Interpreting Florida's New $4,000 Personal Property Exemption

The Florida Constitution gives debtor’s a $1,000 exemption in all personal property such as cloths, furniture, and cash in financial accounts. The Florida legislature enacted a new law in July, 2007, providing debtors an additional $4,000 "wildcard" exemption in personal property provided that the debtor does not claim a homestead exemption. Several questions have come up in recent bankruptcy cases concerning the $4,000 statutory exemption: for instance, can debtors stack the $4,000 statutory wildcard exemption on top of the $1,000 Constitutional exemption? Do joint bankruptcy debtors each get the benefit of a $4,000 statutory exemption?; and if a debtor owns a homestead but elects to abandon the homestead in bankruptcy without claiming exempt homestead equity, can the debtor claim the $4,000 statutory exemption?

The bankruptcy courts have so far liberally construed the new, $4,000 statutory exemption for personal property. More than one bankruptcy judge has ruled that a debtor can stack the exemption on top of the $1,000 Constitutional exemption provided he does not claim a homestead exemption. Owning a homestead does not disqualify the $4,000 exemption when the debtor does not claim or seek benefit of the homestead exemption. (Therefore, where one spouse files bankruptcy and claims a tenants by entireties exemption in the marital home the debtor spouse should be able to claim the $4,000 wildcard personal property exemption.). When two qualified spouses file bankruptcy courts have held that  each spouse can claim the $4,000 exemption; so, where joint filers do not claim a homestead exemption. ( Or, when both spouses file and the house is "upside down" both spouses should qualify for the $4,000 statutory exemption, and the joint debtors would have a $10,000 exemption applicable to their personal property)

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