Bankruptcy Debtors Eligible For Wildcard Exemption If They Keep Home...

Two married Florida debtors own an upside down homestead property. They are seeking mortgage modification in the hopes of holding on to their home. They file Chapter 7 bankruptcy and do not claim their house as exempt homestead because there is no equity to exempt. The debtor’s Statement of Intention stated that they wanted to retain the homestead property. The debtors claimed a “wildcard” exemption which is available to debtors who do not receive benefits of the homestead exemption. The bankruptcy trustee argued that the debtors could not use the wildcard because they intended to retain the homestead and reaffirm the mortgage debt.

The above facts were considered by a Florida bankruptcy judge. The judge held that these banrkuptcy debtors were eligible for the wildcard exemption ($4,000 per peson) because they did not receive homestead benefits even though they intended to retain the homestead after bankruptcy and engaged in postpetition efforts to modify the mortgage. The court pointed out that surrender of a homestead to the mortgage company is not required to claim wildcard benefits.  In re Rodale, Case No. 3:10-6845