Edward Romero filed for Chapter 7 bankruptcy on February 12, 2015 and on his petition he listed his “1997 Peterbilt truck” as exempt under Colorado’s homestead statute. Since 1998, Mr. Romero has lived almost exclusively in his semi-truck; operating independently under the name Romero Transportation, Inc., he spends, on average, 20 to 25 days a month hauling freight cross country. When he does come back to Colorado, he lives out of his truck, with some occasional overnight stays at friends and family. Being a long-haul trucker, the truck was not only his home but his main means of making a living. The opinion does not make it clear why he filed for bankruptcy but it was clear that he filed to protect his “home” and his livelihood. The trustee disagreed with the debtor’s position and sought to deny his exemption. All of which leads us to the present question: under Colorado law, can a semi be treated as a homestead where the debtor lives in it almost exclusively? The answer turns out to be no.
The semi at the heart of this dispute is valued at $45,000; designed to haul freight over long distances, it is close to 14 feet long with a Caterpillar-brand engine, a steering axle, and two drive axles. Mr. Romero lives behind the driving compartment in a large cab (along with his dog); inside the cab, there is a bed, a microwave, a toaster, a coffee pot, refrigerator, printer, television, a small storage loft for his clothes and other items, and (last but not least) a self-contained portable toilet. The dog has a small kennel near the bed.
In this case, the debtor was attempting to exempt the equity in his home and his primary means of making a living and to avoid a sale by the trustee; while Colorado also has exemptions for a debtor’s motor vehicle and tools of the trade both are substantially less than the homestead exemption. If the debtor could exempt the full amount of his equity in the vehicle, $45,000, then there would be no equity for creditors and thus he would avoid a sale by the Chapter 7 trustee. The only snag was whether the term “homestead” could be read to include a semi as a residence.
The court reviewed the history of the word “homestead” in Colorado (the legislature had failed to provide a definition of the term), both as a territory and as a state, and concluded that it had always been used in connection with real estate. Therefore for the truck to be a residence it had to have some permanent or semi-permanent connection to the land in Colorado. The problem for the debtor was that the semi had no fixed location in Colorado, where it stayed; in fact the semi was constantly on the move, hauling freight across the country, which as the court pointed out was its primary purpose. While sympathetic to the debtor’s plight, the court felt bound to apply the plain meaning of the word “homestead” and it denied his homestead exemption.
The results may have been different if it had been decided under Maine law. Title 14 M.R.S.A. §4422(1) protects a debtor’s equity in his or her residence, up to $47,500 ($95,000 if over 60 or disabled and unable to be gainfully employed). Unlike Colorado, a residence is defined as “real or personal property that the debtor…uses as a residence.” The statute seems to contemplate a residence that is not tied directly to the land, like a houseboat or a RV. That being said, another problem would likely arise from the dual use of the semi as a residence and as a business.
Currently pending in Maine bankruptcy court, In Re Fallen 14-20077, is a case involving a debtor and a creditor wrestling over the residential exemption where the debtor is using part of the home in a catering/events business; both parties have very different views of how the value of the property should be allocated. I would think an appraiser might be hard pressed to figure out how much value of the semi should be allocated to the debtor’s residential use but people are pretty creative so I am sure it can be done. Like Colorado, Maine has an exemption for motor vehicles and tools of the trade, again both significantly less than the residential exemption. I would certainly argue that the semi was a residence if he was my client, even though valuation may be tricky.
While Mr. Romero lost, I have to tip my hat to his attorney for some out-of-the-box thinking; I think his position was not frivolous, in that it had no basis in fact or law. Unfortunately, Colorado’s exemptions used the term homestead instead of residence. That being said, all may not be lost. Mr. Romero may have a chance to covert his case to Chapter 13, where he can “buy” the equity in his semi by making payments to the trustee for 3 to 5 years (a long time to be sure). He might be able to claim a lesser exemption in his semi by claiming it as a vehicle or tools of the trade and find some way to pay the rest of the equity to the trustee. Finally, he may also be able to dismiss his case, though dismissals in Chapter 7 are not automatically granted and subject to court approval. The only risk there is that if Mr. Romero filed because creditors were hounding him, dismissal puts him right back where he was before.
 Colorado’s homestead exemption allows a debtor to exempt up to $60,000 of equity in a debtor’s home (up to $90,000, if over 60 or disabled).
 I believe the motor vehicle exemption is up to $3,000 and the tools of the trade exemption is up to $10,000.