Bankruptcy Homestead Exemption
Justin Pratt (2011 J.D. Candidate, Texas Tech University School of Law) recently published his comment entitled The Inequitable Situation: A Look at the Bankruptcy Homestead Exemption After Five Years of Judicial Interpretation, 3 Est. Plan. & Community Prop. L.J. 97 (2010). An excerpt from the beginning is below:
In 2005, Congress amended the Bankruptcy Code to prevent abuse by debtors and increase creditors’ responsibilities. Along with the new legislation came litigation based on ambiguities within the legislation. One of the greatest protections to debtors in bankruptcy is the homestead exemption. When Congress amended the Bankruptcy Code, it altered some of the provisions applying to the homestead exemption. In the past, courts were split on how to interpret the part of the legislation that limits the value a debtor may protect in his homestead, but now courts uniformly interpret the legislation. However, this interpretation fails to address current and future problems with the legislation.
This comment explains the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), demonstrates how courts currently interpret the new homestead exemption cap, and offers a solution to the problems created by the court’s interpretations. Part I of this comment is a basic explanation of bankruptcy law, the BAPCPA, and includes a brief explanation of the bankruptcy exemptions along with the history and purpose of the BAPCPA. Part II explains and examines difficulties courts have interpreting the homestead exemption in the BAPCPA by introducing the two principal arguments the courts use to interpret the provision-“title” and “equity.” Part III walks through the relevant case law that demonstrates the strengths and weaknesses associated with each interpretation. Finally, Part IV of this comment proposes legislation that will solve the problems with interpreting the statute. Ultimately, this comment concludes that amending the statute is the best way to solve the problems encountered by courts and presented by scholars.
After graduation, Justin will be working as a criminal defense attorney in Utah.