The Florida Supreme Court entered its long awaited decision on February 3 in Osborne v Dumoulin , Case no. SC09-751. the Court held that a debtor who owns a homestead may still elect to take the $4,000 “wildcard” exemption pursuant to Section 22225(4) if the debtor does not assert the homestead exemption on Schedule C. There would appear to be no requirement that the debtor must surrender the property to the secured creditor, however, the debtor is effectively surrendering the home to the trustee if the trustee chooses to administer the property.

This decision resolves a substantial split of authority across the state on this recent amendment to the Florida statutes to try to provide some additional exemption to those who do not have a homestead exemption, but still leaves questions open as to what trustees will attempt to do with underwater residences.

However, the court also held that the mere fact that the debtor did not list the homestead exempt does not end the inquiry which should be on a case by case basis. (such as homestead property jointly owned with a non-debtor spouse).

Planning issues remain, such as whether a debtor will take the risk that the trustee will demand rent or attempt to sell the property. Since the trustee likely does not plan to turnover rent to the mortgage holder and is not really administering the property, such conduct would seem to be improper by the trustee to try to force the homeowner to pay rent.

Broward County bankruptcy attorneys as well as all bankruptcy attorneys in Florida now have a basis to assert additional exemptions for many Florida debtors, but there remain some risks to this approach when the debtor is a homeowner. As a Fort Lauderdale bankruptcy attorney, I recognize the great importance this case will have to consumer debtors.