Exempt vs. Non-Exempt Property

When creditors seek to collect on their debt (usually after a lawsuit and a final judgment is entered in their favor), they eventually look for assets they can seize to offset the debt they are owed. This typically comes in the form of garnishing a bank account. But it could also go as far as the sheriff coming to your house to seize a vehicle or even your household furnishings. However, there are laws that control the type and amounts of property that a creditor may be entitled to, and many types of property have protections that essentially make them immune from creditor collection efforts. These protections are known as “exemptions” under the law. Property protected from creditors is known as “exempt” property. Property not protected from creditors is known as “non-exempt” property.

Every state passes its own laws regarding type and amount of property that its residents can exempt from creditors. In Florida, our exemption laws are found both in the Florida Constitution and the Florida Statutes. The Bankruptcy Code also provides federal exemptions on certain property, up to certain amounts. These federal exemptions in the bankruptcy code might be available in a bankruptcy filing, as availability of the federal bankruptcy exemptions depends largely on your state of residency during the three years before your bankruptcy filing, or the location of the property itself. Typically, most South Florida residents that file bankruptcy in Broward, Dade and Palm Beach counties rely on Florida exemptions to protect their property, but this is not always the case. Call us today for a free attorney phone consultation to better understand the exemptions that may be available to you.

Exemptions

Once you file for bankruptcy, all of your property instantaneously becomes property of the bankruptcy estate. However, the bankruptcy schedules we file in your bankruptcy for you will claim all available “exemptions” on your property. Again, whether you claim Florida exemptions, federal exemptions or some other state’s exemptions depends largely on where you lived in the years before your bankruptcy filing, or the location of the property itself. To sum up, claiming proper exemptions on your property is a critical step in the bankruptcy process.

You may be able to exempt all or at least most of your property from bankruptcy estate. But that depends on property you own, its value and the exemption laws to which you are entitled. If most or all of your property is exempt property, you will likely have no-asset bankruptcy case. Where there is no (or not enough) unprotected (i.e., “non-exempt”) property available for the trustee to liquidate and make a meaningful distribution to your creditors.

The most common exemptions under Florida law are outlined below:

The Florida Homestead Exemption

This exemption stems from the Florida Constitution, and is one of the strongest protections available, arguably anywhere in the word! It is designed to protect your primary residence from foreclosure by unsecured creditors or a bankruptcy trustee. As long as the property is located in Florida, and your intent is to keep the property as your primary residence, you can qualify for Florida’s Homestead exemption (but be aware of certain limitations tha may be imposed in a bankruptcy filing – call us today to learn more about potential homestead pitfalls in bankruptcy). Assuming your homestead is protected under the Florida exemption, then the equity in the homestead is also protected, but the protections can be limited or defeated in certain scenarios. It is critical to speak with experienced SouthFlorida bankruptcy attorney to best understand details around your homestead exemption rights.

Florida Personal Property Exemptions

This exemption stems from the Florida Constitution, and is one of the strongest protections available, arguably anywhere in the word! It is designed to protect your primary residence from foreclosure by unsecured creditors or a bankruptcy trustee. Likewise, as long as the property is located in Florida, and your intent is to keep the property as your primary residence, you can qualify for Florida’s Homestead exemption (but be aware of certain limitations tha may be imposed in a bankruptcy filing – call us today to learn more about potential homestead pitfalls in bankruptcy). Assuming your homestead is protected under the Florida exemption, then the equity in the homestead is also protected, but the protections can be limited or defeated in certain scenarios. It is critical to speak with experienced SouthFlorida bankruptcy attorney to best understand details around your homestead exemption rights.

Florida Motor Vehicle Exemption

This exemption stems from the Florida Constitution, and is one of the strongest protections available, arguably anywhere in the word! It is designed to protect your primary residence from foreclosure by unsecured creditors or a bankruptcy trustee. Similarly, as long as the property is located in Florida, and your intent is to keep the property as your primary residence, you can qualify for Florida’s Homestead exemption (but be aware of certain limitations tha may be imposed in a bankruptcy filing – call us today to learn more about potential homestead pitfalls in bankruptcy). Assuming your homestead is protected under the Florida exemption, then the equity in the homestead is also protected, but the protections can be limited or defeated in certain scenarios. It is critical to speak with experienced SouthFlorida bankruptcy attorney to best understand details around your homestead exemption rights.

Other Florida Exemptions. Besides the above general exemptions, there are a variety of exemptions on special asset classes, as outlined below:

121.131 Benefits To Public Officers And Employees Exempt

122.15 Pensions, Annuities And Other Benefits To Public Officers And Employees Exempt

175.241 Firefighter Pensions Exempt

185.25 Police Pensions Exempt

222.01 Designation Of Homestead By Owner Before Levy.

222.11 Exemption Of Wages From Garnishment.

222.13 Life Insurance Policies; Disposition Of Proceeds.

222.14 Exemption Of Cash Surrender Value Of Life Insurance Policies And Annuity Contracts From Legal Process.

222.18 Exempting Disability Income Benefits From Legal Processes.

222.201 Limited Federal Bankruptcy Exemptions, Under 522(D)(10): (A) A Social Security Benefit, Unemployment Compensation, Or A Local Public Assistance Benefit;

(B) A Veterans’ Benefit;

(D) Alimony, Support, Or Separate Maintenance, To The Extent Reasonably Necessary For The Support Of The Debtor And Any Dependent Of The Debtor;

(E) A Payment Under A Stock Bonus, Pension, Profitsharing, Annuity, Or Similar Plan Or Contract On Account Of Illness, Disability, Death, Age, Or Length Of Service

222.21 Exemption Of Pension Money And Certain Tax-Exempt Funds Or Accounts

222.22 Exemption Of Assets In Qualified Tuition Programs, Medical Savings Accounts, Coverdell Education Savings Accounts, And Hurricane Savings Accounts

222.25 Motor Vehicle, Not To Exceed $1,000 Exempt

222.25 Exemption Of Assets In Qualified Tuition Programs, Medical Savings Accounts, Coverdell Education Savings Accounts, And Hurricane Savings Accounts From Legal Process.

238.15 Teachers’ Pensions, Annuities Or Any Other Benefits Exempt

440.22 Worker’s Compensation And Benefits Exempt

443.051 Unemployment Compensation Exempt

497.456(8) Funds In Preneed Funeral Contract Consumer Protection Trust Fund Exempt

632.619 Money, Benefits, Charity, Relief, And Aid From Fraternal Benefit Societies Exempt

744.626 Benefits From The United States Department Of Veterans Affairs Or The Social Security Administration To Or For The Benefit Of A Disabled Veteran Or Spouse Exempt

769.05 Recovery For Injuries in Hazardous Occupations Exempt

960.14 Victim Assistance Awards Exempt

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