Tuesday, November 12, 2013

Bankruptcy Cap on Homestead Exemption and Not if Held by Tenants by the Entireties

Bankruptcy section 522(p) which was added in 2005 provides a cap of $155,675.00 (originally $125,000.00 but is subject to increases) in value (equity) on homestead property acquired within 1,215 days of the petition date.

Courts though have held  that this limitation only applies to the Florida homestead exemption that the debtor could claim under the Florida Constitution and not the separate exemption available for property held as tenants by the entireties.

One Court noted that while its ruling would appear to provide a way for a debtor to "end run" the $125,000 cap contained in section 522(p), that its ruling is consistent with the legislative history of new section 522(p) which was directed to close the "mansion loophole" and not against a state's common law exemption for tenancy by the entireties property.