Applying Federal Homestead Exemption to House in Philippines

[tedbell]

Anyone know if there are restrictions to claiming the primary residence Federal BK Homestead Exemption on a house located overseas (Philippines)? More generally, can I claim personal property exemptions for overseas personal property using the federal exemptions?

Thanks

[justbroke]

Where is your homestead (primary residence)? Is it in the USA or is it in the Philippines? I would think it would be "expensive" for a Trustee to try to liquidate property that is not in the United States; at least not easily! There are some mixed opinions on whether you can apply a homestead exemption under your venue's (filing State's) statutes if the property is not within that State. I looked at Alaska's homestead exemption real quick and it does read... "as a homestead of the individual's interest in property in this state used as the principal residence". (Alaska Statutes § 09.38.010 (a)) I can't tell you if they'd fight you over this, but even if you use the Federal Exemption scheme, the State's exemption laws still apply.

I think you should be speaking with an asset protection/bankruptcy attorney to discuss your options with foreign-owned property! Again, I would think it very expensive and difficult for a Trustee to attempt to liquidate property in a foreign country. The Trustee might seek to just abandon the property rather than speculate and try to get something out of both the foreign real and personal property. It is my opinion that you could protect your personal property using the Federal Exemptions. My concern is with the real property.

If I'm recalling correctly, I have only read one case with foreign "real" property and the Trustee decided that it wasn't worth the effort to liquidate the property on behalf of the Estate.

(In another thread you were writing as if the homestead property was actually in Alaska. Is that not the case?)

http://www.bkforum.com/showthread.php?77259-Selling-House-Before-Filing-Ch7-Protecting-Proceeds

[despritfreya]

I doubt very much that you can claim a foreign residence as your homestead under Alaskan law and I would assume this also applies to proceeds from the sale of the same:

In re Shell, 295 B.R. 129 (Bankr.Alaska, 2003)

"The homestead statute has two requirements: an individual must have an interest in property in Alaska, and that property must be his or her principal residence. A "principal residence" is defined as "the actual dwelling place of an individual or dependents of the individual and includes real and personal property." (Emphasis added)

Have no doubt that if there is a buck to be made, the Chapter 7 Trustee will sell the property no matter where it is located. He/she may even offer to sell it back to you to avoid the issues relating to selling property outside of the US.

Edt: It futher appears that under the Federal Exemptions (you have a choice in Alaska to use either State or Fed) the property must be your physical residence to claim the homestead. Not sure how a property in another country is your "residence" if you reside in the US, but I have never dealt with such an issue - maybe if you show you are here temporarily such as a work assignment - just a thought.

Des.

[justbroke]

Cool Des. That answers my question about the motivation of a Chapter 7 Trustee to sell foreign property. It makes sense that the Trustee could even "bluff" by forcing the Debtor's hand to buy the property from the Trustee.

[HHM]

Personal property : not an issue, you can use the exemptions however they are designated and cover "personal" property where ever it is located (barring some specific state statute to the contrary).

Homestead: as desp points out, not likely. Main hurdle is whether you can really claim that property, in good faith, as your "primary" residence. Also, as Desp did some leg work, Alaska exemptions only apply to real property located in the state. As to whether the Fed Homestead will apply...not sure, the main hurdle being a good faith claim that it really is your primary residence when you apparently live in the U.S.

In general, bankruptcy applies to ALL of the debtor's assets no matter where located. So the house in Philippines is at risk, assuming there is value in the property and it can be readily sold.

This is one of those issues where you have to be prepared for a fight. No matter what you do, the trustee will probably fight you on the issue assuming there is value in the property.

[tedbell]

Thanks for the replies