Opinion
CASE NO. 12-01645 BKT
07-12-2012
In re: GLADYS RUIZ GARCIA XXX-XX-0641 Debtor(s)
Chapter 7
OPINION AND ORDER
Before the court is the Chapter 7 Trustee's (the "Trustee") Objection to Exemptions (the "Objection")(Dkt. No. 16), and Debtor's response to the objection (Dkt. No.17). The Trustee argues that under the Puerto Rico Home Protection Act No. 195, enacted on September 13, 2011(in Spanish titled "Ley del Derecho de la Protección del Hogar Principal y el Hogar Familiar", referred to herein as the "PR Home Protection Act"), the homestead exemption claimed by Debtors is inapplicable to bankruptcy cases. Therefore, the Trustee requests that Debtors' claim for exemptions under the PR Home Protection Act be disallowed in order that the bankruptcy estate may sell and liquidate the realty to repay the creditors. For the reasons set forth below, the Objection to Exemptions is GRANTED and Debtor's claim for homestead exemption pursuant to the PR Home Protection Act is DENIED.
I. Factual Background
On March 5, 2012 Debtor, Gladys Ruiz García, filed a chapter 7 bankruptcy petition (Dkt. No. 1). Debtor listed her primary residence in Schedule C with a value, as of the date of filling the petition, of $85,000.00. (Dkt. No. 6). As it appears from Schedule D, said property has a mortgage lien in the amount of $21,110.19. (Dkt. No. 1). Debtor claims a homestead exemption over her primary residence for the totality of the value of the property, pursuant to the PR Home Protection Act. (Dkt. No.6).
The Trustee argues that the recent PR Home Protection is inapplicable to bankruptcy cases, and, as such, Debtor's homestead exemption must be disallowed. (Dkt. No. 16). The Trustee mainly relies on the specific waivers to the homestead exemption that the PR Home Protection Act incorporates in its Article 4 and the ruling made in case: In re Hernandez, -- B.R.—2012 WL1255126*3(Bkrtcy.D.Puerto Rico, Hon. E. Lamoutte).(Dkt. No. 16).
II. Discussion and analysis
Under section 541 of the Bankruptcy Code, all of Debtor's assets become property of the bankruptcy estate upon filing of the bankruptcy petition. This, however, is subject to Debtor's right to reclaim certain property as exempt under section 522. 11 U.S.C. §522.
Article 4 of the PR Home Protection Act provides that the homestead protection is unwaivable, except in those circumstances expressly enumerated in said article. Applicable to this case, Article 4(d) provides that the homestead protection is waived in those cases where the Bankruptcy Code is applicable. Thus, by its plain terms, the protections, of the PR Home Protection Act are exclusive of the exemptions afforded by the Bankruptcy Code. Pursuant to Article 4 of the PR Home Protection Act, when Debtors filed for bankruptcy, they automatically waived the homestead protection provided therein. See In re Hernandez, -- B.R.--2012 WL1255126*3(Bkrtcy.D.Puerto Rico, Hon. E. Lamoutte)
III. Conclusion
WHEREFORE, IT IS ORDERED that the Trustee's Objection to Exemptions shall be, and it hereby is, GRANTED and Debtors' claim for homestead exemption pursuant to the PR Home Protection Act shall be, and it hereby is, DENIED.
IT IS SO ORDERED.
San Juan, Puerto Rico this 12 day of July, 2012.
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Brian K. Tester
U.S. Bankruptcy Judge