The OSX file vault feature will only let you activate it on your current home folder if you have a HFS+ case-insensitive file system. It will not let you activate it on a current HFS case-sensitive.

But there is a trick, when creating a “new” clean user it will allow you to enable filevault for that new user.

So, here is how you do it.

But before you try, make sure you have enough free space, try to get rid of huge files and folders, backup your data. (in this case, we will copy your data, so you will have 2 copies for safety)

Also clean your applications cache, such as firefox cache, camino, opera,
~/Library/caches/com.apple.Safari/Webpage\ Previews/ , etc…: and close most of your applications.

$ cd ~/Library/Caches

$ find ./ -name “Cache” -exec rm -rf {} \;

$ rm -rf ~/Library/Caches/com.apple.Safari/Webpage\ Previews/Incoming/*

Steps

1. Create another admin user, for example “admin”, with administrator privileges

2. login as that user.

3. move your old user folder.

$ cd /Users/

$ sudo mv myusername myusername.bak

3. delete your old user from the “Accounts” preferences pane.

4. then create it again and check the option to use filevault

5. Logout from “admin” and login again as newuser.

6. Now copy the old data to your home folder. ( will take a very long time for that)
update: You must use rsync instead of cp, so that you also copy your VERY important hidden files. such as .ssh .gnupg .vimrc .gem .gitconfig etc..

$ sudo /usr/bin/rsync -av /Users/myusername.bak/ /Users/myusername/

# watch out if you have files that should not change the ownership, such as server backups.
$ sudo chown -R myusername ~/

7. Logout and login again, for your preferences to take effect

8. If everything looks fine, you might just delete the backup folder.

$ sudo rm -rf /Users/myusername.bak

if you have any confusions let me know in comments.