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Florida Bankruptcy Lawyer: What property can I keep? Part 2

Many clients ask me if they will lose everything when they file bankruptcy. The answer is a resounding NO! It is likely that they will keep most, if not all of their property.  Florida has exemptions which is property that is not included in the bankruptcy estate.  The debtor who files bankruptcy can keep this exempt property.

Chapter 7 is a “liquidation” bankruptcy.  Debtors are eliminating all their unsecured debt – debts usually comprised of credit cards, medical bills or judgments not based on intentional acts.  They may choose to walk away from secured assets as well.  Secured assets are any property that is protected by some form of agreement that keeps ownership of the property in the creditor until it is paid for.  Homes, leased or financed vehicles or even expensive TVs and the like are examples of secured assets.  These assets can be forfeited in bankruptcy and the debtor is relieved of any deficiency or liability on the debt.

In exchange for this “liquidation”, debtors can only keep a certain limited amount of property.  Florida allows $1000.00 dollars applied to any personal property of each debtor filing; $1000,00 dollars of equity in one vehicle titled in each debtor; their home, if it is current in it’s payments or $4000.00 dollars in additional exemption applied to any property the debtor wishes if they do not keep their home.  Their qualified retirement funds are exempt as well and client’s are cautioned never to touch these funds for any reason.  Death benefits, annuity contracts, disability benefits and life insurance cash values are also exempt.  Exemptions exist for Alimony and child support as well as crime victims funds, public assistance and social security.

For the self employed, unfortunately, tools of the trade are not exempt nor is the value of their company.  The business has value and the Trustee will likely seize the value of the stock or what the company is worth if that value exceeds the exemption limits.  For those businesses that have significant value, debtors can turn to Chapter 13 for relief as that bankruptcy is a re-organization and debtors are allowed to continue their normal business activities, thereby keeping business assets.

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