CO Homestead exemption - urgent question

[gunna2gtthr]

Just had my hearing with the trustee today...unnerving. I have a question for you all that I am confused and irritated about, but first I will give you backround.

My former partner and I own a house together, which I moved out of over a year ago, so obviously it is not my primary residence. Combined, we have about $40,000 in equity.

The trustee said that I do not get a homestead exemption because I don't live there, which was my understanding before I even filed. He hinted (but I will be notified within 30 days) that there will be a forced sale and they will give her the equity she has and then the trustee will keep mine. I felt I knew this possibility going into my bankruptcy after all I read and investigated.

Then....(before my hearing when I posed the questions above)

at the first meeting with my attorney, he said they WILL NOT sell the house because the exemption stays with the HOUSE and not the occupier. I asked him to clarify in different ways and he just got pissed off at my questions. He said that the house has $60k worth of homestead exemption, and even if only one owner (who is NOT bankrupt) lives there, they cant force a sale. So, I accepted his advice.

Fast forward to today:

the trustee asked if I lived there and I said no. He said that on the paper it said i lived there (my attorney knows i dont and even met the ex). I said, "sir, I don't". He looked at his assistant and said "exemption denied." My attorney says to the trustee "ok, I will file an amendment (or whatever it was called)" and that was that.

After the hearing, the trustee's assistant had to ask me a question and sign something. I quietly asked her (she was a sweetie) what the next step was and she said they would have their private realtor value the property. I said, but if it is sold, my ex will be homeless because her credit is shot, blah blah blah. She said "I am sooo sorry." She said they will give her her part of the equity and keep mine. I said when will you know what you will do...she said within 30 days. I started quietly crying..

i waited outside for my attorney and asked him about it. He basically said they were blowing smoke out of their ass, they could NOT take the house because the exemption follows the HOUSE, not the one declaring bankruptcy. Then he said angrily "dont you understand??"..then looked at me and said "apparently not" and walked away.

I think the trustee and his assistant is correct.

Thoughts, please....xanax aint doing it for me :-)
thanks!

[AngelinaCat]

Hi gunna2gtthr: Welcome to the forum. I feel for you, and what you have stated is essentially correct. The Homestead Exemption follows the person living in the house (provided that person has duly qualified for and applied for same when it was due.) Your attorney is an idiot.

At least this is more or less the way Homestead Exemption works in Florida. I am sure other states are similar.

(I also reformatted your post so that it would be easier to read.)

[AngelinaCat]

Also, since you are from Colorado, please accept my condolences and prayers on behalf of the horrific loss your wonderful state and its peoples have suffered today.

[justbroke]

What if I said that they were both right? First, the Trustee is right in that you can't claim the homestead.

But, trust your attorney. Many trustees do attempt to take property in Chapter 7 liquidation cases. What your attorney is telling you is that he knows the law and that the Trustee is wrong with respect to whether your non-debtor ex-spouse is entitled to the homestead exemption. Your attorney is telling you, in a around about way, that he will fight that issue in court.

As in Florida, Colorado (Colo. Rev. Stat. § 38-41-201) goes on to say that the $60K exemption applies to the "owner" of the occupied home. Since you are an owner and your ex is an owner, your ex still gets the exemption under Colorado Exemption laws. It also reads that the homestead applies where the home is occupied by "an" owner... and not that it needs to be occupied by the debtor.

Maybe the Trustee sees that they can try to get your $20K of the $40K value. Maybe your attorney "knows" the law and that the $60K homestead exemption is available IN TOTAL to your ex-husband. The reason for the property appraiser is to make certain what the actual value of the property is, and what the total equity is. I think your attorney may have the upper hand as there is PLENTY of caselaw supporting what your attorney told you.

Here are a few of the cases I found, and I'm confident that the Dickinson and Bryant cases (which actually set many other precedences in Colorado bankruptcy), are what your attorney is basing his opinion on. Even in Dickinson, the result was that the non-resident ex-spouse was still entitled to half the homestead exemption!

There is only one homestead exemption per a specific piece of real property. In re Lambert, 34 Bankr. 41 (Bankr. D. Colo. 1983); In re Pruitt, 829 F.2d 1002 (10th Cir. 1987); In re Bryant, 221 Bankr. 262 (Bankr. D. Colo. 1998).

And (the exemption) attaches to the property. In re Bryant, 221 Bankr. 262 (Bankr. D. Colo. 1998).

Former husband, as a co-owner of the property, entitled to half of homestead exemption even though he no longer resided in the property. In re Dickinson, 185 Bankr. 76 (Bankr. D. Colo. 1995).

[gunna2gtthr]

Thank you so much for your replies.

Of course, Justbroke, you have eased my anxiety considerably. What really threw me for a loop was when the trustee asked if I live in the home, and I said no. He looked momentarily puzzled then said that the documents said I was a resident of the house (I am not and haven't been for over a year). I reaffirmed that I did not live there.

He said that because I do not live there that the homestead exemption was denied and asked his assistant to put the denial on record or something like that (my head was spinning at that point).

Then my attorney said to the trustee, without skipping a beat, " I'll file the amendment(I think that was the word, if not, I'm sure you know the correct term)."

The assistant had to go over something different with me and I asked her what it all means. She said the first step is to have their realtor look at the info. I said "so you guys might sell it right out from under her???". She (very kindly I might add...and sympathetically) said yes, but that when it sells, they will give her the equity due her. There were no ifs, ands, or buts attached. No hesitation. I asked when will I know if their intent is to sell, and they said within 30 days I will be notified through the attorney's office.

One thing that makes me nervous is that the lady before me had a smith and wesson gun. She valued it at $40 and the trustee said that sounded pretty low. She bought it a couple years ago for $200-$300 she told the trustee when he asked. He told her he would be taking it to sell. Holy cr*p..its worth a couple hundred dollars! Then my attorney (also her's) said "Ok, if you want it I will go downstairs and get it right now and you can take it" OMG, he said that to the trustee??? Then the trustee said I want a picture of it to begin with. My attorney said "no, you said you wanted it I will give it to you (by then his bp was raising along with his voice), what's your office address??" The trustee said I don't want a gun in my office. My att. said "fine." give me the auctioneer's address and I am taking it to him TODAY. Oh, also, the trustee first asked her if she wanted to keep it and she said yes, for protection. My attorney stood up and said "no, she doesn't want it...you can have it" Huh???? The trustee said "that is not what she said her intent is". My att. said "yes it is". Trustee said "that's not what she just told me" then he turned to her and asked her again. She said "I will do what my attorney advises" THEN, my attorney, quite pissed by now, launched into the whole thing about bringing the gun into the courtroom. HOLY smokes. There is a sidebar story for you. Then I was next. egads, I was shaking in my boots by then.

So......do you think the courts have the RIGHT to force a sale after the trustee said the homestead exemption was denied? Before he denied it, he also asked if my ex planned on staying in the house. I said yes. It was a bit later that I spoke with the assistant and she told me most likely it would be sold.

If this trustee is going after a $200 gun, why wouldn't he go after my equity if he could?
sorry for the repeated stuff here...I just want to understand, and when I wasn't "getting it", my attorney walked away from me. Ugh.

I really am not stupid, just scared and could not reconcile being told two different things, esp one of them being straight from the trustee’s right hand girl.

THANK YOU so much for the replies…I look forward to more.

[gunna2gtthr]

Angelina
I forgot to tell you thank you for your condolences. It is pretty bad when going to the movies is no longer safe....terrifying actually.

[AngelinaCat]

Hi gunna2gtthr: I sincerely understand your situation. But I must ask you to PLEASE format your posts so that they are easier to read.

I barely followed your first, and then trying to follow the second, with the totally irrelevant to us--not to you I understand that it is VERY relevant to you--about the lady with the gun and the trustee and your/her attorney interactions about it--in the middle of your post about your non-existent homestead exemption, is very confusing.

If a post wants to make me click by without reading it, and I am a Moderator--congrats to JB for sticking with it, what will the general membership do? And we really do wish to help.

Thank you.

[AngelinaCat]

Angelina
I forgot to tell you thank you for your condolences. It is pretty bad when going to the movies is no longer safe....terrifying actually.

Hi gunna2gtthr. Sorry I have to mess this up with the above caution.

But thank you for the 'thank you'. Our local radio stations actually had commentary from local law enforcement personnel as to how to act and behave if a similar situation happens in one of our movie theaters...

Not that I would be anywhere but home at midnight, but many people go and enjoy themselves in what should be a safe place. *Sigh*

[gunna2gtthr]

Hi
How do I reformat it? Angelina reformatted my first. I clicked reply to thread, then posted. please instruct...I don't want to be confusing.

[gunna2gtthr]

and I brought up the gun thing to mention how the trustee seemed to want to obtain all he could from the debtors in order to pay creditors. Sorry for the confusion and rambling on.

[AngelinaCat]

Hi
How do I reformat it? Angelina reformatted my first. I clicked reply to thread, then posted. please instruct...I don't want to be confusing.

As you are typing, just type as you would when you are writing a letter. Basically, each new thought-and the thoughts that go with it-is a paragraph, then double-space and begin a new thought-paragraph.

At the very least, when you come to the end of a thought and line, and start a new one on the next line, give a double tap to the 'enter' key on the keyboard to give a blank line between your last thought, and the new one. It helps so much on the eyes.....

Am I making sense? (This last post of mine should give you an idea of what I mean.)

Thanks

[gunna2gtthr]

Haha...got it Angelina. I thought you meant a specific technical way I was supposed to post. I have been reflecting my rambling thoughts in my writing. again, I am so sorry! Just mush brain tonight.

I don't know if it matters regarding my questions, but the co-owner is not an ex husband...we were never married. So, technically, as the courts would view it, it would be more of a "friend" who is the co-owner.

[gunna2gtthr]

Haha...got it Angelina. I thought you meant a specific technical way I was supposed to post. I have been reflecting my rambling thoughts in my writing. again, I am so sorry! Just mush brain tonight.

I don't know if it matters regarding my questions, but the co-owner is not an ex husband...we were never married. So, technically, as the courts would view it, it would be more of a "friend" who is the co-owner.

[justbroke]

This is what I think... your attorney and the Trustee are true adversaries. It is very apparent in what just transpired.

Now, as for what the Trustee's "clerk" (assistant) to you, I would not put any value in that. It seems that your attorney is a fighter and from what I read about the homestead in CO, the Trustee may have a hard time getting anything. The Trustee can't "deny" an exemption, they can only OBJECT to an exemption! That objection has to go before the judge who is the trier of fact and will make a ruling. Your attorney will likely mention the cases that I did and the judge will render an decision. While I can't tell you what will happen, my personal (non-attorney) opinion is that the Trustee's assistant was wrong. There is a difference between you not having an exemption and the Trustee going after a co-owned property -- against a non-debtor ex-spouse -- who also enjoys an exemption in the property.

So, please sit down or just call your attorney and ask what the strategy is should the Trustee file an "objection to exemption"? In fact, the Trustee couldn't file an "objection to exemption" if you're not claiming the exemption. The Trustee would need to file a Motion To Sell or something else. It sounds complicated because it could become complicated.

As for going after a $200 gun, the Trustee is apparently making a point. Besides, they only make $65 on each case unless they find something. If they get the $200 gun, then the Trustee would make another $50. Your attorney sounds tough and does not play games. I like the gun "play" and the battle of wits! (Although this adversarial relationship may be while the Trustee is so tough with your attorney.)

[gunna2gtthr]

Justbroke- thank you so much for your replies...they have helped me tremendously :-)