A prior blog post reported that an Arizona bankruptcy judge had ruled that because of a glitch in drafting the new bankruptcy law the $125,000 cap on homestead protection under the new law applied only in two states: Texas and Minnesota. Under the rationale of the Arizona decision bankruptcy debtors in states such as Arizona and Florida continued to enjoy unlimited homestead exemption in bankruptcy courts.
In an oral ruling late September a judge in the Southern District of Florida reached a contrary decision. The judge concluded that no rational person could reasonably believe that the Arizona decision reflected the intent of Congress in drafting the new bankruptcy law. The Florida judge refused to follow the reasoning of the Arizona bankruptcy court, and he upheld the new law’s $125,000 homestead limit. Other bankruptcy judges in Florida have heard argument on this issue in different cases; their future rulings should clarify the law in Florida.
In re Elona Caplan, Case No 05-14491-RAM
posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida