In re Diaz Collazo

524 B.R. 431, 2015 WL 137271
CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedJanuary 9, 2015
DocketNo. 14-04827 (ESL)
StatusPublished
Cited by4 cases

This text of 524 B.R. 431 (In re Diaz Collazo) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Diaz Collazo, 524 B.R. 431, 2015 WL 137271 (prb 2015).

Opinion

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case is before the court upon the Objection to Debtor [sic] Claimed Exemptions filed by the Chapter 13 Trustee (the “Objection”, Docket No. 15) and the Response thereto filed by the Debtor (Docket No. 19). Also before the court is the renewed Objection filed by the Chapter 13 Trustee (the “Renewed Objection ”, Docket No. 27) to Amended Schedules A and C (Docket Nos. 25 and 26) and the Unfavorable Report on Confirmation (the “Unfavorable Report ”, Docket No. 28) grounded on the Renewed Objection. The Chapter 13 Trustee argues that only one individual may claim a homestead right under Puerto Rico’s Home Protection Act No. 195 enacted on September 13, 2011 (the “2011 PR Home Protection Act”), 31 L.P.R.A. §§ 1858 et seq., as amended, while in the instant case the debtor and his non-filing spouse have both claimed such homestead. The Debtor contends that both him and his non-filing wife are entitled to claim the homestead exemption over the real property. For the reasons stated below, the Chapter 13 Trustee’s Objection, Renewed Objection and Unfavorable Report (Docket Nos. 15, 27 and 28) are hereby denied.

Procedural Background

The Debtor filed a Chapter 13 bankruptcy petition on June 13, 2014. See Docket No. 1. In his Schedule C, the Debtor claimed a full homestead exemption afforded the 2011 PR Home Protection Act over his principal residence in a total value of $149,704.99. See Docket No. 1, p. 24. He is married to Ana M. Jimenez Rodriguez, who is a non-filing spouse. See Docket No. 1, p. 40, ¶ 16. The Debtor and his wife purchased their principal residence after their marriage.

[434]*434On July 31, 2014, the Chapter 13 Trustee filed an Objection to Claimed Exemptions (Docket No. 17) claiming that: (a) the Debtors had not provided him with a copy of the homestead deed; and that (b) “per the homestead deed provided by debtor [], both debtor and his non-filing spouse have claimed the homestead exemption, thus, debtor is ineligible to claim the homestead exemption pursuant to state law” (Docket No. 17, p. 3, ¶ 4).

On August 13, the Debtor filed his Response (Docket No. 19) providing a copy of the homestead deed and attesting that: (a) exemptions must be liberally construed; (b) pursuant to Rivera García v. Hernández Sánchez, 189 D.P.R. 628 (2013), and Article 9 of the 2011 PR Home Protection Act, the Debtor can claim his homestead right. He also contends that because he and his non-filing spouse were the registered titleholders of the real property at the Puerto Rico Property Registry, pursuant to Rivera García, supra, both of them had to appear in the notarial deed to claim the homestead under the 2011 PR Home Protection Act.

On December 15, 2014, the Debtor filed Amendments] of Schedule^] A[and] C to “correct the amount of secured claim” (Docket Nos. 25 and 26).

On December 30, 2014, the Chapter 13 Trustee filed the Renewed Objection (Docket No. 27) restating the same arguments in the prior Objection (Docket No. 15). On that same date, the Chapter 13 Trustee filed the Unfavorable Report (Docket No. 28) on the grounds that the “Trustee’s objection to exemption filed in dkt# 27 is pending”.

On January 2, 2015, the Debtor filed an Answer to Unfavorable Report (Docket No. 29) referencing his Response filed at Docket No. 19.

Jurisdiction

The court has jurisdiction pursuant to 28 U.S.C. §§ 157(a) and 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B).

Applicable Law and Analysis

(A) Exemptions in General

When a debtor files a bankruptcy petition, all of his/her/its assets become property of the bankruptcy estate [11 U.S.C. § 541] subject to the debtor’s right to reclaim certain property as exempt under 11 U.S.C. § 522. See Taylor v. Freeland & Kronz, 503 U.S. 638, 642, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992). Property becomes exempt by operation of law when no objections are filed. See 11 U.S.C. § 522(l). Exemptions should be liberally construed in furtherance of the debtor’s right to a “fresh start”. In re Gutierrez Hernández, 2012 Bankr.LEXIS 2735 at *5, 2012 WL 2202931 at *2 (Bankr.D.P.R. 2012); In re Newton, 2002 Bankr.LEXIS 2089 at *7, 2002 WL 34694092 at *3 (1st Cir. BAP 2002); Christo v. Yellin (In re Christo), 228 B.R. 48, 50 (1st Cir. BAP 1999). A “fresh start” does not translate to a “head start”. In re Goldberg, 59 B.R. 201, 208 (Bankr.N.D.Okla.1986). “The basis for exemption laws is that by providing a debtor to retain a minimum level of property, the debtor and his or her family will not be completely destitute and thus a burden to society.” Id. at 208.

(B) The Principal Residence Belongs to the Conjugal Partnership

Property rights in bankruptcy are created, defined and determined by state law. See Travelers Casualty & Surety Co. of America v. Pacific Gas & Elec. Co., 549 U.S. 443, 451, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007), quoting Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979).

[435]*435The Debtor’s principal residence disclosed in Schedule C does not belong to him, but to the conjugal partnership comprised between himself and his wife, the non-filing spouse. “In Puerto Rico, upon marriage, a new entity is created, which commences on the day of marriage and will own property acquired for a valuable consideration during the marriage at the expense of the partnership property, whether the acquisition is made for the partnership or for one of the spouses only; that obtained by the industry, salaries, or work of the spouses or of either of them; the fruits, income, or interest collected or accrued during the marriage, coming from the partnership property, or from that which belongs to either one of the spouses.” In re Padilla, 2011 Bankr.LEXIS 4662 at **10-11, 2011 WL 5911243 at *4 (Bankr.D.P.R.2011), citing Articles 1296 and 1401 of the Civil Code of Puerto Rico, 31 L.P.R.A. §§ 3622 and 3641, and Fernández-Cerra v. Commercial Insurance Co. of Newark, 344 F.Supp. 314, 316 (D.P.R.1972). The Civil Code of Puerto Rico denominates this new entity as the “conjugal partnership”. See Articles 1295-1315 of the Civil Code, 31 L.P.R.A. §§ 3621-3681; F.D.I.C. v. Martinez Almodovar, 671 F.Supp.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Acevedo v. Bayron (In re Acevedo)
546 B.R. 496 (D. Massachusetts, 2016)
In re Rivera
544 B.R. 475 (D. Puerto Rico, 2016)
In re Colon
525 B.R. 1 (D. Puerto Rico, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
524 B.R. 431, 2015 WL 137271, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-diaz-collazo-prb-2015.