Florida Law Shields Homes From Creditors
Both inside and outside of bankruptcy, exemption laws protect debtors’ property from their creditors. Florida, in particular, has always had a reputation as a state with a generous homestead exemption and deservedly so. Florida laws allow debtors to exempt the full value of their homestead, including mobile homes. This means that regardless of your home’s value, a judgment creditor cannot force the sale of your home in satisfaction of debt.
Florida Homestead Exemption in Bankruptcy
It is important to be aware, that in a bankruptcy case, the Florida homestead exemption has limits depending on the length of time you’ve lived in Florida. Florida bankruptcy debtors can only protect $137,000 (or $274,000 if filing a joint petition) of home equity for the first 40 months they live in the Sunshine State.
Caution: you can’t just move to Florida, buy a house and then file for bankruptcy to wipe out all your debts. It is important to make sure that Florida law applies to your bankruptcy case at all. If you have moved to Florida within the last two years, you may not be able to avail yourself of the generous protections offered by Florida’s homestead exemption and the laws of your previous state will apply. If you are concerned that Florida law may not apply to your bankruptcy case, consult a Florida bankruptcy attorney.
Eligibility Requirements: Location, Acreage
Assuming Florida bankruptcy law applies to your case, it is likely that your home will be exempt. However, be aware that the exemption does not apply to investment property. The Florida Constitution defines “homestead” as one’s principal residence up to one half acre in a municipality or 160 contiguous acres elsewhere. Contiguous property may include lots with separate legal descriptions and separate tax numbers.
Interplay Between FL Homestead and Wildcard Exemptions
Another factor to consider when filing bankruptcy in Florida, is the interplay between the state’s homestead and wildcard exemptions. In 2007, the Florida legislature passed a law that allows debtors who aren’t exempting a home to protect more of their personal property. After all, renters should be able to get through bankruptcy with some assets as well, right? Under the 2007 law, you can’t use both the homestead and wildcard exemption in Florida, you must choose between them. This important because Florida’s wildcard exemption allows debtors to protect an additional $4,000 of personal property or $8,000 for married couples filing joint cases. When the homestead exemption is used, only personal property up to $1,000 is exempt.
See Also: What Is a Homestead Exemption?
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