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What are Exemptions and what is exempt?

What are exemptions?

The Federal Bankruptcy Code promises a fresh start to the honest debtor that is faced with unmanageable debt. In order to get that fresh start in chapter 7, the debtor must surrender non-exempt assets to the trustee (lern more about the trustee.) Exemptions are determined under state or federal law.

Property exempt in a bankruptcy

If you qualify as a Florida resident you will likely be able to exempt at least the following property from liquidation in a chapter 7 bankruptcy:

  • $1,000 equity in a vehicle
  • Your homestead property and $1000 in personal property
  • $5,000 personal property if you don't own a home
  • Savings from Social Security
  • ERISA qualified Pension & Retirement accounts (most are ERISA qualified)
  • Spendthrift Tusts
  • Workers compensation benefits
  • Prescription medication and medical equipment
  • Medical Savings Accounts

If you are married and filing bankruptcy jointly, both you and your spouse may claim separate exemptions, except you both must claim the same homestead.

If you have have lived in Florida for at least two years you MUST use the Florida exemptions. If you have lived in Florida for less than two years, you will have to claim the exemptions for the state in which you lived for the majority of the 180 days before the prior two years. If that state doesn't allow non-residents to use it's exemptions or there is no state's exemptions you qualify for you must use the federal exemptions.

In a chapter 7 all non-exempt property will be turned over to the bankruptcy trustee who will sell it and distribute the proceeds to creditors. Most or all remaining unsecured debt will be discharged. If your exemptions cover all your assets, you keep all of your property and the trustee takes nothing. This is called a no-asset chapter 7.

  • If you have non-exempt assets you may be able to "redeem" them (buy them back) from the trustee. If you want to redeem the asset but do not have the money, there are finance companies who may give you a loan for this purpose. (Learn more about Redemption)
  • YOU assign the value of property claimed as exempt. (see more about valuation below)

In a chapter 13 bankruptcy you may keep all your property, but you must pay creditors at least the value of your non-exempt property over three to five years.

Valuation to determine exempt property.

Private property

"Private property" is essentially everything you own that isn't real estate. You must determine the replacement value of you personal property the time of filing. Liquid assets such as Cash, bank account balances, stocks and bonds are simple to value. Other property can prove more difficult. If your property is new or close to new, you may reduce the price paid for the property whatever extent appropriate for the amount it has been used. If available, the prices asked for items of like age and condition on ebay, craigslist or other online marketplaces may be used as a guide. (Completed transactions are even better if you can find them.) We usually request an appraisal for jewelry, collectibles, artwork, antiques, heirlooms, or any property of significant value before filing to make sure we can protect your assets as much as possible. 

Valuation is normally conducted under the “honor system”. We normally do not question values you submit on your Questionnaire, as you know best the condition and age of your assets. Keep in mind when you sign your schedules with the valuation of your assets, you are doing so under penalty of perjury. While they rarely do so, the bankruptcy Trustee has the authority to send an appraiser to your home. If you undervalue an asset the trustee may take the asset, sell it, give you back the amount you claimed as exempt and apply the rest to your debt. The trustee's motivation to pursue undervalued assets is a commission of a percentrage of the amount recovered for creditors. If you are off by a small amount, there is likely nothing to be concerned about. Significant undervaluation will present problems.

Valuation of property for exemption purposes is not something that should be taken lightly. Improper valuation of assets could have serious consequences. The information provided here is only for quick reference purposes. We will discuss valuation of your assets in more detail specific to your case prior to filing your case.


Kelly Blue Book Private Party Value is appropriate if the car is a common, late model vehicle. If the car is collectible, antique, customized or special in any way a professional appraisal is usually required. If the car has damage or mechanical defects, repair estimates should be obtained from a local repair shop to adjust the value for the deficiencies.

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At Holland Law we focus on Consumer Bankruptcy and Debt Defense. We proudly serve Sarasota, Manatee and Charlotte Counties and expanding to serve all of Central and South Florida, from coast-to-coast. We offer free phone or in-office consultations in Bradenton, Sarasota, Lakewood Ranch, Port Charlotte and across the Central and South Florida region. Contact us through the form on this page or call us at (941) 306-3601 to speak with an experienced bankruptcy and debt defense attorney today. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.