If you have been living in Florida for over 2 years, the homestead exemption can be used as long as there is less than $189,050 in equity for each person filing. For example, if there are two married people filing a joint bankruptcy, then you can double the exemption amounts so that amount would be less than $371,100 in equity you would be allowed to protect. You can have unlimited equity in your home if you have owned it for 1215 days prior to filing your petition.
This includes another home if you have bought and sold another homestead property within those 1215 days. Typically, this is not an issue since the home equity is usually lower than the allowed statutory amount. If you have moved from another state in the last 2 years, we cannot use the Florida exemptions and would have to perform an analysis on which exemptions apply. Some states allow non-residents to use their exemptions. Other states will require non-residents to use federal exemptions. Most states would not allow you to exempt property in Florida after you have moved from another state.
You must also be residing in your home to be able to claim homestead exemption. The homestead exemption would not protect or apply to an investment property or a property where you are on the deed but are not living in the residence. There are exceptions if you are away from your home temporarily but have full intention of returning. Some examples are being away for medical treatment or being active duty in the military. As long as you intend to return to your home and you are not renting out the property, it can continue to be exempt as your homestead.
With inflation hitting record highs, people are looking to cash out the equity in their homes, sell their vehicles, and liquidate their retirement accounts to pay off their debts. This can be problematic for a few reasons.
First, if home values go down then you are stuck with a debt that exceeds the value of your home. If you run into a situation where you now have a higher payment that you cannot afford due to a loss of job, divorce, or medical issues the lender would foreclose on the property and potentially make you responsible for the deficiency. Property values fluctuate up and down.
Second, it’s not advisable to pay off unsecured debts with secured property. If you can eliminate 100% of your unsecured debt in a bankruptcy, while still having the ability to keep your home, that is going to be a better option than increasing or extending your mortgage payment for years and risking a future default on the mortgage loan.
Similarly, it’s always best to preserve your exempt assets such a 401k, rather than liquidate them to pay debts. The bankruptcy would allow you to eliminate your unsecured debt while still preserving the money in your 401K for your retirement without an adverse tax consequence. Furthermore, there are also costs associated with the refinance such a mortgage origination fees, appraisals, recording fees associated that can be up to 3-5% of the loan which you are paying for years. This cost typically far exceeds the cost of filing for bankruptcy.
When you file a bankruptcy case, there is a hearing called a “341 meeting of creditors”.
The meeting of creditors takes place whether you file a Chapter 7 or a Chapter 13. It occurs thirty days after your bankruptcy petition is filed. The meeting lasts about 10 minutes, and it is telephonic not over zoom.
There is a conference bridge so when you call in, everyone (you, your attorney, and the trustee) will be on the phone line. You will be prepared for the hearing because we thoroughly review all the documents the trustee will ask you about when we prepare the petition. Since everything is disclosed on the bankruptcy petition and your documents are provided to the trustee in advance of the meeting, your attendance at the hearing should really be a formality to getting your discharge.
If there is anything special about your case, such as being over the exemption amount you would know that in advance of filing your case so there should be no surprises. Many people ask if all their creditors show up for the meeting. It’s a bit misleading that it’s’ called a meeting of creditors because it is extremely rare that any creditors appear for the meeting.
Creditors appear in probably in less than 1% of cases. There would likely have to be a special issue such as a lender asking where the debtor’s car might be located if they are surrendering it or a creditor that the debtor personally knows. Typically, the meetings run very smoothly and on time.
In today’s current market business owners are faced with numerous challenges from finding employees to drastically increased costs. They are faced with the question of whether they will be able to continue their business or whether it’s better to close it.
That is a very personal decision since so much goes into starting and sustaining a business. There are several factors we look at in making that determination.
Are there any business assets such a commercial building, inventory, or equipment that should be liquidated to pay your creditors? Your assets cannot be sold or transferred for your benefit at the expense of paying your creditors. Even transferring assets to a new business venture can disqualify you from filing bankruptcy so its very important to consult with an attorney before making any decisions on the proper steps to close your business. Another issue is whether the debt is exclusively in the business name, did you personally guarantee the business debt, or did you use your personal credit lines to fund your business?
In most cases, there is a personal guarantee on business debt and personal credit cards are used to keep the business afloat. If the majority of your debt, is non-consumer or business-related then you would qualify for a Chapter 7. Again, it is important to seek the advice of an attorney to determine which Chapter type you would qualify for under the bankruptcy code.
Many times, if the business has no assets and will be closed then it can just be administratively dissolved without the need to file for bankruptcy. Another issue also is whether there are any outstanding account receivables, do you reasonably expect payments in the future, or expect any reoccurring income? There is also a potential that that could be collectable by the trustee if you are filing a business bankruptcy.
All of these factors need to be considered whether determining whether to file a business bankruptcy or a personal Chapter 7 or 13 bankruptcy.
This issue comes up frequently when the person who files for bankruptcy (otherwise known as the debtor) is on the title to a vehicle that someone else drives and makes the payments on.
This happens oftentimes when a parent keeps the vehicle in titled in their name instead of their child’s name but the child drives it. It also happens when the debtor puts the vehicle and loan in their name for a family member who does not have good credit. If there is equity in the vehicle (the value of the vehicle exceeds what you own on it) and that amount is over the allowed bankruptcy exemptions you would need to pay the trustee the difference.
However, if you have not paid anything towards the vehicle or any gas or paid for any maintenance then there is an exception you might qualify for called bare legal title which allows you not to have to pay anything to the trustee under those circumstances.
You may have to provide proof that the other person has been the one making the payments. Bare legal title applies to personal property and cars. However, you cannot have bare legal title to real property.
If you are on the deed of any real estate, whether you live there or not, or whether you have paid for it or not, that cannot be considered bare legal title. At that point, we would need to evaluate if the property can be exempt as your homestead or not.
