In order for people in Florida to qualify for bankruptcy exemptions, they must meet a residency requirement. The claimant (the party requesting a bankruptcy) must have resided in Florida prior to the bankruptcy action. Domicile in Florida refers to an intent to reside in the state for a long period of time, usually indefinitely. In re Dwyer 305 B.R. 582, 585 (Bkrtcy. M.D. Fla., 2004). The way an individual proves domicile is not necessarily through actual residence but by simply showing that one has an address, driver's license, voter registration or other qualifications. Florida is pretty liberal with allowing people filing for bankruptcy to claim exemptions. Because Florida has chosen to "opt-out" of the Federal Exemption Scheme, claimants must use Florida state exemptions rather than federal ones. This has traditionally provided protections for Florida residents. This article looks at the two major bankruptcy exemptions in Florida: the homestead exemption and and the personal property exemption.
Exemptions
Exemptions enumerate properties that cannot be taken away through bankruptcy actions. They provide protections to those needing to file bankruptcy. Exemptions are one way claimants can protect their assets when they file for Chapter 7 or Chapter 13 bankruptcy in Florida. Applying exemptions correctly is a very important step in the filing process and can result in the claimant being allowed to keep his or her personal and real property out of the Bankruptcy Estate.
Homestead Exemption
Florida's homestead exemption is among the most generous in the US and offers unlimited protection to certain real property up to the owner's equity in the property. A homestead is legally thought to be a private, residential property on which a family lives. A homestead asset exemption prevents a creditor from taking away a debtor's primary residence in the event of a bankruptcy. Pursuant to Florida’s State Constitution, the homestead that is exempted from forced sale can include residential land up to 160 acres (outside a city) and a half acre (within a city). West's F.S.A. Const. Art. 10 § 4(a)(1).
Personal Property Exemption
Up to a thousand dollars is protected from creditors, including an additional thousand for a spouse. West's F.S.A. Const. Art. 10 § 4(a)(2). Also exempt automatically are special savings accounts, including education funds, medical savings accounts and hurricane accounts. West's F.S.A. § 222.22. Florida is also quite liberal about providing exemptions for wages for the head of the household. Up to $500 a week is prevented from attachment and garnishment (meaning taken away by creditors). West's F.S.A. § 222.11. Welfare income, such as social security and other benefits, is also limited in garnishment. Although the personal property exemption has been reduced by federal law, it is still quite extensive.
Recent Issues with Florida Exemption Law
While the laws in Florida are quite liberal in providing exemptions for claimants seeking bankruptcy, in recent years with financial problems looming and real estate values on the decline, there has been a general reduction of benefits for bankruptcy claimants in Florida. To rectify this problem, the Florida legislature recently revised Florida’s exemption scheme by increasing the amount a debtor can claim as exempt property when the debtor does not receive the benefit of Florida’s homestead exemption. In other words, if you do not own a home, you can protect more personal property. Specifically, Florida has increased personal property exemptions to $4,000 for those who choose not to take advantage of the homestead exemption. West's F.S.A. § 222.25(4).
