South-Western Legal Studies in Business

Homestead Exemption May Apply to Property in Another State
Description

Appeals court held that bankrupts are regarded as residents of the state in which they spent the most time in the180 days prior to filing. That meant the homestead exemption of that state would apply, even though they had sold their home and moved to another state.

Topic Bankruptcy
Key Words

Homestead Exemption; Residency

C A S E   S U M M A R Y
Facts

The Drenttels lived in Minnesota until June, 2003, when they sold their home and bought one in Arizona. In July 2003, they filed Chapter 7 bankruptcy. They claimed that their Arizona home, valued at $181,682, was exempt from the bankruptcy estate under Minnesota’s homestead exemption of $200,000. The trustee objected, claiming that the Minnesota exemption could not be applied to property outside of the state. The bankruptcy court agreed with the trustee. The Drenttels appealed to the Bankruptcy Appellate Panel, which held in their favor. The trustee appealed.

Decision

Affirmed. “Debtors must file for bankruptcy protection … in the district where the debtor’s domicile was located for the longer portion of the 180-day period immediately preceding the filing.” When the Drenttels filed, they had been in Minnesota more than in Arizona in that time period, so the Minnesota homestead exemption is available to them regardless of which state the homestead is located.

Citation  

In re: Drenttel, 403 F.3d 611 (8 th Cir., 2005)

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