What is the Wildcard Exemption in Florida?
Losing property is probably the worst part of a Chapter 7 liquidation. This is part of the trade-off at the heart of a Chapter 7—you get to wipe out unsecured debts (like credit card debts), but you have to give up property in exchange.
Helpfully, Florida exempts certain property from bankruptcy, such as your homestead. Another exemption is the “wildcard” exemption, but how does it work?
What Does the Wildcard Exemption Cover?
Florida has created a list of assets that a person can keep the trustee from taking. For example, you can exempt up to $1,000 of value in your car. But the wildcard exemption is different. You can apply it to anything you want. That’s what makes it a “wildcard.”
So, if your car is worth more than $1,000, you can use the wildcard exemption to protect more of the value. If you want to exempt other property, you can use your wildcard to exempt that instead.
How Much is the Wildcard Exemption?
The wildcard exemption is $4,000, but you only get it if you do not claim the homestead exemption. This is only fair. After all, most people have much more than $4,000 in equity in their homes. The homestead exemption is a big boon to people who own property in Florida, so it even things up a little bit to let those who don’t own real estate to exempt other property.
How Do You Value Property?
Most of our clients want to exempt as much property as they can in a Chapter 7. Let’s say a person has a car, a stamp collection, and personal jewelry. Ideally, they want to keep all of them.
First, they need to value their property, which means you need to find the replacement value. This is how much it would cost to buy what you have on the open market. If you have a motor vehicle, then you can use the Kelley Blue Book value, which will take into consideration the year, make, model, and miles driven on the vehicle. Other property might need an appraisal, such as expensive jewelry or art.
However, bankruptcy courts often rely on the good faith of the debtor to value their property fairly. You might be tempted to value everything low, which can make your wildcard exemption stretch farther. But we encourage our clients to avoid doing so, since they could get into trouble with the bankruptcy court. For regular home furnishings, you can go to a thrift store or flea market and use the prices there as a guide for determining the replacement value of your assets.
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Nowack & Olson is a leading bankruptcy firm in South Florida that has assisted countless consumers and small businesses get out from under their debt. We understand Chapter 7 and other bankruptcies inside and out and can explain how they will impact you. If you have a question about which bankruptcy to file, or if you are unsure if bankruptcy is right for you, please contact us today.
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