Bankruptcy In Florida: Debtors Can Stack Personal Property Exemptions

On July 31, 2007, Governor Charlie Crist amended one of Florida’s exemption laws, Florida Statute 222.25(4).  This amendment created more questions than it answered.  By amending the existing statute, Governor Crist changed bankruptcy practice as we knew it in Florida.  The law added a personal property exemption of $4,000.00, but was only applicable to those residents who did not claim the benefits of Florida’s homestead exemption.  Previously, in Florida, we only had a $1,000.00 personal property exemption, which was found in Art. X, Sec. 4(a)(2).  The question ringing in the ears of all bankruptcy attorneys was whether the new law took the place of the existing exemption or was stackable on top of the existing law.

The answer to this question seemed simple on its face and maybe that is why it wasn’t litigated in other jurisdictions.  Because the $1,000.00 personal property exemption is found in Art.X, Sec 4(a)(2) and is a Constitutional exemption, and the $4,000.00 is found in Florida Statutes 222.25(4) and is a statutory exemption, it seemed the two exemptions would have to co-exist, thereby providing at least some of the debtors in Florida additional protection.  It is well known in Florida that a statutory amendment cannot change the Florida Constitution, and therefore, the amendment to Florida Statute 222.25(4) would not alter the Constitutional exemption.  

Interestingly, the Chapter 7 Trustee argued that the legislative history of Florida Statute 222.25(4) supported her position that the maximum allowable personal property exemption was $4,000.00.  However, in the end, the Chapter 7 Trustee’s arguments could not overcome Art. XI, Sect. 5 of the Florida Constitution, amendment provisions.

Accordingly, the question was recently answered by Judge Alexander L. Paskay, United States Bankruptcy Judge, Middle District of Florida, Tampa Division.  In the case of In Re Bezares,  Judge Paskay concluded that the two exemptions exist separate and independent, one Constitutional and one Statutory, and therefore, Debtors who do not claim a homestead exemption are entitled to a total of $5,000.00 in personal property exemptions.