Florida Legislature Increases Personal Property Exemption

Palm Beach County Bar Association Bulletin, September 2007

On July 1, 2007, Florida Statutes section 222.25 was amended to increase a debtor’s personal property exemption from $1,000 to $4,000. The increased exemption, however, only applies if the debtor does not claim or receive the benefits of a homestead exemption under the Florida Constitution. Further, this exemption does not apply to a debt owed for child support or spousal support.

Some have questioned whether the Florida legislature went far enough with the amendment. To illustrate, the old $1,000 exemption from creditor claims was carried over from the Florida Constitution of 1868. However, according to the Office of Economic and Demographic Research, $1,000 in 1868 is worth $15,000 in today’s dollars. Whether you think the legislature went far enough, will likely depend on who you are representing.

Regardless of whether you believe the legislature went far enough, the wording of the amended statute leaves open issues which will have to be resolved by the courts. For example, an argument can be made that for those who do not claim or receive a homestead, the new exemption is in addition to the $1,000 exemption available to all residents. If that were the case then the total personal property exemption would increase to $5,000 for an individual or $10,000 for a couple. Another issue which will have to be resolved by the courts is whether an individual debtor, who owns his homestead jointly with his non debtor spouse and qualifies for a tenancy by the entirety exemption, can use the increased personal property exemption in lieu of claiming the homestead exemption. Further, some Florida debtors, who do not claim a homestead exemption, may now attempt to use the increased exemption to protect the equity in a motor vehicle not otherwise protected by the $1,000 exemption specific to motor vehicles. Notwithstanding the issues raised above, which will ultimately be resolved by the courts, many Florida debtors will benefit from this amendment as they will now be able to keep more of their assets in a bankruptcy.

It is important to remember that following the October, 2005 enactment of BAPCPA, in order for a debtor to take advantage of Florida’s exemptions in a bankruptcy, the debtor must have lived in Florida for at least 730 days. If the debtor has not lived in Florida for 730 days, another State’s or even the Federal exemptions may apply. Florida is not the only state which has amended its exemption laws in response to the October, 2005 enactment of BAPCPA, so, if you are researching another State’s exemption laws, be sure to check for the most recent version.