Protected Massachusetts Home Sold After Bankruptcy: Money Also Protected
By L. Jed Berliner, Springfield Bankruptcy Attorney on Mar 2, 2008 in Bankruptcy Cases of Interest, Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Life After Bankruptcy, Massachusetts, Protecting Assets In Bankruptcy
An asset protected in bankruptcy is also protected from debts which are not discharged in bankruptcy. This protection continues after the case closes. Can a non-discharged creditor get at the money if you sell the asset later? The First Circuit Court of Appeals says no. Pasquina v. Cunningham (In re Cunningham), 2008 U.S. App. LEXIS 1202 (1st Cir. 2008).
In the Cunningham case, the a creditor argued that it is not discharged because the debt was from fraud. It also argued that it should be able to get the proceeds when the debtor later sold his Massachusetts home, since the Massachusetts Homestead Act does not protect money received after selling a home, unlike laws in other states.
The First Circuit disagreed and ruled that protections are established as of the filing date. A later sale does not affect the protected filing-date status.
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