03 Sep Homestead Exemptions if You’re “Livin’ in a Van Down by the River”
When you file bankruptcy, you claim “exemptions” in property you wish to keep free of any claims of the bankruptcy trustee. And the “homestead” exemption–the exemption used to protect your home–is the most important exemption for many debtors.
But what if your home is the movable kind? And I’m not just talking about mobile homes here. What if you’re, as the late Chris Farley put it in that famous Saturday Night Live skit, “livin’ in a van down by the river.” What if the van is your home? Or an RV? Can you claim it as your homestead?
Of course you could exempt that property as a motor vehicle, but there’s a problem with this approach. The motor vehicle exemptions in many states and under the federal exemptions are a bit stingy. The homestead exemption, by contrast, is much more generous. After all, homes are more necessary than cars.
Fortunately for one New York debtor, the Bankruptcy Court for the Western District of New York allowed him to claim a homestead exemption in his Peterbilt semi-tractor. In In re Tullar, Case No. 10-11214-k (Bankr. W.D.N.Y. 2010), the debtor used the vehicle to produce income–he hauled trailer loads with it. But he also lived in the sleeper cab of the semi, which as most sleeper cabs do, had a bed, lavatory, refrigerator, electricity, and other comforts of home.
In his well-reasoned opinion, Judge Michael J. Kaplan allowed Mr. Tullar to exempt two-thirds of the equity as his homestead based on the amount of time the debtor used the semi as his home, essentially dividing the time in which he used the semi as a tool of the trade hauling loads and the time he used the semi as his home. The New York exemption statutes conflicted in two areas leading the Court to fashion this unique remedy based on equity–fairness principles. As Judge Kaplan remarked, “it would be a tragedy if the debtor lost both his livelihood and his ‘home’ because of non-exempt equity.” It would also have been legally incorrect because Mr. Tullar clearly established that he used the semi tractor as his home.
The court’s ruling resulted in Mr. Tullar being left with $7800 in non-exempt equity in the semi tractor. The Court suggested a Chapter 13, which would allow him to repay that non-exempt equity and keep the semi tractor. The court also suggested that if Mr. Tullar could not afford a Chapter 13 plan that the Chapter 7 trustee might consider allowing Mr. Tullar to repay the non-exempt equity over time.
Some states have exemption statutes which are much clearer. For example, in my Charleston, South Carolina bankruptcy practice, I rely on our South Carolina exemption statute which plainly allows personal property to be claimed as the debtor’s homestead. Each South Carolina debtor receives an exemption in the amount of $53,375. (For married couples, that amount would double.)
Like so many other bankruptcy issues, the law is different from state to state. If you have a houseboat, or semi tractor, or even a van down by the river that you use as your home, you need to know the law applicable to your case. If you’re thinking about filing bankruptcy, contact a bankruptcy lawyer in your area to find out about your exemption rights.
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