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According to state statutes, eight jurisdictions allow unlimited homestead
exemption values. Nevertheless, a new federal bankruptcy law now preempts all state homestead
exemption laws to the extent of imposing a maximum cap upon value that may claimed as
exempt in Chapter 7 and Chapter 13 cases.
Claiming the federal bankruptcy homestead exemption
According to 11 USC Section 522, (the Federal Bankruptcy Code
homestead exemption statute), the federal homestead exemption provides
an exemption up to $18,501 dollars, in equity ownership value, for a
primary residence. The unused portion of the homestead exemption, if
any, may be applied to any other property, as a wild card, up to a
maximum value of $9,250. To claim the homestead exemption, the property,
and the corresponding Code section must appear with the schedule of
exempt property filed with the clerk of the court.
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Opt-Out States - May Claim State or Federal Homestead Exemption Law: |
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Claiming state homestead exemptions in bankruptcy
Debtors who reside within the jurisdiction of the state for less than
2 years may not claim state exemptions in Chapter 7 and Chapter 13
bankruptcy cases, and further, may not claim exemptions provided by
their prior state of residency. In this short-term residency
circumstance, debtors may alternatively select the federal bankruptcy
exemptions provided by 11 USC Section 522.
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Non Opt-Out States - Must Claim State Bankruptcy Homestead Exemption Law: |
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In one of the first cases published that construes the new Code
changes, as amended by the Abuse Prevention and Consumer Protection Act
of 2005 (BAPCPA), an Arizona federal bankruptcy court held 11 USC
Section 522(p) - which imposes a $125,000.00 cap on a homestead acquired
by a debtor within 215 days before the petition was filed - applies only
in non-opt out states.
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