Exempt Property

Currently Florida Centric -- as homestead property is exempt from forced sale

Under s. 522(b)(1) & (2) of the Bankruptcy Code, the debtor is allowed the exemptions under Florida law. See Section 222.20, Florida Statutes, in which Florida opted out of the Federal bankruptcy exemptions and has required that Florida residents filing bankruptcy use the exemptions provided by Florida law. Florida’s exemptions are much more favorable to the debtor than the Federal exemptions. Since the Florida Constitution, under Article X, Section 4, provides an exemption for homestead property, the homestead is also exempt from the bankruptcy estate. The homestead may consist of up to 160 contiguous acres outside a municipality or ½ acre inside a municipality. After the homestead is determined to be exempt from the bankruptcy estate, title to the homestead re-vests in the debtor and may thereafter be conveyed or mortgaged by the debtor.

Procedure to Determine Exempt Property

When the debtor files bankruptcy, all exempt property - including homestead property, is listed on Schedule C, which is attached to the Petition for Bankruptcy. The debtor’s creditors have 30 days after the Meeting of Creditors (“341 Meeting”), or 30 days after an amendment to a Schedule or a supplemental Schedule, whichever is later, to file an objection to any claimed exemptions. See Bankruptcy Rule 4003. If the creditors or the Trustee do not object, title to the exempt property re-vests in the debtor. If an objection to a claimed exemption (i.e. homestead) is filed, the homestead will not be exempt from the bankruptcy estate until the bankruptcy court enters an Order denying the objection.

What Is Needed To Insure A Sale Or Mortgage of Homestead Property?

Record certified copies of the following:

• Bankruptcy Petition and Schedule C listing the subject property as exempt; and,
• Bankruptcy Docket evidencing the date of the Meeting of Creditors and showing that no objections were filed within 30 days after the Meeting of Creditors; and if applicable,
• Court Order – if an objection to the subject property as exempt homestead was filed, then a court order overruling or denying the objection must be recorded.

If the subject property is claimed as exempt and all of the above are complied with, you may insure a sale or mortgage by the debtor without requiring anything further from the bankruptcy court. However, this procedure to determine homestead as exempt from the bankruptcy estate does not mean that liens and mortgages are eliminated; it only establishes that title to the homestead property is no longer vested in the bankruptcy estate and may be conveyed or mortgaged by the debtor. While title to exempt property (i.e. homestead) re-vests in the debtor, all of the judgments, mortgages, taxes, and other liens must be released or listed as exceptions in the policy.