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Church Joint Venture, L.P. v. Earl Blasingame

Summarizing by Amir Shachmurove

Studensky v. Morgan (In re Morgan)

Studensky v. Morgan (In re Morgan), No. 11-51180 (5th Cir. July 17, 2012) * Unpublished opinion pursuant to 5TH CIR. R. 47.5
The Fifth Circuit REVERSED the judgment of the District Court and held that, where a debtor does not claim a homestead exemption and then sells the homestead post-petition, the debtor has the burden of claiming the exemption in the PROCEEDS within the six months allowed under applicable state law. In this case, because the Debtor failed to claim an exemption in his homestead, and failed to claim an exemption in the proceeds during the six months following the sale (i.e., while the proceeds were exempt under state law), the Debtor lost his right to claim an exemption in the sale proceeds. The trustee's objection should have been sustained. The lower courts' decisions were reversed and remanded.
Procedural context:
On appeal from the U.S. District Court for the Western District of Texas, which affirmed the decision of the Bankruptcy Court to overrule the Trustee's objection to the debtor's amended claims for exemption.
The Debtor filed his bankruptcy petition on July 30, 2010, and claimed the federal exemptions without exempting any portion of his homestead. He sold his homestead seven days later on August 6, 2010, and used the proceeds to retired a lien on his homestead. When the trustee learned of the sale and the payment to the lienholder (the Debtor's brother), the trustee challenged the validity of the lien and demanded repayment of the proceeds from the sale. On February 11, 2011 (six months and FIVE DAYS after the sale), the Debtor amended his schedules to claim an exemption in his homestead. The trustee objected to the amended schedules, contending that the state exemption of proceeds from the sale of a debtor's homestead was no longer applicable and, thus, could not be asserted. The Bankruptcy Court overruled the objection and allowed the exemption, and the District Court affirmed.
Jolly, Higginbotham, and Dennis (per curiam)

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