The homestead exemption in bankruptcy is one of the most well known exemptions in bankruptcy law. The ability to file a bankruptcy case and not have creditors tamper with one’s real property is a major advantage to debtors seeking a fresh start. The homestead exemption varies from state, and in Kansas it is one of the most generous in the country. A recent Supreme Court decision reaffirmed the commitment of the courts to ensuring that this exemption will continue to be absolute and unqualified.
At the same time, the decision restated the power that bankruptcy courts enjoy under Section 105(a) of the code. This section has applicability in business bankruptcy cases, when it is used routinely by debtors in possession to facilitate their reorganization and for selling assets free and clear of liens under Section 363.