BAPCPA of 2005 added several brand-new restrictions on the amount that a state may allow to a debtor as a homestead exemption. These were designed to deter debtors: from moving from state to state just for the purpose of taking advantage of more generous homestead limits, one step ahead of their creditors, like the case of OJ Simpson moving from California to Florida; from using nonexempt money to pay down mortgages and thereby increase their home equity to claim as exempt; from profiting at the expense of defrauded or injured creditors.

Bankruptcy Code Sections 522

     These limits are set forth in Bankruptcy Code Sections 522:

The amount of the homestead exemption will be reduced by the value of any property transferred by the debtor within 10 years prior to the filing of the petition with the intent to hinder, delay or defraud his creditors (unless the property transferred was of an exempt nature). The homestead amount is capped at $ 136,875 if the property was acquired by the debtor within 1215 days of the bankruptcy petition and the debtor's previous residence was in a different state. The homestead amount is capped at $ 136,875 if the debtor has been convicted of a felony or owes a debt arising from a violation of federal securities law or from any criminal act, intentional tort, or willful or reckless misconduct that, within the past 5 years, caused serious physical injury or death to another person, unless the debtor can show that the property is reasonably necessary for the support of the debtor and his dependents.

Written by Henry Rendler