Last updated October 29, 2026

Keeping Homestead Sale Proceeds in a Florida Bankruptcy: The Rule and Who Decides

Short answer: Florida protects a homestead from forced sale, and Florida courts protect the money from a voluntary sale only when the owner intends in good faith, before and at the time of the sale, to reinvest it in a new Florida homestead within a reasonable time, and keeps it separate (Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201 (Fla. 1962)). There is no fixed number of months. Whether the rule fits your sale, and whether to claim it, is your bankruptcy attorney's decision.

This page states the rule and explains the real estate side: how a sale and a purchase are timed, and how the money moves at closing. It covers Miami-Dade, Broward, Palm Beach, Martin and St. Lucie.

Informational purposes only. This is not legal or tax advice and no attorney-client relationship is created by reading it. PBP Real Estate, LLC is a licensed Florida real estate brokerage (License CQ1064615), not a law firm. We list and sell real estate; we do not advise on debts, on whether or how to file, on exemptions or on the bankruptcy case itself. Ask your bankruptcy attorney about your situation.

Does homestead exemption in Florida give protection from creditors?

Yes, broadly, with exceptions written into the constitution. Article X, section 4(a) of the Florida Constitution exempts a homestead owned by a natural person from forced sale, and says no judgment becomes a lien on it. The exceptions are taxes and assessments on the property, debts for its purchase, improvement or repair, and labor performed on it. A mortgage the owner signed is a lien the constitution allows, because the owner, joined by the spouse if married, may mortgage the homestead (art. X, s. 4(c)), so it is still paid in full, or by the lender's agreement, when the house is sold.

The protection has size limits, not a dollar limit: up to one-half acre of contiguous land inside a municipality, or up to 160 contiguous acres outside one. Whether a particular home qualifies is a legal question for your attorney.

Can creditors take your primary residence in Florida?

Most creditors cannot force the sale of a qualifying homestead, but federal bankruptcy law adds a cap for recent purchases. Under 11 U.S.C. 522(p), a debtor who uses Florida's exemptions may not exempt more than $214,000 of interest acquired during the 1,215 days before the case is filed, for cases filed from April 1, 2025 to March 31, 2028. The cap has exceptions. One of them leaves out value rolled over from an earlier principal residence, bought before that period, into the current one when both are in the same state (section 522(p)(2)(B)).

How the cap and its exceptions apply to your home is a question only your bankruptcy attorney can answer. We do not advise on exemptions.

What happens to the homestead protection when the house is sold?

It can follow the money, but only on conditions. In Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201 (Fla. 1962), the Florida Supreme Court held that proceeds from a voluntary sale of a homestead stay exempt from creditors only if the owner has a good-faith intent, before and at the time of the sale, to reinvest them in a new Florida homestead within a reasonable time, and keeps the money separate rather than mixing it with other funds.

Some pages online name a fixed number of months. The Florida rule does not. What is reasonable depends on the facts, and a court decides it if anyone challenges the claim.

Does the rule work the same way inside a bankruptcy case?

The rule is the same, but the sale runs through the case. A Florida debtor claims Florida's exemptions in the bankruptcy, and the federal cap in section 522(p) applies on top. If the house is sold while the case is open, the sale itself needs approval: in Chapter 13 the debtor sells with the court's order, and in Chapter 7 the trustee decides whether non-exempt property is sold. The order approving a sale says where the money goes. Some orders send proceeds to the trustee, some allow an exempt amount to go to the debtor, and some do both.

Whether to claim the proceeds as exempt, what the order should say about them, and what to do with the money afterward are your attorney's decisions. See selling a house during Chapter 13, when a Chapter 7 trustee sells and selling after the case closes.

How does the real estate side affect the proceeds?

Mostly through timing and paperwork. The legal rule cares about intent, time and separation; the real estate side controls when the money arrives and where it is paid.

• Timing the two closings. If you plan to buy another home in South Florida, we line up the sale and the purchase so the closing dates fit together, instead of leaving the money waiting while you search.
• Paying the money where your attorney directs. PBP Real Estate never holds closing funds; the title company does. Before closing, your attorney gives the title company written instructions on where the proceeds go, or the court's order does. We make sure those instructions are in the file in time.
• A price record for the court. If the sale needs court approval, Gia Freer prepares a written price opinion by hand from current Beaches MLS closings, and we keep a dated log of every offer.
• Confidentiality. Our marketing never mentions a bankruptcy, and a transaction broker keeps your reason for selling confidential unless you waive that in writing (section 475.278(2)(f), Florida Statutes).

We do not advise on where to keep the money, whether to claim it, or how it affects your case. Gia and Grant Freer have closed 767 transactions and $203,762,527 since 2000, 671 of them since 2013 (Beaches MLS, agent production report, as of October 19, 2026).

Related

• Selling a house in a Florida bankruptcy: the hub
• Selling a house after your bankruptcy case closes
• Selling a house during Chapter 13 in Florida
• Selling a house in Chapter 7: when the trustee sells
• Short sale during bankruptcy in Florida
• Selling in other special situations

Published by Gia Freer, Broker of Record, PBP Real Estate, LLC · Florida broker license BK689801 · brokerage license CQ1064615. Last updated October 29, 2026.