If you are in dire financial straits and holding off filing for bankruptcy because you are worried about protecting your property, here are a few things you should know.
Florida’s homestead exemption offers protection to homeowners. If you have been a legal Florida resident for at least two years, and you have owned your home for at least 3.5 years, you may be fully protected under the Homestead Act from losing your home. If you have owned your property for less than 3.5 years, only a portion of the value of your home may be protected under bankruptcy law.
Other Protected Assets Under Bankruptcy
- If you have claimed a homestead exemption, you may retain $1,000 in personal property assets after bankruptcy; but if you have not claimed homestead exemption, you may qualify to keep $5,000 worth of assets per person in your household.
- Most employee Retirement plans are exempt from creditor claims.
- Individual retirement accounts and most annuities may be exempt. If you file outside of Florida, be aware that a recent Supreme Court decision ruled that bankruptcy may only protect IRA contributions the debtor made personally; inherited income from another person’s IRA may not be protected in other states.
- Personal property pledged to a secured creditor, such as a motor vehicle, recreational vehicle or boat may be retained, provided payments can be maintained.
- An unsecured motor vehicle with equity of $1,000 or less is protected. If you have more than $1,000 in equity, you should consult an attorney.
- Cash value of your life insurance, provider you are both the owner and the insured party.
Other protections under the law cover the bank account of a head-of-household when that account contains only wages; contributions made to college trust funds more than a year before bankruptcy filing; and personal property that was previously pawned.
Need more information before deciding if bankruptcy is right for you? Contact a qualified bankruptcy attorney.