Bankruptcy Court decision on homesteads

Massachusetts Lawyers Weekly reports that a “Bankruptcy Appellate Panel” recently upheld a ruling by the US Bankruptcy Court for Massachusetts in a case interpreting Massachusetts Homestead law. The facts were that the debtor had recently been divorced with the non-debtor spouse having been awarded possession of the marital home and the debtor spouse receiving the right to 25% of the proceeds when the marital home was sold some time in the future. The debtor spouse had a homestead on the property and argued that his interest in the property should be excluded from the bankruptcy because of the homestead. The Bankruptcy Court held that the decision of the Probate Court in the divorce proceedings divested the debtor spouse of any interest in the real estate, leaving him only with a portion of the proceeds from a future sale which the Bankruptcy Court characterized as personal property that was not protected by the Homestead exemption.