January 20, 2008
5th Circuit First Impression of BAPCA Homestead Exemption Cap
In In re Rogers, __ F.3d __ (5th Cir. Jan. 4, 2008), the court addressed 11 USC 522(p)(1), a cap on homestead exemptions enacted in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It was the first circuit court to do so.
The statute reads, in relevant part: "[A]s a result of electing . . . to exempt property under State or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate [$125,000]2 in value in—real or personal property that the debtor or dependent of the debtor claims as a homestead." 11 U.S.C. § 522(p)(1)(D). The statute further states that “any amount of such interest does not include any interest transferred from a debtor’s previous principal residence (which was acquired prior to the beginning of such 1215-day period) into the debtor’s current principal residence, if the debtor’s previous and current residences are located in the same State.” Id. § 522(p)(2)(B).
The question for the court was what was an "interest" under this statute. The case recounts the enormous split in the lower courts on the question -- splits arising out of basic property law issues -- and is a good read. Stay tuned!
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