In re: Kathy Ellen Richards -

Case Type:
Consumer
Case Status:
Affirmed
Citation:
22-8002 (6th Circuit, Aug 25,2022) Published
Tag(s):
Ruling:
Acknowledging that exemptions are to be liberally construed on behalf of debtors, the Sixth Circuit BAP affirmed the bankruptcy court decision disallowing the debtor's claimed homestead exemption in proceeds from a residence sold pre-petition. The BAP found the phrase "uses as a residence" in the statute to be plain and controlling. Since the debtor was not using the sale proceeds as a residence on the petition date, the exemption did not apply. The BAP also held that the debtor's amended exemption did not moot her appeal.
Procedural context:
The trustee objected to the debtor's homestead exemption and the bankruptcy court sustained the objection. The debtor appealed but also amended to claim a wild card exemption in the proceeds. The debtor appealed. The trustee also argued that the amendment adding the wild card exemption mooted the appeal.
Facts:
The debtor sold her home and deposited about $37,000 of net proceeds into her attorney's escrow account. Six days later, she filed a Chapter 7 bankruptcy and claimed an exemption of $25,150 in the proceeds pursuant to 11 U.S.C. Sec. 522(d)(1). The trustee objected to the exemption, arguing the statutory language creating the exemption did not extend to proceeds from a residence. The bankruptcy court sustained the objection and disallowed the exemption. Thereafter, the debtor asserted an exemption of approximately $11,000 under 11 U.S.C. Sec. 522(d)(5) (the "wild card" exemption), to which the trustee did not object.
Judge(s):
Bauknight, Dales and Gustafson; Opinion by Gustafson

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