Can Married Couples Double Stack Homestead Exemptions: Explained

If each spouse gets a homestead exemption in bankruptcy, it could double the amount of equity protected.

If married, can you double or stack a homestead exemption?  A homestead exemption helps protect your residence when you file bankruptcy. But if a married couple files jointly, does each get an exemption? Does the homestead exemption double for each spouse? Maybe. That would allow the debtors to double or stack the homestead exemption and protect more equity.

Courts have struggled with this. On the one hand, the law means what the law says. If the statute says the limit is a number, that’s the number. On the other hand, why should a person not get same the amount as if they were single? Put differently, if the exemption amount is the same if someone single or married, a married person is only getting half the protection.

The Federal Exemption Law

We start with the fact that bankruptcy is a federal legal process with its own national laws. This includes protections for your assets, called exemptions. These federal exemptions are described in 11 USC 522, which is long enough to make your head spin.

Conveniently, Congress has made it very clear about the answer here. If using Section 522, subsection (m) says:

Subject to the limitation in subsection (b), this section shall apply separately with respect to each debtor in a joint case.

That is very clear. 522m says that each married person who files bankruptcy jointly (together) gets their own exemption amount. In short, in this instance, you’d be able to double the homestead exemption.

State law and doubling the homestead exemption for each spouse

There is no “M” in State

But states can “opt out” of the federal 522 exemptions and provide their own protections. And many do. As you can guess, some are more generous than others. As I’m a California bankruptcy attorney, I’ll be focusing on California’s homestead and Ninth Circuit court rulings.

Speaking of which, what does the 9th Circuit say about stacking or doubling a state exemptions? “We hold that a state which opts out of § 522(d) and provides its own system of exemptions is not bound by subsection (m) as to those exemptions.” In re Granger, 754 F. 2d 1490 (9th Cir, 1985).

“States that ‘opt out’ of the federal exemption system can limit their citizens to the exemptions available under state law. California is among the majority of states that have exercised this opt-out power.” In re Wolf, 248 BR 365 (9th Cir BAP 2000).

In short, the 9th Circuit says that if a state wants to do its own exemptions, it can also opt out of 522(m) that allows doubling them.  But what about the Supremacy Clause, that federal law supersedes state law. The Ninth Circuit has an answer for that too.

“A similar Supremacy Clause argument was recently rejected by this court… the Ninth Circuit held that a state which opts out and provides its own exemptions is not bound by 11 U.S.C. § 522(m)… consequently, as regards the Supremacy issue, In re Granger is dispositive.” In re Talmadge, 832 F.2d 1120 (9th Cir 1987), Granger cite omitted.

Can you Double the California Homestead exemption for each spouse?

This is very relevant, because the California homestead exemption is now between $300,000 and $600,000 (and adjusted for inflation). Doubling the exemption — one for each spouse — could, in theory, let married bankruptcy filers protect double the $600k, or exempt over a million dollars in home equity.

Not surprisingly, people have tried to double their state law homestead exemption in the Ninth Circuit. The result? Here’s one example: “This statute provides only one homestead exemption for a married couple: like the Nevada court in Lenox, we read this language to exclude more than one homestead for a single family. The Rowes here chose to claim their exemption in the Avenue C property, and thus cannot claim a homestead exemption in any other property.” In re Rowe, 236 BR 11 (9th Cir BAP 1999).

The same results have been held in attempts to double the California homestead exemption.

“Strangman and Schneider each articulate the rule that under California law a husband and wife are entitled to only one homestead exemption between them. This rule is consistent with the language of Civil Procedure sections 704.710(d) & 704.720(c).” In re Wilson, 175 BR 735 (NDCA 1994), relying on Strangman v. Duke, 140 Cal.App.2d 185, 295 P.2d 12 (1956) and In re Schneider, 9 B.R. 488 (NDCA 1981). reversed on other grounds, Wilson, 90 F. 3d 347 (9th Cir 1996). See also In re Reed, 940 F. 2d 1317 (9th Cir 1991).

But note this also from the BAP: “Contrary to the decision of the trial court below the debtors may claim state exemptions and then may claim federal exemptions without reduction for any amounts claimed exempt under state law.” In re Emmerich, 19 BR 666, 667 (9th Cir BAP 1982).

The 1215-day Rule, federal exemptions of 522 and doubling the homestead

We’ve looked at both federal exemptions of Section 522 (which allow doubling for married debtors), as well as the state California homestead exemption (which does not).

But here’s a new twist: what if California debtors acquired their residence less the 1215 days ago in Section 522(p). That limits debtors to a homestead of approximately $190,000. But we’re back in the federal statute. Does the doubling of subection (m) come back into play?

What’s interesting is that in California, the minimum is now $300k (not subject to stacking). In theory, a married couple could file with less than 1215 days, get the $190k each, and doubled, obtain a greater ‘throttled’ exemption than they would’ve under the generous state exemption.

Locally, a 2023 case has answered this question. Because Section 522(p) is purely a federal concept, therefore whether the cap should be doubled or not is a question of federal law. Federal law of 522(m) allows doubling, and therefore, this fallback homestead exemption value can be claimed each by both husband and wife filing jointly. In re Reicher (21-1270, CDCA, April 4, 2023).

There is no 9th Circuit Court of Appeals ruling on this issue, but other similar cases are In re Davis, 647 B.R. 775 (2022) (22-40279-MJH Bankr. Court, WDWA 2022). Outside the 9th is In re Nestlen, 441 BR 135 (10th Cir BAP 2010) and In re Rasmussen, 349 BR 747 (Bankr. Court, MDFL 2006).

Consult with a bankruptcy lawyer before filing bankruptcy to ensure that you’re protecting your assets. Trustees and creditors really do take houses and other things in bankruptcy, and you want to be protected by a qualified bankruptcy attorney.