What are you allowed to keep when filing bankruptcy?
The catch is that you are only allowed to keep a limited amount of property. What are you allowed to keep when filing bankruptcy? In Florida, as of now, you are allowed to keep your homestead, regardless of its value, as long as you continue to make the regular monthly payments on it. Other forms of real property, such as rental property are generally not exempt from administration by the Bankruptcy Court and Trustee, and most likely will be turned over to the Trustee, liquidated, and the proceeds applied to the administration of the bankruptcy estate, and to the repayment of creditors.
Everything but real property is personal property. What are you allowed to keep when filing bankruptcy under Florida law? Under Florida law (which is adopted for exemption purposes, or the things you are allowed to keep), each person who files is entitled to keep: (i) up to 6 months’ worth of wages if they are not co-mingled with other monies, (ii) the Cash Surrender Value of your Life Insurance or Annuities, (iii) ERISA qualifying pension plans, 401K or similar plans, (iv) some pre-paid college tuition plans, (v) $1,000.00 of equity (the value of the vehicle versus what is owed on the vehicle) in one vehicle, plus (vi) $1,000.00 of other personal property based on garage sale or other liquidation values. Jewelry or higher value items could be based on pawn shop or jewelry store values.
Antiques, collections, objects of art, gold, silver, precious metals, stocks, bonds diamonds, crystal, china, or other objects of value are generally not exempt, and are not able to be kept in a Chapter 7 bankruptcy. Stocks, bonds and/or small businesses also will usually be taken by the Trustee. This type of property may be kept in a different form of bankruptcy, such as a Chapter 13, which envisions that you will pay back money over a period of time, in addition to its other advantages. However, when you base things on a garage sale or liquidation value, most people keep most or all of their personal property, and are able to discharge their unsecured debt.
We will discuss more common bankruptcy issues in our next few articles, so make sure to come back for more!
By: Joel S. Treuhaft, Esquire