03 Jan 7th Circuit’s Belcher Decision Sure To Spawn
My colleague David Leibowitz of Chicago posted about a fresh 7th Circuit Court of Appeals case, In re Belcher, which denied a homestead exemption under Illinois law to a spouse as to real estate that was titled in his spouse’s name only but not in his name. This case will expose real estate equity to the bankruptcy estate for the benefit of creditors in joint cases where property in titled in the name of only one spouse. In Belcher, the court denied a $7,500 exemption to one spouse who was not listed on the deed to the property.
When one decision leads to another involving similar, but slightly different issues, we in the legal community confer parental rights over the offspring. The first decision is said to beget the second. We like to refer to a string of decisions that follow as the progeny. The Belcher case is destined to spawn offspring as to other exemptions in personal property, such as vehicles, savings and assets that convey ownership via named title.
Belcher involved real estate and the Illinois Homestead exemption. Illinois has similar exemptions for various types of personal property. In Belcher, the statutory Homestead exemption broadly applied to real estate “owned or rightly possesses by lease or otherwise.” Nevertheless the 7th Circuit determined that broad language did not create a property interest in real estate not expressly owned in name. The Illinois personal property exemption is one word specific – “owned” by the debtor. Similar, but slightly different. Expect a similar result as courts extend the holding in Belcher to personal property cases.
After Belcher, trustees will examine deeds to see if joint filing spouses are able to claim a double exemption in real estate. As they seek to expand the reach of Belcher from real estate to other items of personal property, these trustees will look at car titles and signature documents to determine whether joint debtors are entitled to claim an exemption in personal property that is not titled in their name.
Andy Miofsky, Esq.
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