Are Your Assets Protected From Creditors?

You suddenly get a call from a collection agency that says you owe a hospital over $100,000 for care for which you had no insurance.  You tell them you cannot pay, and they respond that they will be getting back to you.

What are you going to do?  You own your house and have a small savings account.  Will they force you out of your house?  Will they take your life savings?

The answers to these questions may depend on what type of property you own and how you hold title to that property.  Florida is known for its generous creditor protection laws.  Creditor exempt assets have no limits and are completely immune to levy, seizure, or garnishment.  Below are several types of assets that are protected from creditors:

  1. Homestead – The Florida constitution protects homestead property from creditors.  Homestead property is a primary residence on up to ½ acre if within a municipality or up to 160 acres if outside a municipality.  This means that your house cannot be taken from you, no matter what it is worth.


  1. Tenancy by the Entireties – This is a special way for married couples to hold title to property. It is presumed in Florida that title held as “husband and wife” is tenancy by the entireties.  What this means is that the entire property is owned by both the husband and wife and that a creditor of one of them cannot attach the property.  A creditor of both of them jointly may attach the property.  A bank account may be held this way, but you must insure that the paperwork is filled out properly when opening the account.


  1. IRA’s – This includes Roth, Rollover and Voluntary IRA’s.


  1. 401k’s – Your retirement accounts are protected.


  1. 529 college Savings Plans – money that you put away for your children’s education are protected.


What’s not protected:

  1. Individual bank and brokerage accounts.


  1. Tenancy by the Entireties property where both spouses owe money to the same creditor.


  1. Property held individually or as Joint Tenants or Tenants-in-Common


If your assets are protected, it is possible to negotiate or ignore creditor’s demands.  Obtaining the advice of a qualified estate planning attorney is recommended.