In a recent decision, the bankruptcy court for the District of Massachusetts found that a debtor who had not lived at a property for over 30 years could still claim an exemption in that property, even though her principal residence was elsewhere.
The debtor owned a one-half remainder interest in property occupied by her elderly parents. On her Schedule C, she claimed an exemption in the property in the whole value of her interest, $14,945.29 under § 522(I) of the Bankruptcy Code. The Chapter 7 Trustee objected to the debtor’s claim of exemption and argued that because neither the debtor nor her dependents resided at the property, she could not properly claim an exemption.
At hearing, the Debtor testified that she had not lived in the property for over 30 years and that her parents lived there. The debtor further testified that she lived in another town because of a medical condition and that it was her intention to move to and live at the property permanently when her medical condition permitted.
Noting that there are several cases holding that a debtor can have more than one “residence” for federal exemption purposes, the bankruptcy court found that the debtor’s intent to eventually live at the property, along with her testimony that she was often there to care for her parents and regularly stayed overnight at the property, was there to care for her parents and kept items at the property, was sufficient for the debtor to claim an exemption in the property.
This case is similar to In re Denker-Youngs, which was discussed on this blog last summer. In that case, the bankruptcy court for the Eastern District of New York found that a debtor who was ordered to vacate his home could still claim an exemption in the property. Like that case, the bankruptcy court for the District of Massachusetts gave weight to the debtor’s intent and her testimony that she intended to return to the property as soon as she was able.
Bodie B. Colwell practices as an associate with Preti Flaherty's Bankruptcy, Creditors’ Rights and Business Restructuring group from the Portland office. She focuses on supporting bankruptcy, insolvency, and creditors’ rights clients.