In re Hainz

245 B.R. 347, 43 Collier Bankr. Cas. 2d 1083, 1999 Bankr. LEXIS 1780
CourtUnited States Bankruptcy Court, E.D. Missouri
DecidedAugust 11, 1999
DocketBankruptcy No. 94-44418-172
StatusPublished

This text of 245 B.R. 347 (In re Hainz) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Hainz, 245 B.R. 347, 43 Collier Bankr. Cas. 2d 1083, 1999 Bankr. LEXIS 1780 (Mo. 1999).

Opinion

ORDER

JAMES J. BARTA, Chief Judge.

The hearing on the Trustee’s objection to the Debtor’s claim of a homestead exemption was called on June 10, 1999. The Trustee appeared in person and presented oral argument and other evidence on the record. The Debtor appeared in person and by Counsel and presented testimony, oral argument and other evidence on the record. On consideration of the record as a whole, the Court announced certain determinations and orders from the bench.

The Debtor commenced this case by filing a petition for relief under Chapter 13 on August 18, 1994. On the Schedule C in the Chapter 13 case, the Debtor claimed a homestead exemption under Section 513.475 Revised Statutes of Missouri, 1994 (“RSMO”) in certain real estate titled to. the Debtor and his non-debtor spouse. A second amended Chapter 13 repayment plan was confirmed by an Order dated January 17,1996.

On February 10,1999, the Debtor filed a motion to convert the Chapter 13 case to a case under Chapter 7. The pleading was not entered immediately however, because the Debtor failed to pay the fee required for conversion. After the fees were paid on March 9, 1999, the Court entered an Order dated March 15, 1999, that granted the Debtor’s motion to convert. In the Chapter 7 Schedule C, the Debtor claimed a homestead exemption in the same real property that was claimed as exempt in the Chapter 13 case.

The evidence has established that for approximately one year prior to the date of this hearing, the Debtor did not reside in the real property claimed as exempt; and that the Debtor did not reside in this real property at the time of the hearing in this matter. During the pendency of the [349]*349Chapter 13 case, the Debtor and his non-debtor spouse experienced marital difficulties that resulted in a “Stipulation of Parties” order dated March 3, 1999. Debtor’s Exhibit No. 1. The Stipulation was signed by a Commissioner of the Family Court Division of the Circuit Court of St. Charles County, Missouri. In the Stipulation, the Debtor and his non-debtor spouse agreed that, “The home shall be listed for sale and sold at a price agreed to by the parties. Closing shall be not before the end of the current Chapter 13 plan. The Chapter 13 is expected to end in January 2000 and shall not be extended.” Debtor’s Exhibit No. 1, ¶ 8. By agreement, the Debtor’s spouse was entitled to occupy the home until ten days after the end of the semester; and the Debtor was entitled to occupy the home thereafter until it was sold. Although the Debtor testified that when he entered into the agreed Stipulation, he intended to complete his payments under the Chapter 13 plan, the record reflects that approximately three weeks prior to the date of the Stipulation, he had attempted to file the motion to convert the Chapter 13 case to a Chapter 7 case. The Debtor testified further that he intended to use the real property as his homestead until such time as repairs could be made and the property sold as agreed in the dissolution proceeding. According to the information presented at this hearing, it appears that there would be no equity in the value of the Debtor’s interest in this real property that would be available to the Debtor’s creditors in the Chapter 7 case if the homestead exemption is allowed.

The Debtor’s interest in the real property was property of the Chapter 13 estate when the original petition was filed on August 18, 1994. No objection was presented to the Debtor’s claim of a homestead exemption in the Chapter 13 case.

The Eighth Circuit has held that it is the date of conversion from a Chapter 13 case to a Chapter 7 case that determines what exemptions a debtor may be allowed in the converted Chapter 7 case. In re Lindberg, 735 F.2d 1087 (8th Cir.1984). The Lindberg opinion was entered prior to the 1994 amendments to Section 348. These amendments limited property of the converted Chapter 7 ease to that property of the estate as of the date of filing of the petition, that remains in the possession of or is under the control of the debtor on the date of conversion. 11 U.S.C. § 348(f)(1)(A). The amendments provided further that valuations of property and of allowed secured claims shall apply in the converted case. 11 U.S.C. § 348(f)(1)(B). The Lindberg decision was based in part on the possibility that a debtor in a case converted from Chapter 13 to Chapter 7 would be unable to claim an exemption in property acquired during the pendency of the Chapter 13 case if exemptions were determined as of the petition date. Section 348(1)(A) of the amended statute was intended to remove that possibility in cases filed after the effective date of the 1994 amendments. • At least two courts have decided that so much of the Eighth Circuit’s opinion that fixed the conversion date as the exemption date has been superseded by the 1994 amendments. See Matter of Baker, 154 F.3d 534 (5th Cir.1998); In re Ferretti, 230 B.R. 883 (Bankr.S.D.Fla.1999).

Although no Court sitting in an Eighth Circuit matter has yet published an opinion that determined that the Lindberg decision no longer controls the date of exemptions in a case converted from Chapter 13 to Chapter 7, it is virtually assured that such a conclusion will result. In the matter being considered here, however, that specific question is not ripe for determination because this case was filed on August 18, 1994, approximately six weeks before the effective date of the 1994 amendments. The decision in this case therefore, is controlled by the Lindberg opinion, and the Debtor’s exemptions are to be determined as of the date of conversion from Chapter 13 to Chapter 7.

[350]*350In a Chapter 13 case, property of the Chapter 13 estate consists of the property specified in section 541 and all property of the kind specified in such section that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under Chapter 7, 11, or 12 of Title 11; and earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under Chapter 7, 11, or 12. 11 U.S.C. § 1306(a). Furthermore, except as may be provided in a confirmed plan or in an order confirming a plan, a Chapter 13 debtor shall remain in possession of all property of the estate. 11 U.S.C. § 1306(b). According to the law in the Eighth Circuit that was applicable here on the date of the commencement of this case, upon conversion of a Chapter 13 case to a case under Chapter 7, “.... the property of the estate consists of all property in which the debtor has an interest on the date of conversion.” Lind-berg, at 1090. In the matter being considered here, the property of the Chapter 7 estate included the Debtor’s interest in the real property as it existed on the date of conversion, at the value as it existed on the date of conversion, and subject the Debt- or’s claim of exemption to the extent of the Debtor’s standing and ability to claim an exemption as of the date of conversion.

An individual debtor may exempt from •property of the estate,

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Related

Matter of Baker
154 F.3d 534 (Fifth Circuit, 1998)
DiBraccio v. Ferretti (In Re Ferretti)
230 B.R. 883 (S.D. Florida, 1999)

Cite This Page — Counsel Stack

Bluebook (online)
245 B.R. 347, 43 Collier Bankr. Cas. 2d 1083, 1999 Bankr. LEXIS 1780, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-hainz-moeb-1999.