Can You Protect Your Homestead from Bankruptcy?
What If You Are Behind on Your Payments?
We know! The price of anything in the grocery store these days seems to stretch the budget, but what’s with eggs!? It’s not just grocery prices though. We are getting so many phone calls from people who just can’t make ends meet with the rising cost of it all. People are calling us because insurance prices are doubling (sometimes even tripling!), property insurance is up, hurricanes caused us to lose much-needed work hours, the list goes on. It’s like Floridians can’t catch a break. One of the biggest questions we get are from people concerned about what bankruptcy will do to their homesteads. So, we are here to provide answers to questions you never realized you’d have. Will filing for bankruptcy protect your homestead if you are behind on your payments? In Florida, the answer is usually yes. Now, that is not an all-encompassing yes. It is a qualified yes. If you plan on keeping the home, a Chapter 13 bankruptcy could afford you an opportunity to do so if you are behind on the payments. Likewise, if you are current on the payments and filing Chapter 7 or Chapter 13, the bankruptcy code allows you a way to continue making payments on your homestead. If you were concerned about equity in your homestead when you file bankruptcy, the answer is usually yes, it will be protected. That is, it will be protected if you want to keep the home, are willing to continue making the regular monthly payment, and intend to catch up on all missed payments over the life of your Chapter 13 plan. Unlimited Homestead Equity Protection There are only a few states that allow homeowners to have unlimited homestead equity protection. Florida is one of those states. For example, a creditor cannot go to court, win a judgment,
and put a lien on your homestead even if you own a $1 million house with no mortgage.
The creditor’s judgment will simply become a piece of paper that needs to be enforced another way. They cannot put a lien on your homestead provided there are no shenanigans with regard to your homestead. You will be able to sell your homestead free and clear of that creditor’s judgment lien, and you can keep the proceeds protected while you look for another home. Now, if you don’t reinvest all $1 million of those proceeds from the sale of your homestead, the creditor can possibly go after the remaining funds, but that’s a discussion for another time. Florida Law Favors the Homestead There may be times when your homestead equity could be subject to the bankruptcy court’s jurisdiction and your creditors’ claims, but those times are very few and far between. Again, if you and your family are behind on a few mortgage payments but are able to catch up, a Chapter 13 reorganization may be just what you need to save your home and all of the equity in that home. The state of Florida, its constitution, and case law interpreting homestead laws overwhelmingly favor protecting the home for Florida families. As a rule of thumb, the longer you own your home, the better off you are. But, even if you just purchased your home, you should be able to exempt the equity in your homestead without a problem. As always, it’s in your best interest to check with an experienced bankruptcy attorney before filing for personal bankruptcy and having a discussion with them about your homestead equity. A referral is the greatest gift we can receive from a client or fellow business! Last month we had ... • 25 referrals from friends, family, or previous clients • 37 returning clients for a new matter • 20 referrals from other attorneys • 5 referrals from doctors and other professionals • We sent out 97 referrals to our trusted referral partners. A Huge Thank-You to Our Referral Partners!
Testimonial Our Clients Say It Best
“Best of the best! They helped me in my time of need when I had no clue how to get out from underneath all my debt! Always responds quickly and made everything that should’ve been stressful so easy. Explained all my options, and once I made my mind up, they did all the heavy lifting from there. Great communication and professionalism! I will always be grateful of their wonderful services!” –T.F. GOOGLE REVIEW — DECEMBER 2022
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