Making the decision to file for bankruptcy can be one of the most terrifying moments of your life. Although you know that it will bring much-needed relief from overwhelming debt, you may worry about the possibility of losing your home and having nowhere to live, and concerns of that nature. If this is your case, here’s what you need to know about how Florida’s homestead exemption applies to bankruptcy.
What the homestead exemption does
When you file for bankruptcy, many of your assets will be sold to cover your debts, regardless of the type of bankruptcy that you file for. However, Florida law allows you to exempt up to $145,000 of the value of your home when you file for bankruptcy, and – in most cases – to protect your home from a forced sale.
In other words, if you avail yourself of this exemption, you won’t lose your home during bankruptcy. It applies whether you live in a house, a mobile home, or a modular home – but only for your primary residence. You cannot use it to protect investment properties.
What makes Florida different
While many states have homestead exemption statutes on the books, Florida’s is much more generous than most other states. For example, the base exemption amount of $145,000 is much higher in Florida than in many other states.
In addition, unlike in many states, if you are married and you and your spouse are filing for bankruptcy together, you can both take this exemption – bringing the total exemption amount up to $290,000 for a single home.
Lastly, it’s important to note that these exemption limits only apply if you have lived in your home for less than 40 consecutive months. Once you pass that barrier, you can exempt the entire value of your home, even if it exceeds the statutory exemption limit.
Without a doubt, filing for bankruptcy can change your life drastically. It can be a relief, then, to know that you won’t lose the home – or the equity – that you have worked so hard to build up over the course of your career if you invoke your right to file for bankruptcy.