In Guevarra v. Whatley (In re Guevarra)
In Guevarra v. Whatley (In re Guevarra), ___BR___, 2021 WL 1179619 (BAP 9th Cir. Mar. 29, 2021), the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) vacated the bankruptcy court’s decision. Bankruptcy Court had sustained the chapter 7 Trustee’s Objection to debtor having used the CA CCP 703.140(b)(5) “wild card” exemption to exempt proceeds from selling a house, up to the approximately $30,000 limit of the “wild card” exemption. The bankruptcy court’s ruling was based on the grounds that debtor had not acted good faith when debtor claimed the wild card exemption. However, the BAP remanded to the bankruptcy court, so that bankruptcy court could examine whether the Trustee’s objection to the debtor claiming the wild card exemption could be sustained based on principles of equitable estoppel. Seems unlikely Trustee would win on remand: The BAP stated that although recent case law has clarified that bankruptcy courts retain the power to deny a state exemption if state law provides an equitable basis for doing so, there was no basis here because the nature of the wildcard exemption is such that there is no requirement that a debtor have a good faith intent to use the property for any specific purpose. This is not a published decision, so it can be cited only as “persuasive” if whoever cites it thinks the BAP’s reasoning is persuasive.