Can I Keep My Stuff in Bankruptcy?
Paul G. Tellez, Esq. - Associate, Jay M. Weller, P.A. - January 2005

That depends . . . Whether a Debtor (a person who files for Chapter 7 or Chapter 13 Bankruptcy) can keep his or her worldly possessions while in bankruptcy is a function of the "exemption" laws that determine what possessions of the Debtor become property of the bankruptcy estate, and therefore, allow the Debtor to keep his "stuff."

What are the Florida Exemptions?

The exemption laws are certain provisions of the Federal Bankruptcy Laws, the Florida Statues, and the Florida Constitution that determine what the Debtor may shield or protect from his creditors (the people and businesses to whom the Debtor owes money).

In order to use the Florida exemptions in filing for bankruptcy relief, a person must be consistently domiciled in Florida for the previous 180 days before filing or, at a minimum, for 91 out of the past 180 days.

Florida is an "opt-out" state and use of the generous "federal" exemptions is not allowed for Florida residents.

Some of the Florida exemptions are as follows:

• Homestead Exemption - A Florida Homestead may be kept as exempt or "protected" from the bankruptcy estate. The maximum dollar value of a homestead is unlimited. The Debtor can live in a plywood shack or giant mansion, BUT the size of the land is limited to ½ acre if located within a Florida municipality and 160 acres if located outside of a Florida municipality.
• $1,000 Personal Property Exemption - Each bankruptcy Debtor may exempt or protect $1,000 worth of personal property from the bankruptcy estate. The term "personal property" has a broad definition for purposes of bankruptcy and it includes such items as: furniture, appliances, clothing, jewelry, money in the bank, stocks, bonds, cash surrender value of a whole life insurance policy, and even a potential lawsuit or claim that the Debtor may have against someone else. In determining how much something is worth, the Court looks only at the item's fair market value, or garage sale value. Imagine that if you had to quickly move away from Florida to another state, and had to sell everything you own in a quick yard sale, how much would you get for everything?
• $1,000 Motor Vehicle Exemption - Each bankruptcy Debtor may exempt or protect $1,000 worth of equity in a motor vehicle. "Equity" refers to that part of the value of the vehicle that is not encumbered by a lien. For example, Joe owns a 2001 Ford Mustang worth approximately $4,000. Joe has been making payments to Ford Motor Credit the past two years, but still owes $2,500, so the difference between $4,000 and $2,500 is $1,500. Joe's equity in the Ford Mustang is $1,500. Unfortunately, the motor vehicle exemption is very often the factor that prevents a person who owns his car free and clear from filing a worry-free Chapter 7 Bankruptcy. Equity over $1,000 in a motor vehicle will not necessarily prevent the Debtor from seeking relief under Chapter 7, but to the extent that the Debtor's equity in the vehicle exceeds $1,000, the Debtor may have to pay the Trustee the difference in order to keep his vehicle. Remember Joe? If he files a Chapter 7, Joe may have to pay the Chapter Trustee $500.00 to keep his vehicle.
• Pension Plans, IRAs, 401(K) and other Retirement Plans - these types of savings plans are generally exempt as long as the underlying purpose behind the account is for a person's retirement.

So, to answer the original question as to whether a person can keep his stuff in bankruptcy:

1. A person in a Chapter 7 bankruptcy may keep all of his stuff if the fair market value of his personal property does not exceed the value of $1,000 and he does not have equity in a motor vehicle that does not exceed $1,000;
2. A person in a Chapter 13 bankruptcy can almost always keep his possessions (even if the value of his personal property exceeds $1,000) as long his Chapter 13 plan pays his unsecured creditors at least that amount they would receive if the Debtor's personal property were liquidated
.

Everyone's case is different and no two cases are factually alike. Before considering bankruptcy, consult with a legal professional at Jay M. Weller, P.A. for sound advice on how to approach the issue of protecting your "stuff" under the Florida exemptions.

Julian Credit Management is a firm that practices exclusively in the area of Bankruptcy and Debt Consolidation and has offices in Clearwater (Pinellas County), Port Richey (Pasco County), Tampa (Hillsborough County), Lakeland (Polk County) and Orlando (Orange County). We represent persons throughout the State of Florida.

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