Question

Marie-claire buys a $3.5 million house in which she puts all of her assets. six months later, she declares bankruptcy. how much can she claim for her homestead exemption?

Answer 1

Marie-Claire can only claim a maximum of $160,375 homestead exemption.

This homestead exemption cap is mandated by the federal law. She can only claim a state homestead exemption if she bought the house at least 40 months before declaring bankruptcy. Since, she only bought her house within 6 months of filing for bankruptcy, she can't claim her states homestead exemption. She can only avail of the federal homestead exemption.