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Understanding Florida bankruptcy exemptions

Many people in central Florida who are considering filing a bankruptcy petition worry that all of their property, including their home, will be taken from them to pay the claims of creditors. If a person seeks discharge of all of their debts in a Chapter 7 proceeding, most, if not all, of their assets will indeed be sold to provide cash to pay creditors. In a Chapter 13 proceeding, debtors may be able to keep a significant portion of their assets by working out a satisfactory repayment plan. Regardless of which bankruptcy proceeding is selected, Florida law permits debtors to declare certain assets "exempt" from the claims of creditors. The list of exemptions is quite long, but the major exemptions can be easily summarized.

Perhaps the most important exemption is the unlimited exemption for a person's homestead. To take advantage of this exemption, the debtor must file a notice with the circuit court stating the intention to take advantage of the exemption. A second important exemption is the death or disability benefit payable to a specific individual. Alimony and child support are also exempt from the claims of creditors. Pensions belonging to state highway patrol officers, police officers, teachers and other state officers are exempt.

Various other items of personal property are exempt, including health aids, a motor vehicle limited to $10,000, public assistance, Social Security and workers compensation benefits. The disposable earnings of the head of a family are exempt up to $750 per week. Florida law permits the debtor to use the exemptions for Federal benefits, such as death and disability benefits, that are specified in the United States Bankruptcy Code. Choosing exemptions can be complicated, especially if federal exemptions are used in addition to Florida benefits.

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