Justices Decline to Review Bankruptcy Proceeds for Home Sales

The US Supreme Court declined to settle a circuit split over whether a bankrupt individual’s home sale proceeds that weren’t used to buy a new home are protected from creditors.

Most states have a “homestead exemption” that protects homeowners’ equity in a private residence during bankruptcy. Many of those states also protect home sale proceeds if they are soon re-invested in a new home.

Petitioner Dustin Jade Wells asked the court to consider what happens when homeowners use the proceeds for something else.

The US Court of Appeals for the Ninth Circuit in December 2021 determined that such funds were ...