New Law in Florida Protects Cars in Bankruptcy Cases
Whether you are considering a Chapter 7 bankruptcy filing or a Chapter 13 bankruptcy filing in Florida, you should know that there is a new law in Florida that will allow many more debtors to protect the full value of their automobile when they file for bankruptcy. The new law, SB 158, was recently signed by Governor Ron DeSantis and increases the exemption amount for automobiles under the Florida Statutes. What do you need to know about the recently signed legislation if you are planning to file for personal bankruptcy in West Palm Beach? In short, you should know that a lot more of the value in your motor vehicle will be protected. Our West Palm Beach bankruptcy attorneys can explain in more detail.
Understanding Florida Bankruptcy Exemptions
Currently, under Florida law, debtors who file for bankruptcy can protect or “exempt” a wide range of assets in a bankruptcy case. Florida bankruptcy exemptions are particularly important in Chapter 7 bankruptcy cases where non-exempt assets are liquidated (and exempt assets are protected, meaning the debtor can keep them), but exemptions are also important in Chapter 13 bankruptcy cases since they can impact the total amount of a debtor’s monthly payment as part of their repayment plan.
The Florida Statutes allow debtors to exempt the full amount of equity in their home with a generous homestead exemption, a “wildcard” exemption of either $1,000 or $4,000 (depending on whether or not the homestead exemption is used), a portion of wages, retirement accounts and pensions, and more. Until the new legislation was signed, debtors could also protect or “exempt” up to $1,000 equity in a motor vehicle. That amount has now increased significantly.
Exemption to Increase from $1,000 to $5,000
SB 158 took effect on July 1, 2024. Once the law takes effect, debtors who file for bankruptcy can exempt up to $5,000 of equity in a motor vehicle. In addition, that increased amount of $5,000 will apply to the equity in a motor vehicle that is exempt from garnishment.
Florida lawmakers recognized that the $1,000 exemption for equity in a motor vehicle became law back in 1993, and financial circumstances have changed significantly since then. The legislation aims to address rising costs of living and additional expenses of living in Florida in 2024. For debtors in Florida who have paid off their motor vehicles and have a significant amount of equity in a vehicle, the amended exemption amount will allow them to protect more of their assets in a bankruptcy case.
Commentators suggest that this new change to Florida bankruptcy law could lead to further changes that are beneficial to debtors. In other words, debtors ultimately might be able to protect even more assets in future bankruptcy cases if Florida lawmakers begin addressing other existing bankruptcy exemptions in the Florida Statutes.
Contact a West Palm Beach Bankruptcy Attorney Today
If you are considering consumer bankruptcy in Florida, it is important to seek legal advice about your particular circumstances, and especially about how Florida bankruptcy exemptions will impact your case. One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller can talk with you today about your plans for bankruptcy and what to expect as you move forward with your case.
Sources:
flsenate.gov/Session/Bill/2024/158
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.22.html
