Bankruptcy may be the best way to resolve your debts if you are in severe financial trouble and cannot afford your bills. It is not shameful to file for bankruptcy. Every person has the right to file for bankruptcy if they are in a financial bind that is not manageable on their own.

While bankruptcy is generally a federal matter, federal bankruptcy courts may sometimes refer to state law when resolving specific issues such as property rights or exemptions.

The federal bankruptcy code is a default method of resolving these problems, but federal law permits a state to opt out and instead use state law exemptions for bankruptcies that are occurring in that state. Florida is an example of such “opt-out” state. This means that Florida law applies only to certain aspects that bankruptcies are heard in that state.

Florida Bankruptcy Test

Congress approved an amendment to bankruptcy law in 2005 to combat possible abuse by people who couldn’t afford to repay their debts.

Particularly, individuals who file for Chapter 7 bankruptcy, which results in the discharge most of their debts and not the adoption of a plan for paying back those debts as in a Chapter 13 chapter, are required to prove that they are eligible for Chapter 7 bankruptcy. This is called a means test.

The means test can determine one of the following outcomes:

• Any household with a household income below the median income, which is all income that comes into the household and not the income of the individual filing bankruptcy, automatically qualifies to file Chapter 7 bankruptcy.
• If the monthly income of a household is higher than the Florida median income, the person will need to show that after paying monthly expenses, the household has little or no income left over at the end.

Residency Requirement For Bankruptcy In Florida

The residency requirement must be met if you want to use Florida’s bankruptcy exempts in bankruptcy proceedings. There are two ways to meet the residency requirement:

• The minimum requirement is that you have been a resident of Florida for at most 730 days before filing your bankruptcy petition.
• If you lived in multiple states in the 730 days preceding filing your bankruptcy petition you must have been in Florida for the majority of the 180-day period.

If you are unable to prove your Florida bankruptcy residency, you will need to use the exemptions from another state or the standard federal bankruptcy exemptions.

Florida Bankruptcy Exemptions

In general, bankruptcy is a filing that includes all the property of an individual, including their rights. However, there are exemptions that allow certain types of property to be excluded from the bankruptcy estate. These exemptions are both under federal bankruptcy law as well as Florida law.

Listed below are some of the most important bankruptcy exemptions:

• Homestead Exemption The Florida Constitution provides an exemption for a person’s homestead or primary residence subject to certain restrictions such as land area.
• Personal property exemption The Florida Constitution allows for an exemption of up to $1,000 for personal property and up to $2,000 for jointly filing bankruptcy with a spouse. Florida law provides a limited exemption for wages, and an exemption of up to $1,000 for the value or equity of a vehicle if it is subject to a lien, loan, or other financial obligation.
• Pension Exemption Florida’s statutory law allows for exemptions from certain pension and employment benefits. These include exemptions for annuities, life insurance, workers’ compensation benefits, and unemployment benefits. Florida law exempts most retirement benefits such as IRAs and 401(k), plans, and Social Security retirement benefits.
• Wildcard Exemption A debtor can receive an additional $4,000 exemption on the personal property if they are not eligible for a homestead exemption. If filing bankruptcy jointly with a spouse, this exemption can be doubled.

Our Florida bankruptcy lawyers will help you understand Florida law and how they apply to your property.

Florida Rules on Federal Exemptions

You can use Florida bankruptcy exemptions if you qualify, but not the same exemptions under federal bankruptcy law.

However, there are federal bankruptcy exemptions that can be used in addition to Florida bankruptcy exemptions.

• Retirement benefits for federal civil servants, the Foreign Service, CIA, military, and railroad employees, as well as veterans’ benefits, Medal of Honor pensions, and Medal of Honor pensions
• Survivors’ benefits for military personnel and judges, U.S. courts directors, judicial center directors, and administrative assistants to the Chief Justice of The United States
• Disability and death benefits for government workers, longshoremen, and harbor workers
• Compensation for injury, hazard, or war
• Savings accounts for military personnel on active duty overseas.
• Benefits to certain Native American tribes
• Some Native American lands, homesteads, or lease proceeds
• Group life insurance for military personnel
• Railroad workers’ unemployment benefits
• Seamen’s Wages

Exemptions from bankruptcy can be complex and specific to each case. Our Florida bankruptcy lawyers can help you determine what property is eligible for exemption.

Speak To A Florida Bankruptcy Lawyer Today

Bankruptcy can be a complicated and time-consuming process. Filing for bankruptcy is difficult in Florida because certain laws in Florida are also applicable to federal bankruptcy law.

While a debtor does not have to hire an attorney to file a bankruptcy petition. However, having an attorney representing you in bankruptcy proceedings can help ensure that your rights are protected to the full extent allowed by law.

This post was written by Trey Wright, a Jacksonville chapter 11 lawyer with extensive experience! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

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