Chapter 7 Bankruptcy Exemptions and Non-Dischargeable Debt

Lynette Silon-Laguna

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Bankruptcy Attorney

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Posted over 4 years ago. 3 helpful votes

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Chapter 7 Common Exemptions in Florida

You must be a resident of Florida for two continuous years to take advantage of Florida’s exemptions. If not, then either the Federal exemptions or the exemptions of the state in which you previously lived will apply. A consumer debtor may claim certain items of property as “exempt" and thereby keep those items. When you file for bankruptcy, all property that is not exempt is included in the bankruptcy estate and must be given to the trustee for the benefit of the creditors. This can be done by actually giving the property to the trustee or paying the trustee the value of the property. You can usually pay a reduced amount for a lump sum payment or the full amount for installment payments.

  • Homestead: If you are living in a home you own, then in Florida that home is considered your homestead. If you intend to retain your home in the bankruptcy, then you are able to exempt all of the equity in it if you have owned it for more than 1215 days. If you have owned it less than 1215 days at the time of filing, then you can only exempt up to $125,000 of equity.

  • Personal Property Exemption: For an individual filer, the personal property exemption is $1,000 if you retain your homestead. The personal property exemption is $4,000 if you surrender your homestead or you do not have a homestead. For joint filers, the personal property exemption is $2,000 if you retain your homestead. The personal property exemption is $8,000 if you surrender your homestead or you do not have a homestead.

  • Vehicle Exemption: For an individual filer, the vehicle exemption is $1,000 and for joint filers, the vehicle exemption is $2,000. Note that the personal property exemption can be also be used for your vehicle.

  • Retirement Benefits: Most retirement benefits are 100% exempt from the bankruptcy estate.

  • Life Insurance Proceeds: If you own a life insurance policy with a cash value, the cash value is 100% exempt from the bankruptcy estate.

  • Unemployment Compensation, Veteran’s Benefits, Disability Benefits: 100% exempt from the bankruptcy estate.

Non-Dischargeable Debt in Chapter 7 Bankruptcy

The following debts are non-dischargeable in Bankruptcy:

  • Student Loans (with rare exceptions)

  • Income Taxes (less than 3 years old)

  • Property Taxes (with certain exceptions)

  • Child and Spousal Support

  • Divorce Property Settlements

  • Fines and restitution imposed by a court for any crimes committed by the debtor

Note that even though these debts are non-dischargeable, they must be listed on the bankruptcy schedule.

A New Financial Beginning

Bankruptcy provides a means of discharging most of your debt to allow you a new financial beginning. Gradually your credit score can increase after bankruptcy. If you do nothing, your credit score will actually remain worse than it would be if you discharged your debt in bankruptcy. Furthermore, you will be free from the endless calls from creditors and collection letters. Upon filing, an automatic stay is in place and the calls and letters from creditors must cease.

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