What Do You Lose When You File Chapter 7

Questions about what you lose when you file Chapter 7 bankruptcy arise quite often. Chapter 7 bankruptcy doesn’t mean you will lose everything. In fact, you are unlikely to lose what you most need. Filers in Chapter 7 cases can claim many exemptions to protect all types of property. Some of these exemptions might surprise you.

Florida Bankruptcy Exemptions

Contrary to popular belief, bankruptcy – even Chapter 7 – won’t require you to give away everything. You can claim a number of exemptions that will help you protect your equity in your home, vehicle equity, personal property up to a certain amount, and more.

Florida’s Homestead Exemption

Your equity is the difference between the value of your home and the remaining mortgage amount. Florida’s homestead exemption permits Chapter 7 bankruptcy filers protection of an unlimited amount of equity value in their homes (or any other property covered under this exemption). This means you can keep your home if bankruptcy is filed, as long as there is equity in it.

Additional requirements are:

  • If your property is located in a municipality, it can’t exceed a half-acre
  • If your property is located outside of a municipality, it can’t exceed 160 acres
  • Before you can file for Chapter 7, you must own your property for at least 1,215 days
  • You are the owner of the title (as opposed to an LLC, corporation, partnership, or another entity)

To protect your home, you might consider Chapter 13 bankruptcy. This will allow you to consolidate your debt.

Motor Vehicle Exemption

Florida allows bankruptcy filers to exempt equity in motor vehicles, which is typically their primary vehicle. If you are filing jointly for bankruptcy, you can exempt up to $1,000 of equity in the vehicle. Up to $2,000 is available if your spouse is also filing.

Chapter 7 allows you to liquidate your car if it is worth more than the amount that you owe. You will need your vehicle on a daily basis. Fortunately, you can use the wildcard exemption to protect additional equity (we’ll explain why below). This may allow you to keep your car and make it easier to live after bankruptcy. There are other options if your car isn’t worth the debt.

Florida’s Wild Card Exemption

The wild card exemption can be used in place of the Florida homestead exemption if you don’t want to use it. The wild card exemption allows bankruptcy filings to protect personal property worth up to $4,000 (or $8,000 if they are married and file for bankruptcy together).

You can choose what property you want to exempt. This could mean that you have more equity in your vehicle, which may allow you to keep it. You can also protect personal property that you may consider important.

Other Types of Personal Property

You can also protect your personal property for up to $1,000, in addition to your vehicle. This limit can be increased to $4,000. If you apply for the wild car exemption, it can also increase. Personal property can include any items found in your homes such as appliances, furniture, artwork, or electronics. Personal property also includes savings and checking accounts.

Retirement Accounts and Pensions

Retirement accounts and pensions can be exempted from Chapter 7 liquidation. You can protect retirement funds, such as ERISA qualified pensions, IRAs, retirement plans like 401(k)s, 403(b)s, and public employee retirement benefits.

Heads of Households Can Protect Wages

Florida allows heads of households to keep their wages protected. You can get an exemption of up to $750 per week, 75% of your paycheck, or 30 times the federal minimum wage (whichever is greater).

This exemption is applicable to unpaid and paid wages. As well as wages that have been transferred to a bank account in the last six months.

Alimony & Child Support

You are not exempt from bankruptcy liquidation if you receive alimony, child support payments, or any other support that is reasonably necessary to continue to support the bankruptcy filings and/or their dependents.

Lawsuit Award Exemptions

While bankruptcy filers are usually able to protect compensation for work-related injuries and deaths, other types of lawsuits can be awarded to the bankruptcy estate. This applies to all pending legal claims. These awards can be protected, but only if you use the wild card exemption.

If you have a pending legal matter that isn’t resolved during bankruptcy proceedings, the trustee can decide whether to proceed with the trial or to settle it.

Bruner Wright P.A. Can Help!

In order to help you answer what you lose when you file Chapter 7 bankruptcy, you should know that individuals who file Chapter 7 cases in the US can keep the majority of the belongings that they own. Our attorneys at Bruner Wright P.A. can help you if you’re thinking of filing for Chapter 7 bankruptcy. Our firm is committed to providing clients with the crucial legal advice they need when they need it most.

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Bruner Wright P.A. can help you if you have questions or concerns about bankruptcy and how it could impact your life. Get in touch with us to request a confidential consultation for more information. Contact us today!