Central District Consumer Bankruptcy Attorney's Association

X-eGroups-Edited-By: easky1
Thank you Jim, I appreciate it. I hope I did not ask the question in
a confusing manner... but I referenced 522(o) only because that was
the section I thought might apply. While this is not my situation
presently, my concern is this: where a Debtor, age 66, has $250,000
in equity, and refinances a year or so prepetition taking ouf
$100,000, the effect of which is to reduce his homestead to
$150,000. Thus when he files, his residence is fully exempt.
Obviously he has to do something legitimate with the $100,000 [maybe
like pay his living expenses]. But I had read something that under
the new law there was a specific provision that would in effect
automatically "deduct" that $100,000 he took out of equity from his
available homestead exemption. However, I cannot find any specific
provison that says that. I guess I was incorrect, and there is no
such provision. I appreciate that the Debtor always has to justify
what he did, and that it not be done to hinder or defraud creditors.
Thanks again.
.

The post was migrated from Yahoo.

I don't think that's what Section 522(o) is all about, Frank. Take a look at In re Sissom, 366 B.R. 677 for a good analysis and explanation of this new BAPCPA section. Here's how that Court summarizes 522(o):
"B. Elements of 522( o)
11 U.S.C. 522( o) is one of the new provisions of the Bankruptcy Code resulting from the passage of BAPCPA. Section 522( o), in pertinent part, states as follows:
[T]he value of an interest in real or personal property that the debtor or a dependent of the debtor uses as a residence ... or ... claims as a homestead shall be reduced to the extent that such value is attributable to any portion of any property that the debtor disposed of in the 10-year period ending on the date of the filing of the petition with the intent to hinder, delay, or defraud a creditor and that the debtor could not exempt, or that portion that the debtor could not exempt, under subsection (b), if on such date the debtor had held the property so disposed of.
Put another way, to prevail under 522( o), four elements must be proven: (1) the debtor disposed of property within 10 years preceding the bankruptcy filing; (2) the property that the debtor disposed of was nonexempt; (3) some of the proceeds from the sale of the nonexempt property were used to buy a new homestead, improve an existing homestead, or reduce the debt
associated with an existing homestead, or, alternatively, to buy a new principal residence used by dependents of the debtor, improve an existing principal residence used by dependents of the debtor, or reduce the debt associated with a principal residence used by dependents of the debtor; FN18 and (4) the debtor disposed of the nonexempt property with the intent to hinder, delay, or defraud a creditor."
In re Sissom, 366 B.R. 677, 688 (Bkrtcy.S.D.Tex.,2007)
James R. Selth
Weintraub & Selth, APC
12424 Wilshire Blvd., Suite 1120
Los Angeles, CA 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
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To: cdcbaa@yahoogroups.com
Sent: 4/11/2008 12:57PM
Subject: [cdcbaa] Homestead Exemption and 522(o)
>> Is there currently any issue with local Ch 7 Trustees objecting to the
>> amount of claimed homestead exemptions under BAPCPA 522(o), where the
>> Debtor has refinanced the property in the year or two before
>> bankrupty? I have seen this question asked a couple of times at 341a
>> hearings, but have not had a problem yet. I have a Debtor who re-
>> financed about a year ago, and used the proceeds to run his business. I
>> recall when BAPCPA first came out there was some discussion that
>> Trustee's might try to "deduct" the amount of any refinancing from the
>> California Homestead Exemption. My Debtor is over 65 and needs the
>> full exemption if he is to remain in the home. Need I be concerned, or
>> any recent experience on this issue? Thanks!
>>
>>
>>
I don't think that's what Section 522(o) is all about, Frank. Take a look at In re Sissom, 366 B.R. 677 for a good analysis and explanation of this new BAPCPA section. Here's how that Court summarizes 522(o):

"B. Elements of 522( o)
11 U.S.C. 522( o) is one of the new provisions of the Bankruptcy Code resulting from the passage of BAPCPA. Section 522( o), in pertinent part, states as follows:

[T]he value of an interest in real or personal property that the debtor or a dependent of the debtor uses as a residence ... or ... claims as a homestead shall be reduced to the extent that such value is attributable to any portion of any property that the debtor disposed of in the 10-year period ending on the date of the filing of the petition with the intent to hinder, delay, or defraud a creditor and that the debtor could not exempt, or that portion that the debtor could not exempt, under subsection (b), if on such date the debtor had held the property so disposed of.

Put another way, to prevail under 522( o), four elements must be proven: (1) the debtor disposed of property within 10 years preceding the bankruptcy filing; (2) the property that the debtor disposed of was nonexempt; (3) some of the proceeds from the sale of the nonexempt property were used to buy a new homestead, improve an existing homestead, or reduce the debt
associated with an existing homestead, or, alternatively, to buy a new principal residence used by dependents of the debtor, improve an existing principal residence used by dependents of the debtor, or reduce the debt associated with a principal residence used by dependents of the debtor; FN18 and (4) the debtor disposed of the nonexempt property with the intent to hinder, delay, or defraud a creditor."

In re Sissom, 366 B.R. 677, 688 (Bkrtcy.S.D.Tex.,2007)



James R. Selth
Weintraub & Selth, APC
12424 Wilshire Blvd., Suite 1120
Los Angeles, CA 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net

NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF
THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY
LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION,
DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY
US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THIS
MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION.


--- Original Message---
To: cdcbaa@yahoogroups.com
Sent: 4/11/2008 12:57PM
Subject: [cdcbaa] Homestead Exemption and 522(o)

>> Is there currently any issue with local Ch 7 Trustees objecting to the
>> amount of claimed homestead exemptions under BAPCPA 522(o), where the
>> Debtor has refinanced the property in the year or two before
>> bankrupty? I have seen this question asked a couple of times at 341a
>> hearings, but have not had a problem yet. I have a Debtor who re-
>> financed about a year ago, and used the proceeds to run his business. I
>> recall when BAPCPA first came out there was some discussion that
>> Trustee's might try to "deduct" the amount of any refinancing from the
>> California Homestead Exemption. My Debtor is over 65 and needs the
>> full exemption if he is to remain in the home. Need I be concerned, or
>> any recent experience on this issue? Thanks!
>>
>>
>>

The post was migrated from Yahoo.

Is there currently any issue with local Ch 7 Trustees objecting to the
amount of claimed homestead exemptions under BAPCPA 522(o), where the
Debtor has refinanced the property in the year or two before
bankrupty? I have seen this question asked a couple of times at 341a
hearings, but have not had a problem yet. I have a Debtor who re-
financed about a year ago, and used the proceeds to run his business. I
recall when BAPCPA first came out there was some discussion that
Trustee's might try to "deduct" the amount of any refinancing from the
California Homestead Exemption. My Debtor is over 65 and needs the
full exemption if he is to remain in the home. Need I be concerned, or
any recent experience on this issue? Thanks!

The post was migrated from Yahoo.