In re: Abigail J. Duncan, AZ-17-1110-FSKu

Debtor Abigail J. Duncan owned a house on Kingbird Drive (homestead since 2006) but moved out in January 2014 and lived at a Market Street rental thereafter. She leased Kingbird to third-party tenants beginning January 2014.
Duncan filed a Chapter 7 petition on November 23, 2015 (less than two years after moving out) and claimed a $150,000 Arizona homestead exemption in the Kingbird property.
At the December 29, 2015 §341 meeting she testified she could not afford the house, intended to "get rid of it" and planned to sell it.
The chapter 7 trustee objected to the homestead exemption on grounds Duncan did not reside in the property and intended permanent removal/sale. Trustee timely filed an objection and sought an extension of the objection deadline.
Duncan obtained a loan modification in March 2016 and thereafter changed her position, asserting she intended to keep the property; the bankruptcy court found her intent on the petition date was to abandon the homestead.
The bankruptcy court sustained the trustee’s objection; Duncan appealed. The BAP affirmed, concluding the court’s factual finding of intent was not clearly erroneous.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Duncan abandoned her Arizona homestead on the petition date (intent to permanently remove)	Duncan: Had established a homestead and did not intend permanent abandonment; various indicia (driver's license, voter registration, litigation to protect interest) support intent to retain.	Trustee: Duncan moved out, rented the property, treated it as income-producing, and stated at §341 she intended to sell — showing clear intent to permanently remove.	Court: Held trustee met burden; factual finding that Duncan intended permanent removal on petition date affirmed (not clearly erroneous).
Whether trustee's objection was untimely or premature	Duncan: Trustee filed objection after §341 meeting and before explicit court extension — objection was untimely/premature.	Trustee: Filed objection within extended deadline (court later extended deadline) and had shown good cause; Duncan stipulated below that objection was timely.	Court: Rejected timeliness argument as waived/stipulated and, in any event, objection was timely under the court’s extension; argument frivolous.

Diaz v. Kosmala (In re Diaz), 547 B.R. 329 (9th Cir. BAP 2016) (standards for reviewing exemption issues and de novo review of statutory interpretation)
Calderon v. Lang (In re Calderon), 507 B.R. 724 (9th Cir. BAP 2014) (interpreting Arizona abandonment provision and burden of proving clear intent when removed less than two years)
Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193 (9th Cir. 2012) ("snapshot" rule: exemptions are determined as of petition date)
Ford v. Konnoff (In re Konnoff), 356 B.R. 201 (9th Cir. BAP 2006) (applying state exemption law when state opts out of federal scheme)
Kelley v. Locke (In re Kelley), 300 B.R. 11 (9th Cir. BAP 2003) (debtor intent is a factual question reviewed for clear error)
Papio Keno Club, Inc. v. City of Papillion (In re Papio Keno Club, Inc.), 262 F.3d 725 (8th Cir. 2001) (illustrative quote on the clear error standard)