Viegelahn v. Lopez

Both the text of the bankruptcy statute and precedent support the conclusion that homestead proceeds that debtors acquire post-petition generally revest in them upon voluntary dismissal of their Chapter 13 case. The Fifth Circuit reversed the district court's judgment as to the disbursement of proceeds from the sale of a homestead. In this case, debtors sold their Texas homestead and did not use the sale proceeds to purchase another home. The bankruptcy court determined that debtors were entitled to the return of the homestead proceeds because they voluntarily dismissed their case, but the district court concluded that the proceeds should remain with the trustee for distribution to creditors in the dismissed bankruptcy proceeding. The court affirmed the district court's judgment regarding debtors' motion to dismiss and the trustee's motion to modify. Finally, the court reinstated the bankruptcy court's order directing the trustee to return the homestead proceeds to debtors. View "Viegelahn v. Lopez" on Justia Law