Florida Bankruptcy Question of The Day

Ever since the real estate meltdown of 2007, and the economic aftermath including foreclosures and short sales, the term bankruptcy rolls off the tongue a lot more than usual. Many people are having hard times and the worry is building more and more with each new credit card bill, rising mortgage payments and other bills.

Bankruptcy not only happens to the 99 percenters. Warren Sapp, the famous NFL football player and Dancing With The Stars contestant, filed for chapter 7 bankruptcy four days ago in Florida. It was documented in court proceedings that Warren Sapp owes more than almost 7 million dollars to creditors, back child support and alimony.

I receive many questions emailed to me about the bankruptcy process, so I thought I would invest the time to answer a bankruptcy question I received recently.

Bankruptcy Question of The Day

A woman recently wrote asking "Can I declare chapter 7 bankruptcy and still be able to keep ownership of my car?" She asked this because she stated "I am concerned because I need my car to take my children to school and also for my commute to work."

The best way to answer this is that, in some situations, you can find a way to keep it under Florida bankruptcy laws. If you have a car which is financed, and is worth less than what you currently owe, then you may ask the bankruptcy court to let you hold onto the automobile and keep making payments toward the debt. If the car is worth more than what you owe, you are still entitled to exemptions that protect some of the equity that you have in the car and you may be able to negotiate a deal with the bankruptcy court so that you can retain ownership.

For example, if you do not own a home or if you do not intend to keep the home you reside in as part of the bankruptcy, then an additional exempt $6000 of homestead protection may be attainable to protect that amount of equity in the automobile if needed.