Question

Will I Lose Everything If I File Bankruptcy In Florida?

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Chad Van Horn - Bankruptcy - Super Lawyers

Answered by: Chad Van Horn

Located in Fort Lauderdale, FLVan Horn Law Group, P.A.

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Answer

This is a common question. Many people shy away from the thought of filing Chapter 7 bankruptcy because they fear they will lose everything they own. No one wants to end up on the street without a roof over their head or a penny to their name.

The good news is that losing everything is a myth. You won’t have to give up all your possessions. Both state and federal law provide certain exemptions. This means that certain property is “exempt” or protected from being seized or sold by creditors or the bankruptcy trustee.

Important Exemptions In Florida

Many people have heard of the homestead exemption. In Florida, you have the right to keep 100 percent of your house (although there are certain restrictions on the size). In our state, you also get a $1,000 exemption for your vehicle and a $1,000 exemption for your personal property.

In addition, it may be possible to negotiate with the bankruptcy trustee and keep even more. Bankruptcy trustees usually don’t have an interest in trying to sell used clothes and furniture, for example, so you may end up with more than the exemption amount.

Protecting Your Property Through Chapter 13

Although Chapter 7 bankruptcy is sometimes called “liquidation” bankruptcy because it involves liquidating certain assets, it is not the only option. If you have nonexempt assets that you want to keep, filing Chapter 13 bankruptcy may be the way to go.

With Chapter 13, you create a structured, interest-free repayment plan to pay back some or all of what you owe over a three- to five-year period. This can potentially allow you to keep much more than the legal exemptions allow.

You Won’t Lose Your Credit Forever, Either

If you’re worried about losing your credit score forever, don’t be. Filing bankruptcy doesn’t permanently ruin your credit score. Sometimes, it can actually help you improve it.

Typically, you can expect to start seeing credit card offers appear in your mailbox immediately after your bankruptcy discharge is complete. Of course, you will have to start rebuilding credit like you were 18 again, with small credit limits or by using a secured credit card. It’s important to start using credit again and getting positive marks on your record, because although bankruptcy will wipe out all the negative marks, you also need positive marks on your record to rebuild your credit.

If you have questions about your particular situation and what you will be able to keep, remember that you can always consult with an experienced bankruptcy lawyer. In most cases, bankruptcy attorneys offer free initial consultations, so you can get the answers you need to make the best decision possible. 

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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