Many people who come through my door want to know if their personal property is at risk of seizure in a bankruptcy. Generally, the answer is no, but it really depends on how much property we’re talking about.
A certain amount of property is exempt in bankruptcy. Which property qualifies as exempt depends on which state you live in and how long you’ve lived there. The state of Florida requires you to use its exemptions if you’ve lived here for two years or more.
Up until 2007, Floridians filing bankruptcy were able to exempt $1,000.00 in vehicle equity, $1,000.00 in personal property and their homestead property. However, many debtors lacked a homestead property, making the bankruptcy rules inequitable to a large class of debtors. Because Florida exemptions favored home owners for so long, an bill, CS/SB 2118 was passed to change the homestead portion of the exemption from “a homestead” to, “a homestead or $4,000.00 in additional personal property.” Oddly enough, it was in part the efforts of Douglas Neway that helped pass this bill. Douglas Neway is the Chapter 13 trustee, the very person whose job it is to attempt to collect money on behalf of the creditors.
If you are in a Chapter 7 bankruptcy and your personal property exceeds the exempt amount, we can offer the trustee a “buy back” plan. In one of these plans, we offer the trustee a manageable monthly payment to allow you to retain your property. If you don’t or can’t pay the monthly payment, you must surrender the property or have your discharge revoked. In a Chapter 13 the “buy back” option is automatically accounted for in the Chapter 13 payment plan.
Another way we have been keeping personal property from the hands of the trustee is by exempting it as property held as, “Tenancy by the Entireties”, a unique form of property ownership that requires a couple to be married couple and debts to be allocated a particular way.
If you would like to schedule a free initial consultation to learn how a bankruptcy will effect your personal property ownership, please contact us at 904-685-1200 or email me.