Bankruptcy Law Helps Stop Foreclosures and Protects Family Homes

December 27, 2012 7:51 pm Published by

The professional journal called Consumer Bankruptcy News helps our debt consolidation stay current with how the Bankruptcy Code is being interpreted by judges nationwide. Often, a case I read about in that journal helps me clarify to Bankruptcy in Indiana readers the way the bankruptcy system functions and some of the principles the court tries to uphold.

One of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices there found a story in Consumer Bankruptcy News that she knew would be especially interesting to me.  That’s because it involved two senior citizens in Massachusetts, and she knows I have been helping an increasing number of senior citizens file personal bankruptcy in Indiana.


  • As part of their estate planning, Mr. & Mrs. P. had set up a trust and had “put” their home in that trust. The two of them were the trustees of the trust, and their children were the beneficiaries.
  • When the couple filed bankruptcy, they claimed a homestead exemption for that home. (I helped write the exemptions portion of the new bankruptcy laws of Indiana, and we have a homestead exemption here. That means there is a dollar amount that can be protected in a Chapter 7 bankruptcy. In Indiana. That amount is currently $17,800 per person. What this means is that, if a person has equity in his home, but that equity doesn’t exceed $17,800 or $35,600 for a married couple, the bankruptcy trustee will not be able to force a sale of the home in order to pay creditors.)
  • The thing that made this particular case so interesting is that the bankruptcy trustee did not want to allow Mr. & Mrs. P to claim their exemption because they had transferred the property to the trust. But a higher court disagreed on the grounds that “the homestead statute should be liberally interpreted in favor of the debtor.”  In other words, the principle is that everything possible should be done to try to protect the family home.

At the Zuckerberg bankruptcy law offices, we certainly agree.  If it is important for clients to stay in their homes, we do everything possible to help stop foreclosure. As I always stress to readers of these Bankruptcy in Indiana articles, the bankruptcy court system itself was put into place not as a punishment for debtors, but to help them. I consider one of the highlights of my 26-year long career as a lawyer for bankruptcy in Indiana to be the work I did helping write the exemptions portion of our laws, including the Indiana homestead exemption.




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This post was written by Mark Zuckerberg

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