Bankr. W.D.N.C.: In re Crawford- Definition of Dependent for Exemptions

Summary:

The Debtor’s great uncle Jennings had, in his waning years, received care and assistance from the Debtor and transferred his Rock Hill, S.C. home to her. When she filed bankruptcy, the Debtor asserted that Jennings was her dependent and claimed the property as exempt under N.C.G.S. § 1C-1601(a)(1). Less than three months after her bankruptcy was filed, Jennings died.

Sustaining the Trustee’s objection to the Debtor’s claimed homestead exemption, the bankruptcy court held that while the Debtor had provided sporadic assistance with paying his bills, “what she gave to Jennings was not financial support, but rather, care.” Relying on In re Preston. 428 B.R. 340 (Bankr. W.D.N.C. 2009), the court restated that as there is “a dearth of authority” regarding the statutorily undefined term “dependent”, instead turned to the related term “dependent spouse” as in domestic relations cases, defined therein as “as one who is ‘actually and substantially’ dependent upon another for maintenance and support or is ‘substantially in need of such maintenance and support’ from the other. Id. at 343 (quoting Vandiver v. Vandiver, 274 S.E.2d 243, 250 (N.C. Ct. App. 1981)).

The court also held that as Jennings had died shortly after the filing of the bankruptcy, the Rock Hill property could no longer be claimed as his residence.
Commentary:

While a loss for the this particular debtor, the “actually and substantially dependent” standard could be worse. For example, under 26 U.S.C. § 152, the IRS would not have defined Jennings as a dependent. Nor does this definition require that the Debtor provide the majority of the financial support, only that it be “substantial.”

As, short of a Zombie Apocalypse, Jenning’s death conclusively and inarguably precluded the Rock Hill property from being his residence (and even there it is unclear to the extent that the Undead can be claimed as dependents), the bankruptcy court could have limited its holding to that issue alone.

For a copy of the opinion, please see:

Crawford- Definition of Dependent for Exemptions

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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