WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on Dec. 3 asked the U.S. solicitor
general to provide perspective on whether a bankruptcy court has the power to
levy a financial charge against a Chapter 7 debtor's residential property,
which he has claimed falls under the homestead exemption (Stephen Law v.
Alfred Siegel, No. 12-5196, U.S. Sup.).
In 2004, Stephen Law filed for Chapter 7 bankruptcy in
the U.S. Bankruptcy Court for the Central District of California. He
listed his home property value as $363,348 and sought a homestead exemption.
The Chapter 7 trustee, Alfred Siegel,
did not object to the homestead exemption.
Two years later, the trustee moved to surcharge Law's
homestead exemption $75,000, but Law contends that he was not properly served
in the process.
The trustee had argued that Law defrauded his creditors
by filing a phony lien against his property to take value out of the property.
The Bankruptcy Court granted the trustee's surcharge, and
Law appealed to the U.S. Bankruptcy Appellate Panel (BAP) for the Ninth
Circuit. The BAP reversed the surcharge order, concluding that it was
The trustee appealed to the Ninth Circuit U.S. Court of
Appeals, which reversed the BAP's ruling and determined that the surcharge was
proper. Law appealed to the Supreme Court.
Law argues that the Supreme Court should reverse the
Ninth Circuit's ruling and order the trustee to pay him the $75,000 surcharge
pertaining to the homestead exemption.
Law maintains that the surcharge in question is not
permitted against his property because it is protected by the homestead
Law is represented by Matthew Hellman of Jenner &
Block in Washington.
The trustee is represented by David Seror of Ezra Brutzkus Gubner in Woodland Hills, Calif.
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