No Surcharge on Exempt Homestead

Update of February 28, 2014 blog post, entitled “Bankruptcy for Senior Citizens.”
The Supreme Court ruled just last week in the case of Law vs. Siegel that a bankruptcy debtor’s homestead exemption remains intact and that it cannot be subject to an assessment of the trustee’s costs or fees. In this case, the bankruptcy debtor created a fictional lien and engaged in fraudulent and reprehensible conduct. The trustee spent tens of thousands of dollars to set aside the fictitious lien. The bankruptcy court was outraged at the debtor’s conduct and allowed the trustee to take fees against the otherwise exempt homestead. The Supreme Court, however, ruled that the bankruptcy code clearly states that exemptions are not subject to administrative expenses. In summary, the court sympathized with the trustee who spent so much time and money all because of the debtor’s outrageous conduct, but found that the bankruptcy law was clear and that the trustee fees could not be taken from the debtor’s homestead.