Federal bankruptcy law is the domain of the U.S. Congress according to the authority granted them by the Constitution. Unfortunately, federal legislation doesn't always address every specific need or circumstance that arises in a bankruptcy court. Therefore, state bankruptcy laws are often used to fill in the gaps left by federal legislation. Florida bankruptcy laws, for example contain some significant differences, particularly when it comes to the area of exemptions.
Exemptions are those assets which can be protected from creditors throughout a bankruptcy proceeding. These types of assets can remain the possession of the owner as long as they fall within the guidelines as provided by Florida law. Ultimately, the federal trustee will have to make that determination, as he or she is responsible for liquidating assets and dispersing the funds. Exemptions can be applied both in cases of liquidation and reorganization.
Specific Florida Exemptions
According to Florida law there are seven categories of exemptions debtors must consider when filing for bankruptcy. The following is a list of those categories and a brief description of what they entail.
Homestead - The homestead exemption is pretty universal throughout the United States in that it does not allow a person's primary residence to be seized by a court. It's also not considered an asset in terms of total net worth in a reorganization plan.
In the state of Florida, the exemption applies to any real property - whether it is a standard home, a modular home, or a mobile home. If it is the primary residence of the debtor it is completely off-limits. If it is a tenant dwelling owned by more than one party, it is also off-limits provided the other parties are not involved in the bankruptcy proceeding. Finally, if it is property owned by multiple members of a family, it also cannot be touched if the debtor is the only one involved in the bankruptcy.
Insurance - Florida law prohibits the seizure of annuity proceeds, death benefits, disability benefits, or the surrender value of a life insurance policy. Other securities may be up for grabs in a bankruptcy proceeding, but these are not. If you have to declare bankruptcy, you need not be afraid of that your annuity or life insurance policies will be wiped out.
Miscellaneous - Most of the things included in the miscellaneous category are things that don't easily fit into another category. The first example would be alimony payments that are needed to support children. Also in this category we find damage awards given to employees working in hazardous occupations, business property owned in partnership and deposits pre-need funeral arrangements.
Pensions - The pensions of firefighters, police officers, teachers, and state and county employees are exempt under federal law.
Personal Property - Personal property up to $1,000 in value ($2,000 for husband-and-wife), motor vehicles valued at $1,000 or less, and medical equipment is also exempted under Florida bankruptcy law.
Public Benefits - Public benefits exempted in Florida include things like workers compensation payments, injury recovery from hazardous occupation payments, Social Security, unemployment compensation, veteran’s benefits, and public assistance benefits.
Wages - up to $500 per week in wages are exempt provided that money is deposited into a bank account for up to six months. Any monies over or above that amount are considered disposable income and no longer exempt.
US and bankruptcy courts in Florida
There are three district courts in the state of Florida: the Northern District, Southern District, and Middle District. Each one of these district courts has jurisdiction over several Florida counties. You must file your bankruptcy petition either within the district in which you reside or the district in which you conduct the majority of your business affairs. Within each district there are several local courts that accept your paperwork. Your attorney will know where the most appropriate location for you is.
Florida Credit Counseling
A 2005 piece of legislation made it much more difficult for individuals to file bankruptcy in Florida after that year. Beginning in 2005 anyone filing personal bankruptcy in the state of Florida is required to undergo consumer credit counseling. The purpose of this counseling is to determine whether or not an individual's financial problems can be solved without going into bankruptcy court. If not, the counseling agency will provide a certificate of completion that the debtor must file with his petition. Without prior consumer credit counseling, your case will receive immediate and unfavorable discharge.