The Nebraska Bankruptcy Court has ruled that an unmarried debtor who resided in his home with his long-time girlfriend cannot protect the equity in his home under the Nebraska Homestead Exemption.  See In re Chrisman, Nebraska Bankruptcy  Case 11-41281-TJM.  The debtor, Mark Chrisman, filed Chapter 7 in May of 2011 and listed a home located in Scottsbluff, Nebraska worth $58,000.

The Nebraska Homestead Exemption protect up to $60,000 of the equity in a home for the following debtors:

  • Married couples, with our without children.  This protection continues even if one spouse dies or if the couple divorce.  If you ever resided in the home as married person the Homestead Exemption remains in effect.
  • Individuals who are age 65 or older.
  • Single persons who qualify as “Head of Family.”

Nebraska Statute 40-115 states that “[t]he phrase head of a family . . . includes within its meanings every person who has residing on the premises with him or her and under his or her care and maintenance:

  1. His or her minor child or the minor child of his or her deceased wife or husband;
  2. A minor brother or sister or the minor child of a deceased brother or sister;
  3. A father, mother, grandfather, or grandmother;
  4. The father, mother, grandfather, or grandmother of a deceased husband or wife;
  5. An unmarried sister, brother, or any other of the relatives mentioned in this section who have attained the age of majority and are unable to take care of or support themselves; or
  6. A surviving spouse who resides in property which would have qualified for a homestead exemption if the deceased spouse were still alive and married to the surviving spouse.”

To claim the Homestead Exemption a debtor must actually live in the home on the date the bankruptcy petition is filed.  The Courts often struggle with the issue of whether a debtor actually had supported a dependent in the home, and the Courts often look to such evidence as tax returns and other legal documents to see if the debtor claimed another person as a dependent prior to filing bankruptcy. 

Since Chapter 7 cases involve the liquidation of nonexempt property, a debtor should be absolutely certain of whether they qualify for the Homestead Exemption prior to filing a case.  Keep in mind that there is no liquidation of assets in Chapter 13 cases and that might be a better alternative if the exemption is in doubt.