Filing for bankruptcy can weigh heavily as a potential last resort in the minds of someone burdened with debts and other financial troubles. A simple thought of declaring bankruptcy is associated with negative connotations. This is what makes most people hesitant to consider this option. However, with proper preparations, identifying and utilizing exemptions, filing for bankruptcy can be a great way of stopping harassing bankruptcy calls and successfully clear your way to financial recovery.
It is an exit rather than a dead end
Though bankruptcy is not often cast in the bright light, the entire process is more of an exit than a dead end. It is intended to offer people and businesses a means by which they can settle, lower or eliminate debts under the legal authority and supervision of the relevant courts. Though bankruptcy might involve the seizure and sale of your property and other assets to repay your debts, state and federal exemption laws can protect some of your assets during liquidations.
Exemptions that can protect your assets
Once you opt to declare bankruptcy, the chances are that you will be eligible for some special exemptions that can legally protect part of your assets against seizure during bankruptcy. Though bankruptcy laws vary from state to state, Florida bankruptcy law guarantees several exceptions.
For any family, a home is the most important asset. The good news is that your home can be protected during liquidation in accordance with the Florida Homestead Exemption. For you to qualify for this protection, your home should not be a property exceeding about half an acre in a city or 160 acres in country areas or rural regions. If your home meets these requirements, it cannot be seized by your creditors no matter the amount you might owe on the asset.
Most retirees who worry that their retirement funds and other supplemental incomes will be seized can also be protected by some bankruptcy exemptions. According to the Florida State law, retirement, disability, and all other government assistance are safe from being seized by your creditors and liquidation.
Other supplemental sources of income are also exempted from liquidation particularly during the bankruptcy in Florida. These source of income include alimony, child support payments, and any workers compensation you receive.
Medical and college savings accounts
Funds set aside to take care of your kids’ college fee are exempted from liquidation. If the money the funds are in a prepaid education fund, trust, or other special fund accounts meant for the cost of your kids’ college education, it cannot be seized by your creditors.
It can also be helpful to understand that if you own special accounts with special tax-deferred savings to pay for expenses related to healthcare, these accounts too, will be exempted from liquidation when it comes to bankruptcy.
Keep in mind that identifying particular assets and various sources of income that can be protected during bankruptcy can help you to plan for liquidation effectively.