DAVID R. DUNCAN, Bankruptcy Judge.
This matter is before the Court on a Motion to Avoid Judicial Lien ("Motion") filed by Vincent Victor Scotti and Marguerite Suzanne Scotti ("Debtors") on July 6, 2011. No objections to Debtors' Motion were filed. A hearing was held September 13, 2011. At the conclusion of the hearing, the Court gave Debtors ten (10) days to brief the issues and took the matter under advisement. Debtors did not submit a brief. After the Court's further consideration of the issues, the Court now issues this Order.
Debtors filed for chapter 7 protection on March 18, 2011. Debtors' Schedule D discloses a total of $197,123 in secured debt, consisting of two mortgages on Debtors' residence in a total amount of $85,723 and a judicial lien, the subject of this Order, in the amount of $111,400. Debtors' residence is a single-family home in Columbia, South Carolina with a value listed on Schedule A as $160,000. The residence is owned in Mrs. Scotti's name only; however, the two mortgages on the home, as well as the judicial lien, are joint obligations. Debtors have attempted to claim an exemption in their residence of $74,277. Debtors argue that this exemption amount is proper because it represents a $49,875 exemption for Mr. Scotti and a $24,402 exemption for Mrs. Scotti.
Section 522(f)(2)(A) provides a formula for calculating whether a lien may be avoided. It states:
Debtors must show entitlement to the $74,277 exemption in real property in order to avoid the full amount of the judicial lien. Debtors argue that both Mr. and
Debtors argue that Mr. Scotti's possessory interest in the home is sufficient to entitle him to an exemption in the property. Debtors base their argument on the language of 11 U.S.C. § 522(a)(1) and S.C.Code § 15-41-30.
The South Carolina homestead exemption statute is based on the federal exemption statute, section 522(d)(1). As a result, case law discussing section 522(d)(1) is instructive here. Courts have commonly held that in order to take an exemption in property, a debtor must have an ownership interest in that property. In the Matter of Cunningham, 5 B.R. 709, 710-11 (Bankr.D.Mass.1980).
Id. at 711.
Another court in this Circuit addressed an argument regarding a potential equitable distribution interest and found that such an interest was also not sufficient to allow the debtor to claim an exemption in property. The wife debtor argued that she was entitled to claim an exemption in her husband's life insurance policy because under state law, if the parties were to get a divorce, she would have an equitable interest in the property's cash value. In re Asghar, No. 96-15195-SSM, 1997 WL 34816024, at *2 (Bankr.E.D.Va. Feb. 11, 1997). The court examined a previous case in which a similar argument was presented, and in which the court ultimately held that the wife debtor could not exempt property which she did not own. Id. at *3 (discussing In re Wilkinson, 100 B.R. 315 (Bankr.W.D.Va.1989)). The Asghar court agreed with the result in Wilkinson, stating:
Id. at *4 (emphasis original).
Other courts addressing a debtor's attempt to take an exemption despite a lack of ownership interest have reached the same result. These courts often focus on the fact that when a husband and wife file a joint bankruptcy petition, their estates remain separate unless the court orders otherwise. See In re Cohen, 263 B.R. 724, 726 (Bankr.D.N.J.2001); Asghar, 1997 WL 34816024, at*3; In the Matter of Freund, 32 B.R. 622, 623 (Bankr.D.Wis. 1983). As a result, that property which is owned only by one debtor remains solely in that debtor's bankruptcy estate and is not included in the joint debtor's estate. Exemptions available to each debtor, then, are only available for the property in that debtor's estate; a debtor may not take exemptions for property in his co-debtor's estate if that property is not jointly owned and thus included in his estate also. This logical result is made clearer by an illustration: if a debtor who resides in, but does not own, real property files a case on his own, would there be any question as to whether the real property is property of his bankruptcy estate? The answer, clearly, is no, at least absent some other interest or claim of right. It follows that the debtor would have no available exemption in real property, because the ability to
South Carolina case law interpreting an earlier exemption provision also supports this result. In Gibbs v. Hunter, 99 S.C. 410, 83 S.E. 606 (1914), a son holding a vested remainder interest in property challenged the sale of the property by the sheriff based on his claimed homestead exemption. The South Carolina Supreme Court found that the son was entitled to an exemption, based on his interest in the land, and found that the sale was void based on the son's homestead exemption. Id. In so finding, the court stated that the right to claim an exemption is tied to an ownership interest in the land. Id. Thus, South Carolina law requires an ownership interest as a prerequisite to a homestead exemption.
In sum, to be entitled to a homestead exemption, a debtor must have an ownership interest in the property he seeks to exempt; a mere possessory or potential equitable distribution interest is not sufficient. Nor does the inclusion of the word "dependent" in the statute affect this result. The purpose of this inclusion is to exempt the property interest of a debtor if the debtor or a dependent of the debtor uses the property as a residence. The debtor need not reside on the property as long as a dependent does. The use of the property by both the debtor and a dependent does not, however, increase the amount of exemption available to the debtor. See Freund, 32 B.R. at 624 ("It should be noted that 11 U.S.C. § 522(d) provides that if a debtor does not claim his or her exemptions a dependent of the debtor may claim them on the debtor's behalf. This provision does not apply in the present case because [husband debtor] has claimed as much of the inheritance as he can exempt. [Wife debtor] would only be able to claim an exemption for [husband debtor] if he did not claim it for himself."); AmJur Bankruptcy § 1416 (2011) ("The provision that a dependent of a debtor may claim exemptions on the debtor's behalf is not applicable where the debtor has claimed the full extent of the exemption.").
For the reasons set forth above, Mr. Scotti is not entitled to a homestead exemption in the residence where Debtors live. However, Mrs. Scotti is entitled to an exemption under S.C.Code § 15-41-30(a)(1) of up to $53,375, the maximum allowable exemption for a single owner, less the $3,500 Mrs. Scotti allocated to her 2009 tax refund. This leaves Mrs. Scotti with an exemption of $49,875.
AND IT IS SO ORDERED.
