Which Exemptions Shall I Choose? There Are So Many Choices, Aren’t There?

In the recent case of In re Dufa,Case No. 07-60743 Judge Federman ruled that since the debtors moved to Missouri on the 730th day before filing their bankruptcy petition they were required to use the Missouri exemptions to protect their assets. Judge Federman looked to the Bankruptcy Code to base his decision. §522(b)(3)(A) of the Bankruptcy Code outlines which set of exemptions that one can use to protect their assets.

§522(b)(3)(A) states that you must use the exemptions in the state that you are domiciled in during the 730 days immediately preceding the filing of the bankruptcy. If you have not been domiciled, as defined in Holmes v. Sopuch, 639 F2d at 434, in one spot during the entire 730 days you must determine the place where you lived the longest in the 180 days immediately preceding the 730 days before the filing of the bankruptcy.

In the In re Dufa case, the debtors wanted to claim the Nevada exemptions to protect a homestead in Nevada even though they had moved to Missouri and then filed the bankruptcy. Judge Federman said that one must use “days” and not hours to calculate the 730 day period. So we start counting the 730 days backward on the day before the day of the filing regardless of the time of day that the case is filed. We look again to the code and §522(b)(3)(A) uses the term “preceding” the filing of the bankruptcy. In Bankruptcy Court we constantly hear the phrase “words have meaning”, so it is no surprise that Judge Federman determined that 730 days preceding means exactly that. The 730 day calculation means 730 days beginning the day before the date of the filing of the bankruptcy case.

So the 730 days begins the day before the filing and goes backwards 730 days regardless of holidays and weekends. In the above case debtors’ counsel argued that Bankruptcy Rule 9006 was applicable and therefore the 730 day count should be extended from the 730th day which fell on Memorial day and should run back to Friday, May 27, 2008. If counsel had won this argument then he “might” have been able to use the Nevada exemption to protect the homestead in that state while residing in Missouri. However, Judge Federman did not need to venture down that path as the debtors resided in Missouri during the entire time of the 730 day calculation.

Judge Federman does not agree that Bankruptcy Rule 9006 applies to §522(b)(3)(A) and therefore the 730th day fell on Monday, Memorial Day, May 30, 2008. The debtors had testified that they were indeed in town on Memorial Day and therefore the debtors were in Missouri during the entire 730 days preceding the filing of their case restricting them to the Missouri exemptions.

As with all areas of the interpretation of the Bankruptcy Code, the case law in your area may be different. You can click here to find a qualified attorney in your area to guide you through the often changing and often confusing rules, regulations and case law in the Bankruptcy Court.

Written by Kansas City Bankruptcy Lawyer, Rachel Lynn Foley.