Hull v. Rockwell, 968 F.3d 12

Background

Rockwell owned and lived in a South Portland, Maine house (B Street) and filed Chapter 13 on August 19, 2015, claiming Maine's $47,500 homestead exemption.
He proposed to keep the house under his Chapter 13 plan; the plan was confirmed in November 2015.
Rockwell sold the B Street property on March 6, 2017, received $51,682.87 net, kept $47,500 as his claimed homestead exemption, and paid $4,182.87 to the Chapter 13 trustee.
He moved into and spent a portion of the exempt funds on improvements to a different residence (Bancroft Court); by conversion to Chapter 7 on August 7, 2017, $28,693.77 of the homestead proceeds remained unspent.
Chapter 7 Trustee Hull objected, arguing Maine’s six‑month reinvestment rule stripped the exemption and the remaining funds should be estate property; the bankruptcy court and the district court rejected the objection.
The First Circuit affirmed, holding the Bankruptcy Code fixes exemptions as of the petition date (complete snapshot) and Rockwell’s exemption remained protected absent a statutory exception or bad‑faith conversion.

Issues

Issue	Plaintiff's Argument (Hull)	Defendant's Argument (Rockwell)	Held
Whether proceeds from an exempt homestead sold post‑petition but not reinvested within Maine's 6‑month period lose their exempt status and become estate property after conversion to Chapter 7.	Maine's six‑month reinvestment requirement defeats the exemption and makes the proceeds estate property.	Exemptions are fixed as of the petition date under the complete snapshot rule; §522(c) immunizes properly claimed exemptions absent statutory exceptions.	The complete snapshot applies; Rockwell's exemption remained protected and trustee could not reach the funds.
Whether sale and retention of proceeds during a Chapter 13 case (with later conversion to Chapter 7) permits post‑petition events or debtor control to alter exemption status.	Because Rockwell retained possession and control during Chapter 13, post‑petition conduct (sale, failure to reinvest) should affect exemption status.	§348 preserves the petition date for determining estate property on conversion; absent bad faith, conversion does not reopen the exemption analysis.	Conversion does not change the petition‑date snapshot; post‑petition sale during Chapter 13 did not revoke the exemption absent bad faith or a statutory exception.
Whether §522(c) exceptions or fraud/bad‑faith conversion apply to permit trustee to reach exempt funds.	Trustee asserted the exemption was lost under state law (practical equivalent to an exception).	No §522(c) exception applies and there was no allegation or finding of bad‑faith conversion.	No statutory exception or bad faith existed; exemption remained intact.

Key Cases Cited

Law v. Siegel, 571 U.S. 415 (2014) (Bankruptcy courts must follow the Code; cannot strip exempt property outside Code exceptions)
Harris v. Viegelahn, 135 S. Ct. 1829 (2015) (conversion from Chapter 13 to Chapter 7 preserves petition‑date property limits absent bad faith)
White v. Stump, 266 U.S. 310 (1924) (exemptions are determined at the petition date)
Myers v. Matley, 318 U.S. 622 (1943) (homestead exemption becomes fixed at filing date)
In re Cunningham, 513 F.3d 318 (1st Cir. 2008) (§522(c) immunizes properly claimed exemptions from prepetition debt collection even after sale)
Schwab v. Reilly, 560 U.S. 770 (2010) (exemptions are integral to the bankruptcy "fresh start")
Grogan v. Garner, 498 U.S. 279 (1991) (bankruptcy's fresh‑start purpose)
In re Jacobson, 676 F.3d 1193 (9th Cir. 2012) (contrasting approach treating state reinvestment requirement as part of snapshot)
In re Frost, 744 F.3d 384 (5th Cir. 2014) (contrasting approach declining to apply complete snapshot where state homestead reinvestment requirement not met)
Howison v. Hanley, 141 F.3d 384 (1st Cir. 1998) (discusses Maine homestead statute but involved prepetition transfer and fraudulent conveyance)