What Happens to My Assets When I File for Bankruptcy in Florida?
Many people struggle with money. There is just never enough. Debts keep increasing while wages stay the same.
As a last resort, many people consider bankruptcy. However, bankruptcy can be scary for a lot of people. They do not know what to expect. They are afraid they may lose their assets.
This is possible. When you file for bankruptcy in Florida, your assets are subject to either liquidation or protection, depending on the type of bankruptcy you file. Liquidation means selling assets to convert them into cash. This cash is then used to pay off the debt you owe creditors.
This means you could lose your home, car, furniture, and other assets. Here’s a closer look at what to expect.
Chapter 7 Bankruptcy
Chapter 7 is designed to discharge most unsecured debts, such as credit cards and medical bills, but may require you to surrender some assets. A court-appointed trustee will oversee your case and may sell non-exempt assets to repay creditors.
Exempt assets include:
- Homestead exemption. Florida has one of the strongest homestead exemptions in the country. Your primary residence is fully protected regardless of its value if it sits on no more than half an acre in a municipality or 160 acres in a rural area. However, if your home isn’t fully paid off, you must remain current on mortgage payments to keep it.
- Personal property. You can protect up to $1,000 in personal property (or $4,000 if you do not use the homestead exemption). This includes furniture, electronics, and household goods.
- Motor vehicle exemption. You can exempt up to $5,000 in vehicle equity (the value of your car minus any loan balance). If the car is worth more than the exemption, the trustee may sell it.
- Retirement accounts and pensions. 401(k)s, IRAs, and government pensions are fully protected.
- Wages and public benefits. If you’re the head of household, your wages may be fully exempt. Social Security, workers’ compensation, disability, and unemployment benefits are also protected.
Non-exempt assets are at risk of being sold and include:
- Second homes or investment properties.
- Extra vehicles or luxury items.
- Expensive jewelry, artwork, or collectibles.
- Large amounts of cash.
Chapter 13 Bankruptcy
Chapter 13 is appropriate for those who want to retain certain assets through a repayment plan. It restructures your debt into a three- to five-year repayment plan based on your income and expenses. Instead of liquidating assets, you pay creditors over time based on what you can afford.
You keep your home, even if you are behind on mortgage payments. Chapter 13 allows you to catch up on missed payments over time. You can keep non-exempt assets, but their value affects your payment plan. Chapter 13 requires a steady income to make monthly payments.
Contact Us Today
You may be able to keep some assets in bankruptcy, but it largely depends on the type. In many cases, they are sold to pay off creditors.
West Palm Beach bankruptcy attorney Brian K. McMahon, P.A. can provide you with all the information and advice you need to get through bankruptcy in a quick and stress-free manner. Schedule a consultation today by calling (561) 658-1789 or filling out the online form. We serve the West Palm Beach, Boca Raton, Port St. Lucie, and South Florida areas.