Jacksonville Bankruptcy Court To Trustee: "Hands Off The Debtor...

I wrote a blog post a couple weeks ago about Chapter 7 trustees who try to force debtors to pay money or give up title to their upside-down homestead properties which the debtors do not claim as exempt. The debtors are not using the homestead exemption to protect their homes without equity because they want to qualify for the $4,000 wildcard exemption available to debtors who do not benefit from the homestead exemption.

I read a new  post on a blog published by Jacksonville bankruptcy attorney Chip Parker about a bankruptcy court decision that blocked this trustee tactic. The post was titled: "Can my Chapter 7 trustee kick me out of my Florida home?" The bankruptcy court said that a trustee must abandon the the upside-down homestead unless the trustee can show there is a benefit to the creditors. Mr. Parker was kind enough to link to the court’s decision and the debtor’s motion so that both can serve as a resource for other attorneys faced with similar trustee tactics.

Based on this decision, and another court ruling referred to in my own prior post, I think debtors with upside down homesteads should claim the wildcard and should fight any trustee who wants them to pay for the privilege of keeping their home where there is no equity to benefit the bankruptcy estate.