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15.2.5.1 Overview

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  3. Chapter 15 Protecting the Debtor’s Home, Tangible Personal Property, and Other Assets
  4. 15.2 Homestead Exemptions
  5. 15.2.5 Homestead Exemption Limits in Bankruptcy
  6. 15.2.5.1 Overview

15.2.5.1 Overview

The extreme variation in state homestead amounts, and the existence of states with high or unlimited homestead exemptions and narrow fraud exceptions, led to concern about the use of homestead exemptions to shelter unreasonable amounts from creditors. The 2005 amendments to the Bankruptcy Code limit debtors from taking full advantage of state homestead exemptions in several circumstances.104

Courts have held that these limits apply only to ordinary state exemptions, not to the immunity recognized by many states for property owned in tenancy by entireties.105 In addition, the Bankruptcy Code’s exceptions to exemptions—the look-back period, exceptions for specified types of fraud, among others—are exclusive and cannot be enlarged by the courts. The Supreme Court refused to allow a homestead exemption to be surcharged for attorney fees incurred in attacking a debtor’s egregiously fraudulent lien.106

The restrictions added by the 2005 amendments are outlined in the next two subsections. They are discussed in detail in NCLC’s Consumer Bankruptcy Law and Practice.107

Footnotes

  • 104 See National Consumer Law Center, Consumer Bankruptcy Law and Practice § 10.2.3.4 (12th ed. 2020), updated at www.nclc.org/library.

  • 105 In re Davis, 403 B.R. 914 (Bankr. M.D. Fla. 2009) (2005 amendments limiting homestead exemption do not apply to tenancy-by-entireties exemption; entireties property was exempt even though purchased with funds fraudulently transferred from non-exempt individual account); In re Hinton, 378 B.R. 371 (Bankr. M.D. Fla. 2007) (cap does not apply to property owned in tenancy by entireties); In re Buonopane, 359 B.R. 346 (Bankr. M.D. Fla. 2007) (cap for homesteads acquired within 1215 days of bankruptcy does not apply to property owned in tenancy by entireties); In re Schwarz, 362 B.R. 532 (Bankr. S.D. Fla. 2007) (debtor barred from using Florida homestead exemption could exempt tenancy by entireties property).

  • 106 Law v. Siegal, 571 U.S. 415, 134 S. Ct. 1188, 188 L. Ed. 2d 146 (2014) (statutory list of exceptions to exemptions is exclusive; noting other ways to punish debtor’s fraud here).

  • 107 National Consumer Law Center, Consumer Bankruptcy Law and Practice (12th ed. 2020), updated at www.nclc.org/library.