Source: https://secure.ssa.gov/apps10/poms.nsf/lnx/1601810019
Timestamp: 2018-01-19 01:27:19
Document Index: 675193554

Matched Legal Cases: ['§ 416', '§ 416', '§ 541', '§ 1201', '§ 522', '§ 60', '§ 521', '§ 416', '§ 416']

SSA - POMS: PS 01810.019 - Kansas - 09/17/2002
Effective Dates: 09/17/2002 - Present Previous | Next
PS 01810.019 Kansas
A. PS 02-117 Resource Value of a Property Owned by An Individual Who Has Filed for Bankruptcy; John Ray C~, Sr., ~
This opinion concerns the resource value of home property owned by an individual who filed for bankruptcy under chapter 7 of the U.S. Bankruptcy Code and who later vacated the property. Under Kansas State law, an individual may elect to exempt his residence from inclusion in a bankruptcy estate. In this case, however, the individual elected to surrender his home and subsequently moved from and did not intend to return to the property. When the chapter 7 bankruptcy petition was filed, the property not exempted immediately became part of the bankruptcy estate. At this point, the individual no longer had the authority or right to convert or use any of the property contained in the bankruptcy estate, including his home. Therefore, the property was not a resource to the individual effective the month following the month the petition was filed. Had the property initially been exempted and the individual later moved from the property, then it may have counted as a resource assuming it could no longer be excludable under regulations. In this scenario, SSA would require clear and convincing evidence before determining the individual abandoned his home.
You have asked us whether a home may be counted as a resource for the purposes of determining eligibility for supplemental security income (SSI) after the claimant has filed for bankruptcy. Based on our analysis of the Bankruptcy Code, the Commissioner's regulations, and Kansas statutes, we believe that the home should not be considered as a resource.
John Ray C~, Sr. applied for disability benefits under Title XVI on April 3, 2000, and his claim was allowed at the hearing level in 2002. At the time that Mr. C~ filed his application, he was living with his wife in a house that they owned in Emporia, Kansas. This home was excluded from being counted as a resource for SSI purposes.
On April 20, 2000, Mr. C~ and his wife jointly filed for bankruptcy under Chapter 7 of the Bankruptcy Code. In Schedule C of his Petition for bankruptcy, Mr. C~ listed his home, among other items, as “exempt” from his estate. On the same date, however, in his Debtor's Statement of Intention, Mr. C~ stated that it was his intent to surrender his home. Mr. C~ and his wife signed the statement, acknowledging that they must perform their intention within 45 days of filing the statement with the court.
On May 28, 2000, Mr. and Mrs. C~ moved out of their home. The Bankruptcy Court discharged Mr. C~'s debts on September 8, 2000. It appears that the home was finally acquired by the lender on July 11, 2001.
Section 1602 of the Social Security Act (Act) makes SSI benefits available to claimants whose income and resources do not exceed statutorily prescribed limits. Resources are defined at 20 C.F.R. § 416.1201 as cash and other liquid assets and all real and personal property that a claimant can convert to cash to be used for his support and maintenance. Section 1613 of the Act excludes certain essential items of the claimant's property from treatment as resources. Therefore, in accordance with 20 C.F.R. § 416.1212, Mr. C~'s home was not counted as a resource in determining his eligibility for SSI benefits when he applied on April 3, 2000.
In a proceeding brought under Chapter 7 of the Bankruptcy Code, all of a debtor's assets (with certain exceptions) are collected and ultimately liquidated in order to satisfy in whole or in part the claims of his creditors. A Chapter 7 proceeding commences upon the filing by the debtor of the petition. The commencement constitutes an “Order of Relief” and immediately creates an “estate” comprised of the debtor's property. See 11 U.S.C. § 541. This bankruptcy estate is created for the benefit of creditors and falls within the exclusive jurisdiction and control of the bankruptcy court. The debtor has no right or authority to convert or use the property of the bankruptcy estate. Because the debtor may not convert the property for his own purposes at any time after the creation of the bankruptcy estate, the property does not constitute a resource as defined in the Commissioner's regulations. See 20 C.F.R. § 1201.
Not all, however, of the debtor's property automatically becomes part of the bankruptcy estate. The debtor may elect to exempt certain properties from the bankruptcy estate as outlined in 11 U.S.C. § 522 of the Bankruptcy Code, or as allowed under state law. Under Kansas State law, the homestead may be exempted from inclusion in the bankruptcy estate. See K.S.A. § 60-2301. Property that is exempted from inclusion in the bankruptcy estate typically passes to the debtor free and clear of all encumbrances.
In this case, however, Mr. C~ did not choose to exempt his home; rather, he surrendered his home to the bankruptcy estate. Mr. C~ then complied with 11 U.S.C. § 521(2)(B) of the Bankruptcy Code, requiring him to perform his stated intention to surrender the home within 45 days of filing his statement with the court, when he moved out on May 28, 2000.
Although the lender did not acquire the home until July 11, 2001, as noted above, the bankruptcy estate was created immediately upon the filing of the bankruptcy petition on April 20, 2000. As of that date, Mr. C~ had no right or authority to convert or use the property of the bankruptcy estate, including the home that he surrendered. Therefore, Mr. C~'s home may not be counted as a resource for the purposes of determining his eligibility for SSI benefits. See 20 C.F.R. § 416.1201.
You also asked whether bankruptcy has a consistent effect on determining if property is a resource for SSI purposes. Upon court approval of any exemption from inclusion in the bankruptcy estate, property may be counted as a resource in determining eligibility for SSI benefits, unless it is excludable under SSA regulations. Therefore, as you asked, whether a property is exempted from inclusion in the bankruptcy estate clearly affects the property's status as an SSI resource. Obviously, each case must be considered individually.
In addition, you asked whether property that was originally exempt could become nonexempt if a debtor moved out of his home. The burden of proving abandonment of the home is upon the party challenging the exemption, and must be proved by clear and convincing evidence. See Bellport v. Harder, 196 Kan. 294 (1966). For the purposes of SSI, however, if a property continues to be exempt from the bankruptcy estate, but circumstances change so that the resource is no longer excludable under the regulations, then it may be counted as a resource in determining eligibility. See 20 C.F.R. § 416.1201.
Based on the foregoing, we believe it is reasonable to conclude that Mr. C~'s home was not a resource during the relevant period..
Melissa M. S~
B. PS 01-023 Proper Valuation of Inherited Property When Such Assets are Part of an Estate and the Heir Seeks SSI Entitlement
C. PS 00-463 Proper Valuation of Inherited Property When Such Assets are Part of an Estate and the Heir Seeks SSI Entitlement
Determining the fair market value of that interest prior to the distribution of the estate may be difficult in some cases, however, since personal and real property may be sold or the interest in t