Exemptions

In chapter 7, an allowed, unconditional, exemption is removed from the bankruptcy estate and the property cannot be distributed to creditors even if the exemption loses its exempt status post-petition. Hawk v. Engelhart (In re Hawk), No. 16-20641 (5th Cir. Sept. 5, 2017).

Chapter 7 debtors, Gregory and Marcie Hawk, listed an IRA on their schedules and claimed an exemption for the account funds under Texas exemption law. The trustee did not object within thirty days and the court allowed the exemption. Over the course of several months, the Hawks withdrew funds from the account and did not roll them over into a new retirement account within sixty days as required under Texas law. The bankruptcy court found that the funds had lost their exempt status and ordered the Hawks to turn them over to the trustee. The district court affirmed. [Read more…] about In Chapter 7 IRA Exemption Protects Funds even if not Rolled Over

Because the debtor had no equity in her residential property to which it could attach, the Sixth Circuit found that the bankruptcy court properly authorized sale of the property and denied her claim for exemption based on her state law redemption rights. Brown v. Ellman (In re Brown), No. 16-1967 (6th Cir. March 20, 2017).

Susan Brown’s residence was valued at $170,000 and was secured for more than $200,000. When she filed her chapter 7 petition, she indicated her intent to surrender the property. The trustee sought an order allowing him to sell the property for $160,000 and use the proceeds to pay administrative costs and make distributions to creditors. Ms. Brown objected and claimed an exemption under section 522(d) based on her state law redemption rights. She did not seek a stay of the sale. The sale went forward and the bankruptcy court denied Ms. Brown’s exemption claim on the basis that she had no equity in the property. The district court affirmed. [Read more…] about Court Erroneously Requires that Exemption Attach to Equity

A state property tax refund intended to “provide property tax relief to certain persons who own or rent their homesteads,” is not “government assistance based on need,” for purposes of Minnesota exemptions. Hanson v. Seaver (In re Hanson), No. 16-6023 (B.A.P. 8th Cir. Jan. 6, 2017).

Upon objection by the chapter 7 trustee, the Bankruptcy Court found debtor, Sheri Lynn Hanson, was not entitled to the public assistance exemption based on her refund under the Minnesota Property Tax Refund Act. [Read more…] about Property Tax Refund Not Exemptible

The Nevada personal injury exemption applies to multiple claims rather than being limited to the aggregate total of all claims. Kaplan v. Dutra (In re Kaplan), No. 69065 (Nev. Dec. 1, 2016).

Chapter 7 debtor, David John Kaplan, was involved in two unrelated incidents in which his back was injured. He claimed two personal injury exemptions for $16,150 each in his bankruptcy schedules. The chapter 7 trustee objected to the exemptions arguing that the debtor was entitled to a maximum $16,150 for one or more personal injury claims. Finding no state court precedent on the issue, the bankruptcy court certified the question to the Nevada Supreme Court. [Read more…] about Nevada Personal Injury Exemption Applies on a Per-Claim Basis

A homestead that is exempt in chapter 7 is not part of the bankruptcy estate and, therefore, proceeds from its post-petition sale do not enter the estate for purposes of distribution to creditors. In re Montemayor, 547 B.R. 684 (Bankr. S.D. Tex. 2016) (Case No. 14-10031, Adv. Proc. No. 15-1003).

Juan Jose Montemayor filed for chapter 7 bankruptcy and claimed an exemption in a half-interest in real property as his homestead under Texas law. Post-petition he sold his interest in the property. With some of the proceeds, he bought land and commenced construction on a new residence. He deposited the rest of the proceeds into a bank account for use in building his new residence. When he had not invested all the proceeds in a new homestead within six months, as required by Texas homestead law, the trustee moved for an order requiring him to turn over the funds. The case was before the court on the trustee’s motion for summary judgment. [Read more…] about Texas Court Addresses Post-Petition Sale of Homestead in Chapter 7

Notwithstanding a debtor’s absolute right to amend her schedules, “a debtor can only amend her homestead exemption postpetition if on the petition date the debtor could have legally claimed an exemption for the property in question.” Earl v. Lund Cadillac, LLC. (In re Earl), No. 15-1693 (D. Ariz. Aug. 5, 2016).

When she filed for chapter 13 bankruptcy, Rachael Anne Earl, lived with her husband and four children in the house they had lived in for four years (Claiborne property). Ms. Earl did not have title to the Claiborne property because the property had been sold at a trustee’s sale. At the same time, she owned another single-family home that she had been renting to third parties for four years (Sunnyvale property). After her attempts to overturn the trustee sale of the Claiborne property were unsuccessful, and ten months post-petition, Ms. Earl filed a notice of change of address to the Sunnyvale property and amended her schedules to claim a homestead exemption in that property. Her case was converted to chapter 7 and the bankruptcy court granted Lund Cadillac’s objection to the amendment to Ms. Earl’s homestead exemption. [Read more…] about Limit on Right to Amend Homestead Exemption

California’s homestead exemption requires proof of intent to use the property as a residence rather than proof of actual occupancy, and a bankruptcy court must apply the state’s burden of proof when addressing a challenge to a state exemption. Diaz v. Kosmala (In re Diaz), No. 15-1219 (B.A.P. 9th Cir. March 11, 2016). [Read more…] about Intent to Reside Necessary to California Homestead Exemption