Chapter 7 Riverside Trustee Arturo Cisneros
One of Mr. Cisneros’ recommendations for attorneys and staff is to take the full value of the homestead exemption on schedule “C”. If the debtor is entitled to $75,000 in exemption amount, use the full value of the exemption. This problem pops up when attorneys and staff rely on the bankruptcy software to populate Schedule C exemptions and do not review the exemptions before filing.
Best Case soft ware defaults to the value of the house as listed in Schedule “A” When you list the value of the house on schedule “A”, the Best Case software picks up the value when you go to Schedule “C”. After you select 704 exemption schedule and pick between the various values on the homestead, the software will default to only using the amount of the homestead that is needed to go to the value of the house as listed in schedule A less the liens against the house.
Example. The house is listed in schedule A as valued at $150000 with a $100000 lien. This leaves $50,000 in equity. The Best Case software will see the $50,000 in equity and then exempt the house at $50,000 in equity, EVEN though the debtors may be entitled to the full exemption amount of $75,000 or $100,000.
Chapter 7 Riverside Trustee Arturo Cisneros advises attorneys to take the FULL amount of the exemption, over and above what the Best Case software defaults to. In the above example, the debtor’s attorney should take the full say $75,000 in exemption on Schedule C to over-exempt the house the house rather than under-exempt it.
When drafting the Schedule “C” exemptions, always take the full amount the debtor is entitled to, even if it over-exempts the house. Be sure to “over-ride” the Best Case default position.