Posted by NCBRC - July 13th, 2021
Where the Additional Child Tax Credit and Earned Income Tax Credit were both intended to benefit low-income households and were not limited by taxes owed, they were properly deemed “public assistance” under state exemption laws. In re Moreno, — B.R. —-, 2021 WL 1904189 (Bankr. W.D. Wash. May 11, 2021) (case no. 3:20-bk-42855). Read More
Posted by NCBRC - July 8th, 2021
Insurance proceeds for the repair of the debtor’s fire-destroyed house are not considered when calculating impairment to the debtor’s homestead exemption where the debtor had not made any repairs on the house prior to filing for bankruptcy. Waltrip v. Sawyers, No. 20-1130 (8th Cir. July 2, 2021). Read More
Posted by NCBRC - June 19th, 2021
Under sections 724(a) and 551, the chapter 7 trustee could avoid the penalty portion of a federal tax lien on the debtor’s homestead property and preserve the value of the avoided lien for the benefit of the bankruptcy estate. United States of America v. Warfield, 2021 WL 1530094 (D. Ariz. April 19, 2021) (case no. 3:20-cv-8204). Read More
Posted by NCBRC - June 9th, 2021
Where the Arizona debtors were subject to Kansas exemption law but could not actually take any exemptions due to residency requirements, they were entitled to use federal exemptions under section 522(d). Mackenzie v. Schreiber (In the Matter of Schreiber), No. 20-1993 (D. Ariz. June 4, 2021). Read More
Posted by NCBRC - April 15th, 2021
A debtor may claim the California automatic homestead exemption with respect to property where he resides even though the property was owned by a trust created by his father and he and his brother were equal beneficiaries of the trust. In re Nolan, 2021 WL 528679, No. 20-1496 (C.D. Cal. 2021). The Ninth Circuit affirmed in Anderson v. Nolan (In re Nolan), No. 21-55204 (9th Cir. Feb. 3, 2022) (unpublished). Read More
Posted by NCBRC - January 6th, 2021
Adopting a plain-meaning approach, the Second Circuit found a debtor may avoid a lien that impairs her exemption on property her dependent son lives in part-time but is not his primary residence. Donovan v. Maresca (In re Maresca), No. 19-3331 (2d Cir. Dec. 14, 2020).
The debtor lived in an apartment, and her ex-husband lived in the marital residence (the Property) which he and the debtor owned jointly. They had joint custody of their dependent son whose primary residence was with his mother but who spent several days a week with his father in the Property as his “non-primary” residence. At the time the debtor filed for chapter 7 bankruptcy, her divorce lawyer had a judgment lien on the Property securing almost $71,000 in legal fees. She claimed an exemption on her interest in the Property under section 522(d) and sought to avoid the lien under section 522(f)(1)(A) as impairing that exemption. The bankruptcy court granted the debtor’s motion to avoid the lien. The district court affirmed. Read More
Posted by NCBRC - November 10th, 2020
When the debtor failed to reinvest the proceeds from the sale of his exempt homestead within the period required by state homestead exemption law, the exemption vanished. McCallister v. Wells (In re Wells), No. 20-86 (D. Idaho Oct. 14, 2020).
The debtor filed for chapter 13 bankruptcy and listed the equity in his home as exempt under Idaho law. During his bankruptcy, he sold the home in order to use the proceeds to pay off one of his creditors. He did not reinvest in a new home as required by Idaho exemption law. The trustee sought to capture the proceeds of the sale for the bankruptcy estate on the basis that the debtor’s homestead exemption vanished when the debtor sold the home without reinvesting within one year. The bankruptcy court overruled the trustee’s objection to the exemption. The trustee appealed to the district court. Read More
Posted by NCBRC - October 9th, 2020
Where the judicial lien against the debtor was fully satisfied before the debtor filed his bankruptcy petition, the transfer of funds from his IRA used to satisfy the lien was not an avoidable transfer under section 547 or section 522(f) or (h). Elliott v. Pacific Western Bank, No. 18-17421 (9th Cir. Aug. 12, 2020).
When the debtor defaulted on a loan held by Pacific Western Bank, PWB obtained a state court judgment against him and instituted a levy against the debtor’s employee retirement plan (IRA). Under California law, the funds in the debtor’s IRA were exempt only to the extent they were necessary for the debtor’s post-retirement support. The state court issued an executory lien against the debtor’s IRA, and PWB garnished the funds to cover the amount owed. Three months later, the debtor filed chapter 7 bankruptcy. After he received his discharge, he filed an adversary complaint seeking to recover the funds garnished from his IRA under the theory that they were exempt under state law and section 522(f) of the Bankruptcy Code. PWB argued that the funds were not exempt in the bankruptcy proceeding because the lien had been fully executed prior to the filing of the bankruptcy and, therefore, they did not become part of the bankruptcy estate. The bankruptcy court agreed. The district court affirmed. Read More
Posted by NCBRC - September 15th, 2020
The Bankruptcy Court correctly used the first-in first-out approach to determine how much of a commingled account could be attributed to exempt funds. Tydings v. Reed (In re Tydings), No. 20-4057 (W.D. Mo. Sept. 3, 2020).
After her husband died, the chapter 7 debtor received surviving widow’s social security benefits which she deposited into her bank account where she also deposited her weekly pay checks. Prior to receiving the social security payments, the debtor had $581.27 in her bank account. In the three months prior to her bankruptcy filing, the debtor deposited $15,171.57 in social security funds and $6,670.38 in wages into the account. During that same period, the debtor withdrew $13,461.07 from the account, leaving a balance of $8,939.15 on the petition date. The debtor claimed the entire balance in her account as exempt in bankruptcy. The trustee objected on the grounds that not all the funds in account were exempt. The trustee argued that the court should apply a first-in first-out (FIFO) analysis which would allow the debtor to exempt $3,981. The bankruptcy court sustained the objection and the debtor appealed to the district court. Read More
Posted by NCBRC - June 29th, 2020
The debtor’s uncashed loan check from her retirement account was property of the estate and was not exempt under section 522(d)(12). Ostrander v. Brown (In re Brown), No. 19-24 (B.A.P. 1st Cir. May 21, 2020).
Prior to filing her bankruptcy petition, the debtor received, but did not cash, an $18,000 check representing a loan from her retirement account. The chapter 7 trustee sought turnover of the check. The bankruptcy court denied the turnover motion finding that, because the funds were from an exempt retirement account and the debtor had not yet cashed the check, the check was likewise exempt. Read More