CAN you truck qualify as homestead if you live in it?
AN often repeated joke in bankruptcy involves a debtor who gives up his home but not his car. The punch line by the trustee is, "So you are giving up your house and moving into your car?" But this joke became reality in the case of In Re Tular decided in New York two months ago. Debtor was an independent trucker. He bought his Peterbilt truck in 2005. The truck was equipped with a bed, lavatory and electricity. Debtor told the court that all his possessions, except a 1997 Ford pickup truck and money in the bank, were in the truck. He further testified that he gave up his apartment and moved into the sleeper compartment of his Peterbilt truck.
Federal law prohibited debtor from driving more than 11 hours per day to a maximum of 70 hours per week. Debtor said he typically drove 50 to 60 hours per week and spent 360 days per year on the road. Debtor filed for bankruptcy protection about 10 months after moving into the Peterbilt. He maintained a post office box in Corfu, N.Y., which is where he lived before moving into his truck. His driver’s license and truck registration listed only his post office address. Debtor testified that he had $24,000 in equity in the Peterbilt. He argued that the truck was protected as a ‘mobile home’ under New York’s homestead exemption. The trustee objected because he wanted to get the truck and sell it for the benefit of creditors. Don’t hate the trustee because that’s what trustees do. Trustees represent the collective interest of all creditors in the case. It is his job to get whatever non-exempt assets he can get his hands on, sell them and give the cash proceeds to creditors. The trustee is not the judge in the case. If there is a dispute between debtor and trustee, the disputed matter is presented to the judge who has the power to render judgment on the disputed matter.
The judge in this case found no published ruling on whether a truck could qualify as a mobile home. While there were many analogous cases from other states, they could be distinguished. For instance, a lobster farmer in Maine was able to exempt the boat where he lived as his homestead. A homeless person in Manhattan was able to exempt the cardboard box he lived in as his homestead, and Tarzan’s grandson was able to exempt the tree-house he lived in as his homestead. The court noted that New York law provides a separate and smaller exemption for motor vehicles, but that did not mean the truck could not qualify as a mobile home because mobile home are defined as motor vehicles under New York law. Then the court found that when ‘mobile home’ was added to the state’s homestead exemption, the intention was to protect the typical mobile home. In other words, mobile homes that don’t have wheels and don’t need gas are clearly protected as homesteads in New York. But what about mobile homes that are actually trucks with wheels? What if the wheels were removed, would the absence of wheels convert the truck into a mobile home? These were the nerve wracking issues that the court was confronted with. I mean, even King Solomon who decided to split the baby in half because it was claimed by two mothers, would have had to take a bottle of Tylenol to come out with a fair decision. Hence, the court decided to call Steven Spielberg, the authority on truck transformers. Unfortunately, Mr. Spielberg was in Fiji on an extended vacation with an extra-terrestrial and so the judge had to make a decision by himself.
"Remove the tires as pre-bankruptcy planning and the result is an exempt ‘mobile home’," the court said. Finding that the allowance of the homestead exemption should not turn on such a trivial maneuver, the court ruled debtor’s truck qualified as his home.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.
( Published October 30, 2010 in Asian Journal Los Angeles p. C4 )
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