Exemptions

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.

On appeal, Ms. Hanson argued that In re Hardy, 787 F.3d 1189 (8th Cir. 2015), which reversed the BAP to hold that the Missouri child tax credit refund was exemptible public assistance, abrogated Manty v. Johnson (In re Johnson), 509 B.R. 213 (B.A.P. 8th Cir. 2014), in which the BAP held that the Property Tax Refund Act was not exemptible as public assistance. The BAP rejected this argument, finding that the Eighth Circuit decision in Hardy was based on its disagreement with the BAP as to whether the child tax credit refund fit the definition of government assistance based on need. Relying on the history of amendments to the statute which were geared toward increasing benefits to poorer taxpayers, the circuit court found that the child tax credit refund fit the definition of public assistance.

Turning to the legislative history of the property tax refund statute, the court found amendments to that Act showed that the legislature had “rais[ed] the maximum eligible household income and lower[ed] the threshold income percentage for higher income individuals.” Taking into consideration the property tax relief statute as a whole, the court noted that other sections were not tied to income. Contrary to Ms. Hanson’s assertion, the court saw “no basis in the legislative history for a finding that the Act was intended to benefit low-income homeowners.” Based on this analysis, the court found that it was bound by the holding in Johnson and affirmed the bankruptcy court decision.

Hanson 8th BAP opinion Jan 2017

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 of $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 of 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

The Seventh Circuit found that Illinois’ personal property exemption statute, which provides an exemption for a bible, extended to the debtor’s first edition Book of Mormon, notwithstanding its unusually high monetary value. In re Robinson, 14-3585 (7th Cir. Feb. 4, 2016). [Read more…] about $10,000 Book of Mormon Properly Exempted