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May 1, 2008 12:00 PM
Florida Surprise
To stop individuals who are on the verge of filing for bankruptcy from moving their wealth to states with laws that might better help them keep their assets, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the 2005 Bankruptcy Act) created two holding period requirements. To qualify for a state's homestead exemption with property worth more than $125,000, an individual must own that property for 1,215 days before filing for bankruptcy. There is also a residency requirement of 730 days, pre-bankruptcy filing, to take advantage of a state's other exemptions — including life insurance, annuities and retirement plans.
Since the 2005 Bankruptcy Act was adopted three years ago, there have been cases across the country involving homeowners who failed to satisfy either one, or both, of these holding periods. Yet, in six cases (five bankruptcy cases in Florida and one U.S. Court of Appeals for the Fifth Circuit case) decided from January 2006 through Jan. 4, 2008, homeowner debtors were able to retain all or a portion of the value of their properties after a bankruptcy proceeding. Indeed, recent decisions are producing some surprisingly good results for Florida homeowners who did not maintain a “Florida homestead”:
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| 2010 Tax Act News | Industry Trends Surveys |
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