Judge Invalidates New Bankruptcy Laws Homestead Limitations
One of the first bankruptcy opinions, if not the first opinion, interpreting the new bankruptcy law's homestead provisions was issued by an Arizona bankruptcy judge. The judge ruled that the $125,000 homestead limitation applicable to debtors who acquire their property within 40 months of filing bankruptcy is not applicable in states like Arizona, or Florida, that have opted out by statute of federal bankruptcy exemptions. Based on this court decision a Florida resident filing bankruptcy under the new law, regardless of when he purchases his Florida homestead, still enjoys unlimited homestead exemptions under the Florida constitution.
The judge pointed out that the new bankruptcy law's limitations on homestead exemptions applies only to debtors who elected to exempt property under the laws of their state of residence rather than the federal system of bankruptcy exemptions. . Since Florida laws requires bankruptcy debtors to opt out of the federal exemptions, the judge concluded, no debtor in states like Arizona or Florida could "elect" state exemptions- the election has already been made by the Florida legislature.
This decision is not binding on Florida bankruptcy courts, but the reasoning is creative and the decisions can be used as judicial precedent in our state. If this reasoning is followed by Florida bankruptcy judges it should allay fears of debtors being forced into involuntary bankruptcy in order to strip them of Florida's homestead protections. The case is In re: McNabb Case No 0-05-07495-RJH, District of Arizona.
posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida
Can Creditors file a involuntary bankruptcy Petition without the location of the Debtor.
I used my retirement annuity to purchase my home.. I am unemployed, 63 years old, have no income other than social security and no other assets...can I be forced into bankruptcy? Can the creditor take my home? I live in Florida...thanks...
I bought a house in 1995 and filed in December of 2001. Discharged in Dec 2004. If I sell now, will I be liable for amount over homestead (over 100K in my case of 2001) or am I safe since I did not buy my house during the normal date window prior to filing as is so often referenced?
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