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Debtor receiving exempt amount of liquidated real property
Got it. I understand. Thanks all.
----- Original Message -----
To: cdcbaa@yahoogroups.com
Sent: Wednesday, January 26, 2005 7:34 AM
Subject: Re: [cdcbaa] Debtor receiving exempt amount of liquidated real property
--- Dennis McGoldrick wrote:
I just reread my post and realize I should have said
the money has to be "reinvested" in another
"homestead" any other use would still require the
debtor to return the funds.
Keep in mind, a motorhome can be a homestead, or a
boat, if the debtor lives in the property. If a
debtor sold his home, bought a boat, moved onto the
boat,....the boat would be exempt, and the
boat/motorhome/ could be resold after the bankruptcy.
dennis
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Got it. I understand. Thanks
all.
----- Original Message -----
From:
Dennis McGoldrick
To: cdcbaa@yahoogroups.com
Sent: Wednesday, January 26, 2005 7:34
AM
Subject: Re: [cdcbaa] Debtor receiving
exempt amount of liquidated real property
--- Dennis McGoldrick <easky1@yahoo.com> wrote:I
just reread my post and realize I should have saidthe money has to be "reinvested" in another"homestead" any other use would still require
thedebtor to return the funds.Keep in mind, a motorhome can be a
homestead, or aboat, if the debtor lives in the property. If
adebtor sold his home, bought a boat, moved onto theboat,....the boat
would be exempt, and theboat/motorhome/ could be resold after the
The post was migrated from Yahoo.
I just reread my post and realize I should have said
the money has to be "reinvested" in another
"homestead" any other use would still require the
debtor to return the funds.
Keep in mind, a motorhome can be a homestead, or a
boat, if the debtor lives in the property. If a
debtor sold his home, bought a boat, moved onto the
boat,....the boat would be exempt, and the
boat/motorhome/ could be resold after the bankruptcy.
dennis
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>
> So it seems pretty clear to me that pursuant to CCP
> 704.960, if the debtors
> record a declaration of homestead and then sell
> their property voluntarily
> pre-petition, they can safely exempt $75,000 as long
> as their bankruptcy
> case is filed within 6 months after the proceeds are
> received from sale.
> Correct?
>
Incorrect - The Golden case says the proceeds are
exempt for only six months. The debtor's either have
to spend the money (careful here, as 727 can preclude
a discharge if the money is just blown), or reinvest
the funds within six months. The trustee can take the
money during the bankruptcy. In Golden, the debtor
spent the money after the bankruptcy and the trustee
sued for a judgment for the amount on hand at the time
of the bankruptcy. (Another caution, this could also
cost a debtor a discharge, as a clever trustee could
allege the debtor took property of the estate).
dennis
> ***********************************************
> Mark J. Markus
> Law Office of Mark J. Markus
> 11684 Ventura Blvd. PMB #403
> Studio City, CA 91604-2652
> (818)509-1173
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> ----- Original Message -----
> To:
> Sent: Tuesday, January 25, 2005 2:34 PM
> Subject: Re: [cdcbaa] Debtor receiving exempt amount
> of liquidated real
> property
>
>
> >
> > More recent cite holding Golden still good law,
> but
> > limiting it to sales without a reinvestment
> > postpetition.
> >
> > Here is another more recent cite:
> >
> > In re Kim
> > 257 B.R. 680
> > 9th Cir Bap 2000
> >
> > Other authority cited by Trustee is not
> persuasive. He
> > cites England v. Golden (In re Golden), 789 F.2d
> 698
> > (9th Cir.1986), for the proposition that a court
> may
> > look at the post-petition conduct of a debtor. As
> > noted in In re Combs, 166 B.R. 417
> > (Bankr.N.D.Cal.1994), Golden is based on a
> peculiar
> > temporal exemption statute and its holding is thus
> > limited to its facts. The California exemption law
> at
> > issue in Golden specifically provided that
> proceeds of
> > the sale of a homestead are exempt only if
> reinvested
> > within six months of a sale. Golden, 789 F.2d at
> > 699-700. The Golden court applied the California
> > exemption law as written: to obtain the exemption,
> the
> > debtors had to take certain action, which they
> failed
> > to do. The exemption law itself contained a
> "sunset
> > provision" requiring the court to look to facts
> > occurring after the petition date to determine
> whether
> > the exemption was available. Section 704.115
> contains
> > no such "sunset provision," and the holding of
> Golden
> > is thus inapplicable. See Combs, 166 B.R. at
> 419-20.
> >
> >
> > sometimes it just pays to be old, cause I read
> those
> > cases in the 80's
> >
> > dennis
> >
> >
> >
> > __________________________________
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> >
> >
> >
> >
> >
> >
> >
> >
>
>
>
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More recent cite holding Golden still good law, but
limiting it to sales without a reinvestment
postpetition.
Here is another more recent cite:
In re Kim
257 B.R. 680
9th Cir Bap 2000
Other authority cited by Trustee is not persuasive. He
cites England v. Golden (In re Golden), 789 F.2d 698
(9th Cir.1986), for the proposition that a court may
look at the post-petition conduct of a debtor. As
noted in In re Combs, 166 B.R. 417
(Bankr.N.D.Cal.1994), Golden is based on a peculiar
temporal exemption statute and its holding is thus
limited to its facts. The California exemption law at
issue in Golden specifically provided that proceeds of
the sale of a homestead are exempt only if reinvested
within six months of a sale. Golden, 789 F.2d at
699-700. The Golden court applied the California
exemption law as written: to obtain the exemption, the
debtors had to take certain action, which they failed
to do. The exemption law itself contained a "sunset
provision" requiring the court to look to facts
occurring after the petition date to determine whether
the exemption was available. Section 704.115 contains
no such "sunset provision," and the holding of Golden
is thus inapplicable. See Combs, 166 B.R. at 419-20.
sometimes it just pays to be old, cause I read those
cases in the 80's
dennis
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> Mark:
I recalled a case where a trustee made the demand for
the proceeds once the six months expired. I thought
it was a case where the bankruptcy was filed within
the six months and the trustee waited for the
expiration of the six months. The six month rule is
in two places. In 704.720 (forced sales), and 704.960
(voluntary sale of homestead, WITH A DECLARED
HOMESTEAD).
a quick westlaw search shows this recent Ryan decision
allowing the 704.720 exemption when property was sold
prepetition in a divorce.
"V. CONCLUSION
The language, legislative history and cases
interpreting 703.140(a) support that in bankruptcy,
the homestead exemption is not limited to when a
debtor's residence is sold to enforce a money
judgment. However, when a sale of real property occurs
prior to the bankruptcy petition, 703.140 does not
apply and a debtor must satisfy the standard homestead
exemption requirements. For the automatic homestead
exemption, this includes the requirement that the sale
be conducted pursuant to a money judgment. Here, the
sale of the Property was ordered to satisfy a judgment
for the payment of money to reimburse Guy in
connection with a marriage dissolution. Therefore, the
sale was a forced sale, and Debtor's claimed automatic
homestead exemption in the proceeds on the sale of the
Property, which occurred within six months of the
filing of the petition, was proper.
This opinion shall constitute my findings of fact and
conclusions of law.
Bkrtcy.C.D.Cal.,2003.
In re Cumberbatch
302 B.R. 675"
OK, I found it:
C.A.9 (Cal.),1986.
In re Golden
789 F.2d 698, Bankr. L. Rep. P 71,125
debtor sold in may, filed in June, lost exemption
postpetition and trustee got a $25,000 judgment
against debtor spending the homestead after the bk.
"Golden sold his residence in early May, 1983 and
filed his Chapter 7 petition in the bankruptcy court
on June 30, 1983, less than two months later. At the
time of the filing, he had approximately $25,000
remaining as unspent proceeds of the sale.
Pursuant to 11 U.S.C. 522(b)(2), the debtor may
claim exemptions for property exempt under either
state or federal law. Golden claimed a $25,000
exemption under the California homestead provisions
then codified at Cal.Civ.Code 1265. [FN1] That
section provided:
FN1. Cal.Civ.Code 1265 was repealed, effective July
1, 1983, after the filing of the bankruptcy. A similar
exemption is now found at Cal.Civ.Proc.Code
704.960(a) (Supp.1986). "
"Finally, Golden argues that even if the proceeds are
no longer exempt, he has spent some of the $25,000,
and that the trustee is entitled only to judgment for
the amount remaining in his possession. The award of a
judgment in the amount claimed exempt at filing,
however, furthers the purpose of the California
exemption to preserve the proceeds of the sale for
reinvestment in another home, and to prevent
expenditures for nonexempt purposes. The court did not
err in entering judgment in the amount of proceeds in
the debtor's possession at the time of the filing for
bankruptcy.
Affirmed."
9th Circuit Case, probably binding here.
dennis
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There is also another consideration. It takes almost
no effort for a trustee to wait six months after a
case is filed and demand any remaining homestead from
a prebankruptcy sale. A homestead arising from a
bankruptcy estate sale, is normally considered
determined, and final, as of the filing of the case,
so trustees generally do not hold open a case, try to
get the money back again. It is almost always more
dangerous to have a prebankruptcy sale. When there is
a prebankruptcy sale, I insist the debtor spend all
the money, or reinvest in another homestead, before
the bankruptcy is filed.
At any rate, these observations are just that,
observations.
good luck,
dennis
Thanks, Dennis. I didn't understand this last part of your observations at all. I thought the exemption was fixed on the date the bankruptcy case was filed. If so, how can the Truste wait 6 months and demand the exemption proceeds returned? That doesn't make sense. So long as the debtor files the case within 6 months of receiving the sales proceeds, aren't they protected??
*****************************************
LAW OFFICE OF MARK J. MARKUS
11684 Ventura Blvd. #403
Studio City, CA 91604-2652
(818)509-1173
(818)509-1460 (fax)
http://www.bklaw.com/
*********************************************
There is also another consideration. It takes almostno effort
for a trustee to wait six months after acase is filed and demand any
remaining homestead froma prebankruptcy sale. A homestead arising from
abankruptcy estate sale, is normally considereddetermined, and final, as
of the filing of the case,so trustees generally do not hold open a case, try
toget the money back again. It is almost always moredangerous to
have a prebankruptcy sale. When there isa prebankruptcy sale, I insist
the debtor spend allthe money, or reinvest in another homestead,
beforethe bankruptcy is filed.At any rate, these observations are
just that,observations.good luck,dennis
Thanks, Dennis. I didn't understand this last part of your
observations at all. I thought the exemption was fixed on the date the
bankruptcy case was filed. If so, how can the Truste wait 6 months and
demand the exemption proceeds returned? That doesn't make sense. So
long as the debtor files the case within 6 months of receiving the sales
proceeds, aren't they protected??
*****************************************LAW OFFICE OF MARK J.
MARKUS11684 Ventura Blvd. #403Studio City, CA
91604-2652(818)509-1173(818)509-1460 (fax)
The post was migrated from Yahoo.
homestead after a sale. Sometimes the trustee
surcharges the homestead. The surcharges mostly arise
from the debtor eating the homestead during the case,
for example, the home has 90,000 equity, debtor
claimed 75,000. debtor lives in the home for four
months during the case and makes no payments. Debtor
has really taken the monthly payments, say 2000
multiplied it by four, 8000, in "rental use of the
estate's home". No the equity for the estate is only
7,000 and there is no real distribution to be made to
the creditors. .
Say the debtor agrees to move out as the escrow
closes, but doesn't, trustee now has to evict the
debtor, hire a lawyer, etc., now the equity in the
home for the estate would be entirely eaten by the
debtor's postpetition actions. In these cases, the
trustee tries to surcharge.
I just had a case with more equity than creditors
(converted, failed chapter 11). Debtor lived there
the whole case, no surcharge, cause all the creditors
got paid anyway.
In most cases, where the debtor plays fair, the
trustee does not surcharge, but it, like so many other
things, is dependant upon the relations between the
debtor and the trustee.
There is also another consideration. It takes almost
no effort for a trustee to wait six months after a
case is filed and demand any remaining homestead from
a prebankruptcy sale. A homestead arising from a
bankruptcy estate sale, is normally considered
determined, and final, as of the filing of the case,
so trustees generally do not hold open a case, try to
get the money back again. It is almost always more
dangerous to have a prebankruptcy sale. When there is
a prebankruptcy sale, I insist the debtor spend all
the money, or reinvest in another homestead, before
the bankruptcy is filed.
At any rate, these observations are just that,
observations.
good luck,
dennis
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