I’m Over the Limit on My Exemptions, Can I Still File Chapter 7 Bankruptcy?

Sometimes I meet with clients who are looking to file for bankruptcy in the greater Miami or Fort Lauderdale area, and my clients are either over their exemptions or have non-exempt assets but would still like to file for a Chapter 7 bankruptcy.   They can, but they risk the chance of losing their non-exempt assets or having to buy-back the portion that they are over on their current assets.  Here is how the process works.  If a debtor files for bankruptcy and has a car worth $4,000, under Florida law they can only exempt $1,000 leaving them approximately $3,000 over in exemptions, the trustee can do one of three things:

  1. The trustee will give the debtor the option to buy-back the non-exempted portion of the asset.  This can happen in either a lump sum payment or a payment plan setup with the trustee.  In our example above the trustee can suggest the following:  A. Pay me a lump-sum amount to keep the asset.  If the debtor agrees to a lump-sum amount they can expect to receive a little discount over the $3,000 amount.  The lump-sum would likely be due within 10 days.  B.  Pay me $3,000 over several months to keep the asset.  Typically the payment plan will not exceed four months.
  2. If the debtor cannot come up with the money to keep either the non-exempt asset or cannot pay for the overage of the exempted asset, then the trustee is entitled to take the asset and sell it to pay creditors.

If you are unsure whether or not you have assets that may be exempted or not then contact Shmucher Law, PL to schedule a free consultation with managing partner Ofer Shmucher in one of our five conveniently located offices throughout the greater Miami or Fort Lauderdale area.

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