In all of the chapters of bankruptcy, the bankruptcy code allows many bankruptcy filers ("debtors") to take advantage of certain exemptions. These exemptions enable the debtors to keep their property and not have to worry about it being taken and given to their creditors. The bankruptcy law exists because society has judged that when a person owes many people lots of money that it is better for all the creditors to come together and collect whatever is available than constantly chase the debtor separately to pay what is owed through the normal lawsuit process. As an incentive for the debtor to file the bankruptcy, exemptions exist according to both state and federal law that enables the debtor to know they will be able to comfortably live without worry after the bankruptcy is completed. The exemptions relate to all of the necessary property of the debtor, so that the debtor emerges from the bankruptcy with basic food, shelter, and clothing necessary to continue their life and provide themselves with a fresh start. Sometimes very generous exemptions are provided to the debtor. For example, Florida clients can take advantage of the coveted homestead exemption. This is a state specific exemption allowed only in Florida and a select few other states throughout the country. Usually homestead exemptions allow the debtor to exempt a certain amount of equity ranging from only a few thousand dollars to a substantial sum or even the entire homestead. Florida is one of the few states where debtors are able to exempt their entire homestead provided that other conditions are met by the debtor (and usually they are met).

Florida allows the debtor to benefit from thousands of dollars of personal property exemptions (depending upon the situation), or alternatively less personal property exemption if a homestead is claimed. Debtors are able to exempt everything from automobiles, to clothing, to furniture, and even to such things as electronics and other luxury items (though this is generally frowned upon and necessaries should come first). Florida has opted out of the Federal exemptions and as a result, while Florida provides a generous homestead exemptions, debtors are constrained to using only the Florida exemptions. Most states have not opted out of the federal exemption process. Occasionally debtors will have to use other exemptions depending on whether appropriate residency requirements have been met.

There are also generous exemptions for IRAs, life insurance policies, bank accounts, automobiles, and other items, where if applied by a qualified bankruptcy attorney it is often the case that a debtor may have a great deal of property and yet emerge unscathed with all property intact. It is important to speak with a bankruptcy attorney in Orlando or elsewhere to ensure you are obtaining the maximum allowable exemptions provided under the law, so that your property is protected. Also, liens can interfere with exemptions, so it is important to know how to apply liens and exemptions in their relationship to each other. A bankruptcy lawyer is important to guide you through this process.

It is important to apply the bankruptcy exemptions early enough in the bankruptcy process, and also important for the Trustee to object to any exemptions it finds unreasonable in a timely manner or the objection could be waived.

Because exemptions are often so related to the value of the debtor's property, objections to exemptions could be based upon allegations of inadequate or inaccurate valuation. Generally such an issue would not involve questions of fraud, but rather the simple fact that the typical debtor is not a licensed appraiser of property and thus any estimates are not perfectly exact nor professionally judged. A bankruptcy attorney is important to guide you in any issue between the debtor and trustee over exemptions and their pertinent objections whether from the trustee or a creditor. Appraisal and valuation is often an integral part of the bankruptcy process, especially when dealing with substantive questions of personal property. Also distinctions between resale and other values of the property need to be addressed when valuing property in the bankruptcy debtor's schedules and forms.

Please contact us today if you are thinking about filing bankruptcy, and how to emerge from the bankruptcy process in the best position possible using exemptions and the other tools of the bankruptcy code.