Monday, June 1, 2015

Battle: Florida Opt-Out Statute Not Applicable to Non-Resident

Miami Personal Bankruptcy Lawyer Jordan E. Bublick has over 25 years of experience in filing Chapter 13 and Chapter 7 bankruptcy cases. Tel: (305) 891-4055.

In the case of In re Battle, ___ B.R. ___, 2006 WL 3702734 (Bkrtcy.W.D.Tex.)(Lief, J.), the debtor filed for chapter 13 relief in Texas. Since she had lived in more than one state during the 730 day period preceding the bankruptcy filing, per section 522(b)(3)(A) the applicable exemption law is that of state where the debtor was domiciled longest for the 180 day period prior to the 730 day period. The court held that since the debtor had "resided" [sic] in Florida for the entire 180 day period, the exemption laws of Florida apply.

The issue before the court was whether the debtor must use Florida exemption laws or may elect to use the federal exemptions of section 522(d). The trustee aruged that since Florida is an opt-out state, the debtor was not allowed to use the federal exemptions.

The court held that the debtor was allowed to claim the federal exemptions since the Florida opt-out statute by its own terms applies only to Florida "residents." The court reasoned that since the debtor was not a resident of Florida on the filing date, the Florida opt-out statute did not bar the debtor from claiming the federal exemptions. Section 222.20, Florida Statutes (the opt-out statute) provides that "residents of this state shall not be entitled to the federal exemptions provided in s. 522(d) of the Bankruptcy Code of 1978.." The court noted the holding in In re Schulz, 101 B.R. 301 (Bankr.N.D.Florida1989).

There is a line of cases that would appear to give strength to the position opposite to that of the Court's ruling. See e.g. In re Arrol, 207.B.R. 662 (Bankr.N.D.Calif.1997), In re Drentell, 403 F.3d 611 (8th Cir. 2005).

Furthermore, the court may not have given sufficient emphasis to the structure of section 522(b) and given a misplaced position to the Florida opt-out statute in the stautory scheme and structure of 522(b). It is also unclear why section 222.20, Florida Statutes refers to "residents of this state" as section 522(b) only refers to "domicile" which is a similar but different concept. The court's logic may be puzzling, as section 522(b)(3) directed the debtor to use the applicable law of the particular 180 day state. Section 522(b)(3) inherently contemplates that the debtor will not be a domicile of that state any longer, but nonetheless directs the debtor to use its law. Furthermore, if the Florida legislature had properly used the word "domiciles" instead of "residents" in section 222.20, it is unclear whether the court could have reached the same result.