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Ninth Circuit Nixes Homestead Exemption Award and Vacates Decisions by Central District Judges

It was Friday the 13th of April... and bad luck for U.S. District Judge David O. Carter of the Central District of California and Judge Victoria Kaufman of the U.S. Bankruptcy Court for the Central District of California (Woodland Hills Division). The Ninth Circuit VACATED Judge David O. Carter's decision affirming Judge Victoria Kaufman's order allowing a debtor a homestead exemption of up to $ 100,000.

Why? In short, neither judge followed the law. To quote the summary of the opinion prepared by Ninth Circuit staff, "the bankruptcy court erred in concluding that the debtor established his claim to a homestead exemption under California law because the bankruptcy court made no determination as to whether the debtor intended to continue to reside in the property."

On remand, the bankruptcy court will have to determine whether-- as the creditors previously asserted-- the debtor bears the burden of proof. When she issued the vacated order, Judge Kaufman foisted that burden on the creditors. Since then, however, the Ninth Circuit's Bankruptcy Appellate Panel has stated that the burden of proof on a California exemption claim falls on the California debtor.

Moreover, the Ninth Circuit has set the stage for a showdown by saying Judge Kaufman will have to address other issues the creditors assert will defeat a homestead exemption even if the debtor intended to reside in the property when he filed his bankruptcy petition.

Charles Jakob of Carmichael, California argued for the Appellants. The losing debtor was represented by Mark Ellis of the Ellis Law Group, LLP of Sacramento, California. The case is Phillips v. Gilman, Ninth Circuit No. 16-55436.

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