In re Guevarra
Facts: A debtor takes title to a family member’s home to cosign a mortgage to finance their purchase. The debtor does not financially contribute to the purchase of the property, receives no benefits from the funding, and never resides at the property. The debtor files a petition for bankruptcy protection. The creditor seeks to include the home as an asset of the debtor and force the sale of the property. The property is sold, and the debtor claims a wildcard exemption to exclude the sales proceeds from the bankruptcy.
Claim: The creditor claims the exemption is not valid since the debtor’s petition initially represented they held no interest in the property and did not claim the exemption until after the property was sold.
Counterclaim: The debtor claims the exemption is valid since the debtor is free to amend their bankruptcy schedules.
Holding: A United States Bankruptcy Appellate court holds the debtor may maintain a wild card exemption for the value of their interest in the property since debtors are free to amend their schedules and the debtor’s situation was changed by the sale of the property. [In re Guevarra (2022) 638 BR 120]
Related Reading:
Legal Aspects of Real Estate: Chapter 26: Tenants in common as a vesting
