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California Ch. 7 Trustees Lock Win Over Treatment of Real Estate

Nov. 9, 2020, 8:18 PM

Chapter 7 bankruptcy trustees can liquidate real property acquired by married couples in California on or after Jan. 1, 1975, in order to pay creditors, even if only one spouse is in bankruptcy, the Ninth Circuit ruled.

An assumption under California law that such property is community property applies in this instance, the U.S. Court of Appeals for the Ninth Circuit said Monday.

The decision doesn’t affect any rights to claim a homestead exemption, but does allow a trustee to distribute the total value of property to creditors, rather than just the half belonging to the bankrupt spouse.

The federal...

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