Florida’s Most Under-Utilized Bankruptcy Exemption: Section 222.11
Sunday, December 19, 2010 at 9:13AM Case Study: During the six months prior to filing chapter 7 bankruptcy, Husband and Wife each deposit their wages into separate bank accounts created for that purpose. During the six-month period, while saving their wages, the family lives off other savings. There is at least one dependent. Result: At the time of filing, HIS saved wages are 100% exempt. Her saved wages are 75% exempt.
To put it into dollar terms, say he earns $100,000 in annual salary and she earns $45,000. In the six months before filing, he could save as much as $35,000 in his wage account (after taxes). She might save $15,750 in her wage account. Upon filing bankruptcy, the entire $35,000 of his wages is exempt, and $11,812.50 of her wages are exempt. I.e., they keep $46,812.50 and give up $3,937.50.
Here’s how it works. Florida Statute § 222.11 provides the more or less well-known “head of family” exemption in sections 222.11(2)(a) or (b), which exempts the entirety of the six months of wages. The wages must be “traceable” (hence the desirability for a separate wage account to make tracing easier). The head of family must provide at least 50.1% (more than half) of the support of a dependent.
Note that the dependent does NOT need to live with the head of family.
Less well-known is the provision of § 222.11(c), which allows that the “[d]isposable earnings of a person other than a head of family” are exempt up to the limits of the Consumer Credit Protection Act, which allows garnishment of a maximum of 25% of the person’s wages. Therefore, a non head of family’s wages are 75%, exempt. Thus, the second earner’s wages are substantially exemptible just as are the head of the family’s.
With intelligent planning prior to filing, a two-earner family can protect a substantial amount of wage income. By living off non-exempt savings or other non-exempt funds, and saving their wages, the couple can legally exempt a large portion of their pre-bankruptcy earnings at the time of filing.
Note finally that the § 222.11(2)(c) exemption is available even where there are no dependents, such as for a person who lives alone.
As always, this information should not be construed as legal advice, because every individual case is different. You should consult your bankruptcy attorney for specific application of exemptions to your case.
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