Q: Can I protect my wages in bankruptcy?

Florida has wage exemption statutes located at Fla. Stat. Ann. 222.11(2) that will protect six months of traceable wages for head of household employees. The bankruptcy court takes a narrow view of the Florida statute that seemingly protects all earnings whether denominated as “wages, salary, commission, or bonus.” If you are a true “W2” employee (working for someone else) then you can protect 100% of your earnings (accumulated over the last six months) irrespective of whether
they are characterized as wages, salary, commission or bonus. A cautionary tale for brokers and agents that earn a commission: see below.

Be forewarned: If you are self-employed, or if you are a “1099” Independent Contractor, even if you take a steady “salary” the bankruptcy court will not let you utilize the wage exemption to protect your “wages” because – well, because you are viewed as self-employed. (We agree it doesn’t make a whole lot of sense, but this is the law.)

If you are a true “W2” employee but not head of household, Fla. Stat. 222.11(2)(c) will protect the greater of 75% of your traceable wages or 30 x the federal minimum wage. If we are talking about a negligible amount of money, most trustees are not going to pursue the 25% of unprotected wages, but it could be a factor if the trustee is tallying up all of your unprotected assets to try to squeeze you for a cash settlement to the bankruptcy estate.

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Disclaimer: The Law Offices of Michael E. Zapin is a debt relief agency and we help our clients file for bankruptcy relief. The information on this website is for educational purposes only and should not be construed as legal advice.
Information discussed on this website is focused on bankruptcy in the State of Florida and may vary from state-to-state. Contact a local practitioner in your home state for more information on the differences or contact us for a reliable referral.