What Can I Keep If I File For Bankruptcy? By Attorney Nemia L. Schulte QUESTION: I'm thinking of filing for bankruptcy because I have so many credit card debts. I own a home, have 2 cars, an IRA account, and a checking and savings account. Am I allowed to keep all of this? ANSWER: If you file bankruptcy under a Chapter 7, you can keep your home so long as you are current in payment. You may also keep your IRA account so long as it qualifies as an IRA account under the IRS Code. However, whether you can keep your two cars would depend on whether the equity amount in these cars combined exceed $1,000.00 total. Also, it depends on how much money you have in your checking and savings accounts at the time of filing for bankruptcy whether you are allowed to keep all of the money in these accounts. In Florida, there are certain types of property you can keep in bankruptcy. Florida is considered a "debtor's haven" specifically because of the unlimited homestead protection afforded to homes within Florida. In other words, Florida law allows you to keep an unlimited exemption amount of equity on your home. For example, if your home is worth one million dollars and you only owe $100,000.00 on the mortgage, the remaining $900,000.00 of equity is exempt. However, in order to qualify for the homestead protection, you must show that this home is located in Florida and is your primary resident. Similarly, Florida law allows you to keep an unlimited amount of money in your IRA account. However, if you have a significant amount of money in this account -- for example, over $50,000.00 -- the bankruptcy trustee may require you to prove that this account is truly an IRA account and not merely a savings or money market account. You are allowed to keep, as exempt property, up to a total of $1,000.00 of equity in all of your cars combined. If you are leasing your cars, the chances are that you do not have any equity in them, and thus are able to keep these cars. Of course, in order to keep these cars, you would have to be current in your payments and must continue to make your monthly car payments during and after your bankruptcy filing. If you owe more on the cars than what they are worth, then you have no equity in the cars. You may keep the cars through a "reaffirmation agreement," whereby you are essentially taking these debts out of bankruptcy and agree to honor the original terms of the car note. On the other hand, if there is some equity in the cars, you must determine whether the fair market value (or blue book value) for each car is over the allowed exemption amount. For example, if one car is worth $900.00 and the other car is worth $500.00, then you have gone over the exempt amount by $400.00 (remember, you are allowed only a total of $1,000.00 of equity in all of your cars combined). In this example, if you wanted to keep both cars, you will probably have to enter into a payment plan with the bankruptcy trustee whereby you will be purchasing your non-exempt equity interest (i.e., $400.00) in the cars. Most trustees allow you to repay them over a 12-month period. Finally, Florida law allows you to keep a total of $1,000.00 on all of your personal property. This includes household goods and furnishings, jewelry, clothes, art objects, musical instruments, checking and savings account, etc. However, the value placed on these items is that of a "garage sale" value. In other words, if you were to have a garage sale, how much would you receive for these items? The value amount given to your checking and savings account is the actual amount you have in these accounts. Accordingly, whether you can keep the money in these accounts would depend on the value determined on your other property, and of course, the actual amount you have in your savings account at the time you file for bankruptcy. For many people contemplating on whether to file for bankruptcy, it is absolutely essential that they are aware of the type of property they may be forced to give up in the event it is above the exemption amount. It then becomes a balancing test -- is it worth it to lose some personal property in order to have your debts wiped away? Attorney Nemia L. Schulte practices in Pompano Beach, Fla. Visit her Web site at 123Law.com.