Safeguarding Assets Against Chapter 7 Liquidation
Probably the greatest concern held by individuals who are considering filing for bankruptcy under Chapter 7 is that it will require them to sacrifice a large portion of their personal assets. The risk of losing everything they hold dear is simply too great for them to move forward with this sweeping action for getting out of debt. Unfortunately, many people end up continuing to struggle under the burden of a large load of debt because they are unaware of the fact that thanks to Florida’s many bankruptcy exemptions, they might not have to give up anything at all.
There are exemptions available under both federal and state law, but in Florida it is only possible to use the state exemptions. This should not concern you, because Florida has some of the most generous exemptions of any state in the country. By claiming these exemptions, you can vastly reduce or even eliminate the portion of your personal estate which is available for the bankruptcy trustee to sell off to raise funds for paying back your creditors. In fact, you might even end up with a “no-asset case,” with you reaching the end of your bankruptcy without having to give up a thing.
What the Exemptions Cover
State law allows you to claim a number of different types of exemptions for items including personal income, insurance benefits, college savings and equity in your automobile. Perhaps the most important exemption is for personal property including furniture, jewelry and appliances. Initially it is only $1,000, but this can be increased to as much as $4,000 for an individual or $8,000 for a married couple by waiving the homestead exemption. You might wonder why anyone would choose to leave their house unprotected by waiving the homestead exemption, but to understand why this is a safe move you need to look at the situation from the viewpoint of the bankruptcy trustee.
If your house is underwater and worth less than you owe on your mortgage – which is true of nearly half of homes in Florida – the trustee will not be able to raise any money by selling it. Even if you have some equity, there is a very good chance that it is not enough to offset the costs of listing the home and of paying for real estate expenses and closing costs. An Ocala bankruptcy lawyer from The Law Offices of Justin McMurray, P.A. can assist by preparing your case and ensuring that all available exemptions are applied to protect your personal property to the fullest extent possible. We want to help you take full advantage of the benefits of bankruptcy and we encourage you to contact us now for a free consultation to learn more.