J. Dinkins G. Grange is an attorney in Northeast Florida, helping his clients find solutions to their financial problems, which in some cases includes bankruptcy in some cases. This Blog contains general bankruptcy relevant information. His practice includes representing clients in various areas of civil litigation including Fair Debt Collection Practices Act, Chapter 7 and Chapter 13 bankruptcies, foreclosure defense and probate.
Thursday, December 22, 2011
Y is for Yacht
The letter “Y” is for Yacht.
That's right! Can I keep it? Am I off my rocker? After all, we are talking about
bankruptcy right? Well, some people, though admittedly not many,
have boats, or a yacht, that end up filing a personal bankruptcy.
One of the questions I ask at every
consultation is whether or not he or she has any cars, boats, planes,
or recreational vehicles. Most, including me at times, think this
question is overkill. However, being in Florida, it is not uncommon
for debtors to have boats.
trustee recently won court permission to hire real-estate and yacht
brokers to sell the assets of Frederick Darren Berg. Berg’s mansion
in Mercer Island, Wash., is listed at $8.2 million, according
to the Seattle Business Journal. Located on Lake Washington, the
5,400-square-foot house has four bedrooms, six baths, six fireplaces,
a hot tub, wine cellar, wet bar and two kitchens. That’s not to
mention its city and mountain views, boat dock and covered parking
for four vehicles.
Also up for
grabs is Berg’s 70-foot Holland yacht, the Screaming Cora,
which Berg says is worth $800,000. Sale proceeds will pay off Berg’s
creditors, including Sun Trust Bank (owed $797,450 on a boat loan
secured by the yacht) and Commerce Bank of Washington (which holds
the $4.38 million home mortgage). [emphasis added]
So, yes, there is at least this bankruptcy proceeding that
included a yacht. Normally, boats and planes in the name of the
debtor are not exempt from the bankruptcy process. The trustee would
take the asset and sell it (assuming there is equity in the asset) in
order to distribute the proceeds to creditors. Of course, in that case, the Trustee is thinking of Y as meaning "yield".
In Florida, however, if someone was living on there boat, or in
there RV, they might be able to claim the asset as their homestead
property. You see, the Florida Constitution provides for unlimited
homestead protection, and though there are not many cases involving
yachts being claimed as homestead property, there are a few cases
involving boats. Unfortunately, there is not a bright line as to
what can be claimed as homestead property, and what can not be
claimed as homestead, though the cases provide some very useful
insight into how the courts will rule.
So, if you have a yacht, or RV, that you live in, and are curious
about whether you will be able to keep the asset after filing
bankruptcy, you should consult with a bankruptcy attorney in your