If you are considering filing bankruptcy in Melbourne, Florida, you probably have many questions about the Chapter 7 bankruptcy process. One of those questions should be whether you you will lose any of your assets if you file bankruptcy. That's because in a Chapter 7 bankruptcy, the bankruptcy court can, in some cases, take assets from you to sell and pay off your creditors. However, everyone who files a Chapter 7 bankruptcy has property exemptions they can use to protect their assets. Before you file a bankruptcy petition, you should consult with a local Melbourne Florida Bankruptcy Attorney to determine whether you risk losing any assets in a bankruptcy.
In determining what assets are protected in your bankruptcy, it is critical to first identify and value all of your real and personal property. The next step is to determine what legal exemptions you have to protect those assets from the bankruptcy court. A property exemption is typically derived from state and/or federal statutes that identify what property is protected from creditors and the bankruptcy court. The most common examples of property exemptions are for 401k, IRA and other retirement accounts. Under Florida state and federal laws, these retirement accounts are completely protected from your creditors and the bankruptcy court. You will not lose this money if you file Chapter 7 bankruptcy.
Another common property exemption is the homestead exemption. With certain limitations that go beyond the scope of this article, Florida law protects your homestead (primary residence) from your creditors and the bankruptcy court. As with your retirement account, the bankruptcy court will not take your home away from you. Other miscellaneous exemptions include cash values of life insurance policies, annuities, worker's compensation, social security income, disability income and head of household wages.
When it comes to other personal property, such as money in your bank account, household furnishings, clothing and jewelry, you are typically limited to an aggregate monetary value for these items. For a person filing bankruptcy in Melbourne Florida, you get a minimum of $2,000 in personal property exemptions and a maximum of $6,000 in personal property exemptions. Most of this exemption is known as a "wild card" exemption, because it can be applied to any personal property that you own. If the total value for all your personal property exceeds these monetary limits, the bankruptcy court can take the excess to sell and distrubte the proceeds to your creditors. If the total value of your personal property is less than these monetary limits, then you will not lose any assets if you file Chapter 7 bankruptcy. A Melbourne Florida Bankruptcy Lawyer can determine what monetary limits apply to you.
As the last paragraph suggests, valuation of your personal property is critical in determining whether you will lose any property in a Chapter 7 bankruptcy. For some of you property, valuation is very easy. For example, the value of your bank accounts is determined by the balance of those accounts on the date you file your bankruptcy petition. For your vehicle, you can look to some of the widely accepted valuation services such as Kelly Blue Book, NADA, CarMax, etc. If your vehicle is worth less than you owe on it, then you do not need to worry about appling any of your exemptions to that vehicle. However, if the vehicle is worth more than you owe on it, then you will need to use a portion of your exemptions to protect the equity in the vehicle. Otherwise, the bankruptcy court can sell your vehicle, payoff your lender, and distribute the remainder to your other creditors.
When it comes to household furnishings, clothing, jewelry and other personal items, valuations can become a little more tricky (and subjective). For example, do you value your furniture at the price you purchased it for or the cost to replace it? The answer is probably neither. If you own run-of-the-mill furniture that is several years old, the best valuation is probably "garage sale value" - the price you would get if you were forced to sell your furniture in garage sale tomorrow. This value is likely only about 10% of what you paid for the furniture. On the other hand, if your furniture is high-end heir loom furniture, garage sale value may not be ther best valuation method, and the value is likely to be much higher.
Valuing jewelry can be very similar to valuing your furniture. If it is low-end "costume jewelry", then using a pawn shop value is probably sufficient. However, if you jewelry is heir-loom jewelry that your grandmother purcahsed from Tiffany's 50 years ago, then the jewelry's true valuation is probably substantially more than what you would get at a pawn shop.
Once you have the total aggregate value for all of your personal property, you will know what property, if any, you may lose by filing a chapter 7 bankruptcy. The reality is that most bankruptcy debtors do not lose property when they file Chapter 7 bankruptcy because the above stated monetary limits are enough to cover all of their assets. Other Chapter 7 bankruptcy debtors lose very little. However, this is a critical topic that you need to discuss with a Florida bankruptcy attorney before filing your bankruptcy petition.
If you have any question relating to the issues in this article, or any other aspect of a your personal bankruptcy, please feel free to contact Bowin Law Group for a free consultation. Or, fill our our free case evaluation and someone from our office will contact you personally to schedule your free consultation.
The Bowin Law Group. Brevard's Hometwon Law Group.