Baldridge v. Ellmann (In re Baldridge)

Summarized by Michael Coury , Glankler Brown, PLLC
11 years 7 months ago

Citation:

Case No. 13-700, 6th Circuit, February 3, 2014

Tag(s):

Ruling:

The Sixth Circuit affirmed the bankruptcy court's disallowance of the Debtors' Michigan homestead exemption. The bankruptcy court found that there was no equity in the sale proceeds of the Debtors' homestead to which the homestead exemption could attach. The Court rejected the Debtor's argument that closing expenses recovered from the second mortgage creditor by the Trustee pursuant to 11 U.S.C. Section 506(c) were subject to the Debtors' homestead exemption. The Court held that the surcharge of the second mortgage holder's sale proceeds was not part of the estate of the Debtors at the time the case was filed. The Court found there was no proof to support the Debtors' argument that the surcharge amount reflected the value of the Debtors' right of redemption. The Court further found that the second mortgage holder had a deficiency claim of over $200,000 after the 506(c) expenses and that there was no residual equity in the property upon which an exemption could attach.

Procedural context:

The Chapter 7 Trustee objected to the Debtors' Michigan homestead exemption. The bankruptcy court disallowed the exemption and on appeal the district court affirmed. On appeal to the Sixth Circuit, the Sixth Circuit affirmed the district court.

Facts:

The Debtors' homestead was sold by the Chapter 7 Trustee. The sale proceeds were insufficient to satisfy both mortgages on the property. The bankruptcy court surcharged the second mortgage holder's sale proceeds for $28,000 in sale expenses incurred by the Trustee pursuant to the 11 U.S.C. section 506(c). The Debtors contended that their homestead exemption attached to the monies paid to the Trustee. The bankruptcy court rejected that argument and disallowed the Debtors' homestead exemption.

Judge(s):

Rogers, McKeague and White, Circuit Judges

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!