TheFloridaBankruptcyLawBlog

Florida's  homestead exemption seems simple, but in some respects the exemption involves complicated legal issues. One such issue is the relationship between the Florida homestead protection and a debtor’s status under U.S. immigration laws. There are many bankruptcy cases were a debtor’s immigration status disqualified him from a bankruptcy homestead exemption because the debtor had not yet achieved the legal right under our immigration laws to reside permanently in the U.S. and Florida.

Car related expenses are important deductions in the means test analysis. A debtor’s car expenses, including car payments and car operation expenses, often determine whether a prospective bankruptcy debtor passes a means test analysis for bankruptcy eligibility.

Means test calculation are technical and complicated. I infrequently comment on details of means test computations.

There are so many reasons to stay away from bankruptcy- here is one more. In state court proceedings a debtor may do anything he wants with his exempt assets. In asset is exempt under Florida law a debtor can transfer it to a family member, put it in a trust, or sell it and by an alternative exempt asset. The definition of “assets” in our fraudulent transfer statutes specifically excludes exempt assets.

Not so in bankruptcy court. Bankruptcy trustees can attack pre-petition fraudulent transfers under either of two theories.

Chapter 13 debtors can cram-down mortgages on investment property to the amount of the property’s fair market value. People considering Chapter 13 to remedy upside down investment properties often ask how the cram-down works. Their questions cover issues such as when the cram down is final, does Chapter 13 affect their interest rate, and how does Chapter 13 cram-down deal with arrearage of past due payment on the investment property mortgage.

Here are some general answers to these common cram-down questions.

Two married Florida debtors own an upside down homestead property. They are seeking mortgage modification in the hopes of holding on to their home. They file Chapter 7 bankruptcy and do not claim their house as exempt homestead because there is no equity to exempt. The debtor’s Statement of Intention stated that they wanted to retain the homestead property. The debtors claimed a “wildcard” exemption which is available to debtors who do not receive benefits of the homestead exemption.