The California Bankruptcy Journal has published an article by Michael G. D’Alba entitled “Non-Filing Spouses, Homestead Exemptions, and Voidable Transactions” (Volume 34, 2017, Number 2). A copy of the article may be obtained by emailing Mr. D’Alba at mdalba@dgdk.com.
California is a community property state, and Mr. D’Alba examines issues which arise when non-debtor spouses try to claim homestead exemptions in community property.
Mr. D’Alba discusses issues that arise when a spouse relocates from the marital residence, files for bankruptcy, and then fails to claim a homestead exemption in the martial residence. Meanwhile, the non-debtor spouse continues to reside in the former marital residence. The following issues, at a minimum, require prompt analysis on the part of the non-filing spouse, creditors, and the bankruptcy trustee:
- If the debtor spouse has filed a list of exemptions, how does it affect the non-filing spouse’s rights?
- Are there time periods in which the non-debtor spouse must act to assert his or her rights, and what are those time periods?
- May the non-debtor spouse file a list of exemptions in the debtor spouse’s bankruptcy case?
Mr. D’Alba also examines what happens when one spouse transfers property to the other and files a bankruptcy case in which that transfer is avoided by the trustee as a fraudulent conveyance. While there is an established prohibition of the debtor spouse claiming an exemption in the now-recovered property, can the transferee spouse claim a homestead exemption? If so, what would be the basis to claim the exemption, and are there grounds to object?
The matrimonial law and bankruptcy law fields are complicated by themselves, but when they intersect there are particularly difficult questions which may arise. Specialists in this area may be necessary, and Mr. D’Alba’s article provides a guide to some of the main issues requiring discussion.
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