Realizing that you have more bills than money every month is difficult. Once you hit that point, you may decide that you need to file bankruptcy. One of the first things you have to do if you’re doing this is to determine if you should file Chapter 7 or Chapter 13.
A Chapter 7 bankruptcy is known as a liquidation bankruptcy because the bankruptcy trustee has the ability to liquidate certain assets and use the proceeds to pay debts. There are specific assets that are exempt from this. Understanding those is important because it may help you decide how to handle the situation.
What assets are exempt in Florida?
Florida is one of the states in the United States that doesn’t allow residents to choose between state and federal exemptions. This is actually good news for Florida residents because the state’s exemptions are much more generous than the federal ones.
- Homestead exemption: All equity in a home that’s up to one-half acre in a municipality or up to 160 acres out of a municipality is fully exempt
- Personal property: Up to $1,000 in personal property that’s not covered under other exemptions, but it increases to $4,000 if you don’t use the homestead exemption
- Motor vehicle exemption: Up to $1,000 in equity
- Pensions and income: Most pensions, up to $750 per week of the head of household’s income and up to 75% or 30 times the federal minimum wage for others in home
In many Chapter 7 bankruptcies, the non-exempt assets aren’t liquidated because the value of them isn’t going to make a difference in the debts. This is a decision that the trustee must make, so it may help to have someone on your side who can assist you with this part of the case.