Machele L. Goetz v. Victor F. Weber, No. 22-6009 (8th Cir. 2023)
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Appellant petitioned for bankruptcy relief under Chapter 13 of the Bankruptcy Code on August 19, 2020. She valued her residence at $130,000 at the time, and the parties stipulated that she claimed a $15,000 homestead exemption under section 513.475 of the Missouri Revised Statutes. The bankruptcy court granted Appellant’s motion to convert from a Chapter 13 case to a Chapter 7 case. The parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. Prompted by indications that the Trustee planned to sell her residence, Goetz filed a Motion to Compel Trustee to Abandon Real Property of Debtor. The bankruptcy court denied the motion.
The Bankruptcy Appellate Panel for the Eighth Circuit affirmed. The court held that the bankruptcy court correctly concluded that postpetition preconversion nonexempt equity resulting from market appreciation and payments toward a mortgage lien accrue for the benefit of the bankruptcy estate upon conversion from a Chapter 13 case to a Chapter 7 case. Further, the court rejected Appellant’s claim that she benefits from the increase in equity in her residence because her residence was removed from the bankruptcy estate. The court explained the parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. The bankruptcy court’s determination that this sum is “of more than inconsequential value and benefit to the estate” was not an abuse of discretion.
Court Description: [Before Shodeen, Ridgway, and Hastings, Bankruptcy Judges] Bankruptcy Appellate Panel. Postpetition preconversion nonexempt equity resulting from market appreciation and payments paid toward a mortgage lien accrue for the benefit of the estate upon conversion from a Chapter 13 to a Chapter 7; debtor's argument that the residence is no longer property of the bankruptcy estate because she claimed Missouri's homestead exemption is rejected; because the sale of the residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and debtor's $15,000 homestead exemption, the bankruptcy court did not err in determining the sum was of more than inconsequential value and benefit to the estate, and it did not err in denying debtor's motion to compel the trustee to abandon the real property.
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