John Suggs filed Chapter 13 and claimed the property at 2416 Basil Drive in Raleigh, which was jointly owned with his ex-wife, Patricia Suggs, who resided at the property. John Suggs lived elsewhere, but asserted that Patricia Suggs was his dependent, as defined under the parties Separation agreement, and could, accordingly, claim his equity int the Basil property as exempt under N.C.G.S. § 1C-1601(a)(1). John Suggs, however, owed Patricia Suggs nearly $25,000 in past due separation support and had made all of the mortgage payments on the Basil property herself.
Following In re Preston, 428 B.R. 340 (Bankr. W.D.N.C. 2009) the bankruptcy court held that even construing exemptions liberally in John Suggs favor, Patricia Suggs could not, despite the Separation Agreement, she could not be considered a dependent and the exemption was not allowed.
Even if the claim of Patricia Suggs would not have been a priority claim in this case, it seems that her objection to John Suggs’ exemption was counter-productive as she only holds ~36% of the claimed unsecured debt. An accommodation between the ex-spouses would likely have benefitted both parties by freezing out the other unsecured creditor. Once objections were filed, particularly as the Chapter 13 Trustee was drawn in, that noise likely precluded such. Now a spiteful John Suggs could convert to Chapter 7 and let that Trustee force the sale of Patricia Suggs’ home, potentially at a lower amount than either would prefer.
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