[CLBS] Debtors wish to sell house during Ch. 13-- may they use the money however they want?

[Laura Burri]

Idaho Code 55-1009 provides that proceeds of a voluntary sale of the homestead in good faith for the purpose of acquiring a new homestead are exempt for one year from receipt as well as any new homestead acquired with the proceeds. There should be a few Idaho bankruptcy cases that deal with this. As I recall, the debtors have to intend to use the funds to purchase a new home to retain the exemption. The funds should be placed in a separate account in order to track the exemption in the proceeds. 

What impact this has in the middle of a chapter 13, I don't know. Laura

Laura E. Burri
Attorney at Law
Morrow & Fischer, PLLC
332 N Broadmore Way, Ste 102
Nampa, Idaho 83687
Telephone: (208) 475-2200
Fax: (208) 475-2201
Email: lburri at morrowfischer.com 



-----Original Message-----
From: CLBS <clbs-bounces at admws.idaho.gov> On Behalf Of Tecla Druffel
Sent: Thursday, June 18, 2020 11:56 AM
To: clbs at admws.idaho.gov
Subject: [CLBS] Debtors wish to sell house during Ch. 13-- may they use the money however they want?

Debtors are in a confirmed Ch. 13 plan. On date of filing, debtors asserted automatic homestead exemption on residence located in Idaho. There were no objections raised to the claim of exemption. Now debtors wish to sell the home and move out of state. Confirmed plan states property vests in debtors upon confirmation.

*May the debtors freely use the proceeds?* Of course, I want the answer to be "yes," and I can make several arguments to support it but I wonder if I have a blind spot. Has anyone tested the vesting clause of a Ch. 13 plan when it comes to exempt assets turned into money during the pendency of a Ch. 13 case? Debtors' credit is shot so obtaining a new mortgage is difficult and any new homestead would likely be outside of Idaho.

Feel free to email me directly, tecla at lewistonbankruptcylawyer.com.

Thank you!
Tecla Druffel
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