How to Keep Important Assets in a Liquidation Bankruptcy

When an individual or a married couple in Florida consider bankruptcy, one of the most pressing considerations is the required liquidation of property. It is critical to understand that assets are only liquidated when an individual (or married couple) files for Chapter 7 bankruptcy. If an individual files for a kind of reorganization bankruptcy, such as Chapter 13 or Chapter 11 bankruptcy, no assets are liquidated. Assuming you are planning to file for Chapter 7 bankruptcy, we know you have questions about how to keep assets that are particularly important or valuable to you.

To be clear, Chapter 7 bankruptcies do not require the liquidation of all assets — not even approaching all assets, in fact — and debtors are able to keep a wide range of assets even as other property is liquidated and debts are discharged. How can you keep important assets if you are planning to file for liquidation bankruptcy? Our West Palm Beach bankruptcy lawyers can explain.

Review Florida’s Bankruptcy Exemptions

The way that you can keep a wide range of assets when you file for Chapter 7 bankruptcy — meaning that these assets will not be liquidated — is to review Florida’s bankruptcy exemptions and identify the assets you own that are classified as “exempt.” Any assets that are exempt are those that are exempt from liquidation. In other words, you can keep them, and you can still be eligible for a discharge of your eligible debts.

Florida law requires debtors to use state exemptions (rather than federal exemptions, which debtors in certain states can be eligible to use instead of state exemptions). There are a wide range of exemptions available under Florida law, including one of the most generous homestead exemptions that allows debtors to exempt all of the equity in their home. Other exemptions include, for example, a motor vehicle exemption, exemption for pensions and retirement accounts, and a “wildcard” exemption to exempt assets of your choosing.

Carefully Fill Out Schedule C 

When you are preparing your bankruptcy petition and all accompanying documents and forms required by the US Bankruptcy Code, you will want to pay particular attention to Schedule C (Form 106C), which is a bankruptcy form in which you will list the property that you claim as exempt.

When you fill out Schedule C, you will need to provide a brief description of the property, the current value of the property (or the portion of it you own), the amount of that value that you are exempting, and a citation to the state or federal law that allows you to claim the exemption. Most exemptions will be based on law contained in the Florida Statutes, but certain exemptions (such as for certain retirement accounts) arise out of federal law.

Although filling out Schedule C might seem relatively straightforward, even a minor error can result in problems with your bankruptcy case. Accordingly, it is critical to have an attorney assist you as you complete Schedule C and all required bankruptcy forms.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

To determine which exemptions you are eligible to use, and to seek legal assistance with your bankruptcy case, you should get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller. Contact us today to discuss your bankruptcy plans and to begin working on all necessary documentation, including your bankruptcy petition.

Sources:

law.cornell.edu/uscode/text/11

uscourts.gov/forms/individual-debtors/schedule-c-property-you-claim-exempt-individuals

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222ContentsIndex.html