Trustee Seeks to Overturn Recent ‘Snapshot’ Ruling

Over the summer, Molleur Law’s Chris Keach successfully argued a case before the First Circuit to protect exemptions for debtors. In Rockwell v. Hull, the court held that exemptions are determined at the time of filing of the bankruptcy case, and went further by ruling that the ‘complete snapshot rule’ was the only interpretation of exemptions that were permitted by the Bankruptcy Code.

While we considered this a victory (both for our current client and future clients in similar circumstances), the case’s Chapter 7 Trustee, Hull, disagreed. He has filed to appeal the decision at the Supreme Court. The Court has yet to confirm whether they will hear the case, but if they do, our law firm will continue to work on behalf of our client to ensure the best possible outcome.

For those unfamiliar with the facts of the case, Rockwell originally filed a Chapter 13 and claimed a homestead exemption in his house, which was not challenged in the Chapter 13 case. He was granted permission from the Court to sell his house while in Chapter 13, and then later converted the case to Chapter 7. By the time the case was converted, the debtor had not reinvested the exempt proceeds of his home in a new residence. Maine's exemption statute reads that to maintain a homestead exemption, the proceeds of a sale of a residence must be reinvested within 6 months after a sale. Hull argued that the debtor lost his exemption when he failed to timely reinvest the sale proceeds in a new home. The First Circuit ruled that the debtor's exemption was determined when Rockwell filed his Chapter 13 case, and could not be later lost even if Rockwell didn't reinvest the home sale proceeds timely.

We'll keep you updated on the progress of the appeal and final outcome.