what is known as the wildcard exemption.
See Article X of the Florida Constitution, section 4(a)(2), “personal property to the value of one thousand dollars.”
The Florida Wildcard Exemption
The Florida Wildcard Exemption applies to debtors who do not own a home. It increases the personal property protection up to $4,000.
Florida Statute: 222.25– Other individual property of natural persons exempt from legal process.—The following property is exempt from attachment, garnishment, or other legal process:
(1) A debtor’s interest, not to exceed $5,000 in value, in a single motor vehicle as defined in s. 320.01(1).
(2) A debtor’s interest in any professionally prescribed health aids for the debtor or a dependent of the debtor.
(3) A debtor’s interest in a refund or a credit received or to be received, or the traceable deposits in a financial institution of a debtor’s interest in a refund or credit, pursuant to s. 32 of the Internal Revenue Code of 1986, as amended. This exemption does not apply to a debt owed for child support or spousal support.
(4) A debtor’s interest in personal property, not to exceed $4,000, if the debtor does not claim or receive the benefits of a homestead exemption under s. 4, Art. X of the State Constitution. This exemption does not apply to a debt owed for child support or spousal support.
Motor Vehicle Exemption
You can protect up to $5,000 in equity for a vehicle, as seen above subsection 1 of Florida Statute 222.25. Note that last year, the motor vehicle exemption increased. So be careful because most websites I’ve seen still have the exemption listed at $1,000. I’ve noticed similar mistakes with all the other states I’ve worked on.
Let’s review how exemptions work to protect your vehicle.
Suppose your car is worth $8,000, but you owe $14,000 to the lender. In that case, there is $6,000 negative equity in your car, or your car is “underwater.” Basically, you owe more on your car than it is worth. But let’s reverse the figures. Now your car is worth $14,000, but you owe $8,000. With $6,000 in equity, subtracting the exemption of $5,000 leaves $1,000 non-exempt or not protected. That is the amount that belongs to the bankruptcy estate.
This means the trustee can require that you pay back $1,000 to keep your car. In Chapter 7 cases, the maximum amount of time a trustee can extend payments on non-exempt assets is twelve months. However, bankruptcy trustees prefer a ten-month payment plan.
Note that Chapter 13 does offer what is known as a cramdown. The cramdown allows you to reduce the value of your vehicle to the fair market value. It could potentially save you thousands of dollars. Use the links below to learn more about the Chapter 13 cramdown.
- Understanding the Liquidation Test in Bankruptcy – Bankruptcy.Blog
- What is the Chapter 13 Cramdown? (YouTube Video)
For information on the Florida Bankruptcy Court System, follow this link. Contact information for the trustees in each district can be found via this link.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
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