Florida’s Bankruptcy Laws offer a very generous Homestead Exemption for those filing bankruptcy here in the Sunshine State. As long as you have owned your homestead property for 1,215 days or more prior to filing bankruptcy, the Florida Homestead Exemption is unlimited! How awesome? Right?
However, don’t get too worried just yet if you have not owned your homestead for 1,215 days. You can still take advantage of the Florida Homestead Exemption and protect up to $125,000 of the equity in your home per Debtor. That means that a couple can still protect up to $250,000 of the equity in their home when filing bankruptcy together, which is still pretty awesome!
But what happens when you file a Chapter 7 Bankruptcy with other real property that is not your homestead? Can that property be protected? How the property is treated will completely depend on whether or not the property is mortgaged and/or if there is any equity in the property. If the property is encumbered by a mortgage and there is no equity in the property, then you should be able to simply continue making those normal monthly mortgage payments, and the bankruptcy should not have any effect on the property whatsoever. However, if there is any equity in the property, then the Trustee will most likely take possession of the property and sell it in order to reach the available equity. Unfortunately, there is no exemption available to protect real property that is not your homestead.
Recently, I was presented with a situation I had not yet been confronted by. During a consultation, a potential client advised me that he had filed a Chapter 7 Bankruptcy while owning his homestead and while also owning real property that was not his homestead property. This property was jointly owned by himself and his brother, and there was quite a bit of equity in the property. The brother was also using this property as his primary residence. The potential client was able to exempt his homestead, but he was unable to exempt the property he co-owned with his brother. Now the trustee was demanding his brother to turn possession of the property over to the trustee. The potential client wanted to know if his brother could use the fact that it was his homestead to prevent the Trustee from taking possession of the property and selling it. Unfortunately, we found out that a co-owner using a property as their homestead is not a valid defense. There isn’t anything that can be done in this situation to save the co-owned property other than paying the trustee the fair market value for the property.
Possible situations like this is why it is so important to seek the advice of an experienced bankruptcy attorney before filing bankruptcy. While every situation might not be avoidable, with an attorney’s help, hopefully most of them will be. Contact the Law Office of David M. Goldman PLLC today for a free initial consultation at (904) 685-1200.