Debtors Who Relocate From Florida Are Eligible for Federal Exemptions

Which Exemptions Apply?

A potential debtor who has recently moved to Florida or who is about to move out of Florida may have options in terms of which exemptions apply. An analysis must be done to determine whether Florida, another State or Federal exemptions apply. There are two relevant code provisions to the exemption analysis. 11 U.S.C. §522(b)(3) states that a debtor must reside in a state for at least 730 days before they can claim those state’s exemptions. 28 U.S.C. §1408 provides that venue is proper where the debtor’s domicile, residence, principal place of business or principal assets was located for the longer portion of 180 days. Typically, Federal and other state’s exemptions allow a debtor to exempt more personal property than Florida’s exemptions. Conversely, Florida’s exemptions are typically more generous in exempting the homestead than the Federal exemptions.

A potential debtor that moved to Florida but has not resided in Florida for at least 730 days is unable to claim Florida exemptions pursuant to 11 U.S.C. §522(b)(3). However, one should not automatically assume that the potential debtor’s prior state’s exemptions will apply as some state’s exemptions do not apply extraterritorially, i.e., they only apply to their own residents. For instance, Colorado law states that its exemptions only apply to residents of Colorado. In re Underwood, 342 B.R. 358 (Bankr. N.D. Fla. 2006). In such circumstances, the Federal exemptions apply. Accordingly, a question may arise as to whether a Florida debtor should wait to file bankruptcy until the debtor has resided in Florida for 730 days or whether it is advantageous to file before the 730 days and potentially take advantage of the exemptions under another state or Federal law. This must be determined on a case by case basis.

Alternatively, a situation may arise where a potential debtor plans to move from Florida and must determine whether it is advantageous to file bankruptcy before or after the move from Florida. Similar to Colorado, Florida’s exemptions only apply to residents of Florida. See In re Camp, 631 F.3d 757 (5th Cir. 2011). Accordingly, and analysis of the potentially applicable exemptions should be done prior to the move from Florida in order to determine the best way to protect the potential debtor’s assets.