Exemption of Unemployment Compensation After Debtor’s Receipt

Can a Florida Chapter 7 bankruptcy debtor exempt money in his bank account that represents deposited unemployment compensation? A Florida bankruptcy court recently reviewed this issue which had not previously been considered by any Florida court.

Florida Statute 443.051(2) protect from creditors unemployment compensation due to the debtor. The statute does not state whether the exemption attaches to the money after the debtor’s receipt of the funds. Other Florida statues protect proceeds received from exempt assets. The Florida wage exemption, in Statute 222.11, expressly protections head of household wages for six months after the debtor receives the earnings and deposits the money in the bank. Florida courts have read other exemptions to apply to the “proceeds” of the exempt assets in the debtor’s hand- annuities and pension proceeds are prominent examples.

This bankruptcy court found that the plain language of the unemployment benefit statute does not apply to proceeds after receipt. Therefore, the court ruled that once received proceeds from unemployment compensation lose their exemption. For planning purposes, debtors should not confuse employment earnings and unemployment compensation. Money received as earning from a job which is exempt under 222.11 remains protected in the bank; money received for not working loses its protection when its received.

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