Florida Court Curtails Personal Property Exemptions

An Orlando bankruptcy court issued a decision which curtails the personal property exemptions for debtors who own their own residence.   The case is In re: James Matthew Franzese, Case No. 07-3944-KSJ.

In July, 2007, the Florida legislature created a $4,000 wildcard personal property exemption for people who do not receive benefits of a homestead exemption. Until now, debtors who owned a homestead which had no equity, or debtors who claimed their homestead exempt as tenants by entireties property, had been claiming the $4,000 wildcard exemption because they had relied upon the Constitutional homestead exemption on their bankruptcy petition. (Other courts have held that the new $4,000 wildcard personal property exemption is separate and above the basic $1,000 personal property exemption in the Florida Constitution.) This latest bankruptcy court decision ends this bankruptcy planning technique.

According to the Franzese decision a debtor who is eligible to claim homestead exemption in bankruptcy cannot avail themselves of the $4,000 personal property exemption whether or not they affirmatively seek the homestead exemption in bankruptcy. Any debtor who on the date of filing is entitled to a homestead exemption cannot claim the $4,000 additional personal property exemption regardless of whether the homestead has any equity to protect and the debtor intends to remain in the home. Debtors must state in a timely manner their intent to surrender their homes when they file bankruptcy if they want to claim the $4,000 wildcard exemption.

posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida

Comments

[James]

TWO questions:

1. I have been reading recently that if you are NOT trying to exempt your house in a Chapter 7 filing, you are willing to surrender, then you can get the $4,000 exemption. Is that the current practical status of the law?

2. If you do indicate willingess to surrender the home -- when do you have to surrender/leave it? The stayed foreclosure would not make me leave the house for at least 6 months. Will the bankruptcy court make me leave it earlier?

[Miles Zolin]

How do I find out the criteria for the $4000 wild card exemption? I live in an apartment and do not have a home with equity. Do I qualify for the wild card? Do I also get the normal $1000 exemption? And being married do both my wife and I get the exemptions?

Thanks

Miles