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Click here for the full text of this decision FACTS:On Jan. 17, 1994, Sarah K. Rogers inherited a 72.5-acre tract of real property in Forney located at 14849 Kelly Road. Rogers was single when she inherited the Forney property from her mother. Subsequently, Rogers married George E. Rogers, and they purchased a 5.1-acre tract of real property in Rockwall located at 8644 South F.M. 549. Sarah and her husband constructed a residence on the Rockwall property and claimed it as their homestead. In January 2004, Sarah separated from her husband, moved into a mobile home on the Forney property and claimed the Forney property as her homestead. On April 6, 2004, Sarah and her husband divorced. Pursuant to the divorce decree, Sarah was divested of all right, title and interest in the Rockwall property. The divorce decree awarded the Forney property to Sarah, simply affirming the reality that the Forney property was her separate property, because she inherited it from her mother before marriage. Before 2004, Rogers and her husband had borrowed money from Jack C. Wallace to embark on an ultimately unsuccessful business venture. Wallace eventually sued to recover the unpaid loan balance. On April 19, 2004, he obtained a state-court judgment against both Sarah and her then ex-husband, for the total principal amount of $316,180.95, in addition to court costs and post-judgment interest. On Sept. 28, 2005, Sarah filed for relief under Chapter 7 of the Bankruptcy Code. Sarah elected state law exemptions in accordance with the provisions of 11 U.S.C. �522(b). She claimed a homestead exemption on the Forney property in the amount of $359,000. Wallace filed a timely objection to Sarah’s claimed homestead exemption, arguing that 11 U.S.C. �522(p)(1) capped the debtor’s homestead exemption at the federal statutory amount of $125,000, because the debtor acquired her homestead interest in the Forney property within the 1,215-day period preceding the filing of her bankruptcy petition. The bankruptcy court orally denied Wallace’s objection at a hearing held on Jan. 18, 2006, and issued a written order confirming the denial on Feb. 7, 2006. On Oct. 16, 2006, the district court affirmed the bankruptcy court’s order overruling Wallace’s objection to the claimed homestead exemption. Wallace then perfected a timely appeal. HOLDING:Affirmed. Under 11 U.S.C. � 541(a)(1), the bankruptcy estate is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.” Rogers elected to exempt the Forney property as her homestead under Texas state law. Enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), 11 U.S.C. �522(p)(1) limits the state law homestead exemption under certain circumstances. Section 522(p)(1) prevents the debtor from exempting certain interests from the bankruptcy estate if they were acquired by the debtor during the statutory period and their aggregate value exceeds a certain dollar threshold. The statute reads, in relevant part: “[A]s a result of electing . . . to exempt property under State or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate [$125,000] in value in-real or personal property that the debtor or dependent of the debtor claims as a homestead.” The statute further states that “any amount of such interest does not include any interest transferred from a debtor’s previous principal residence (which was acquired prior to the beginning of such 1215-day period) into the debtor’s current principal residence, if the debtor’s previous and current residences are located in the same State.” The bankruptcy court concluded that �522(p)(1) was inapplicable because Rogers acquired her “property interest” in the Forney property in 1994, which was outside the statutory period. The district court affirmed the bankruptcy court, holding that the term “interest” in �522(p)(1) did not encompass the classification of real property as a homestead. After a review of other courts’ decisions on the subject, the court found that �522(p)(1) covered vested economic interests in the homestead property acquired during the statutory period. A homestead interest, the court stated, is not covered by �522(p)(1) because it does not constitute a vested economic interest in property. A homestead interest, the court stated, is a legal right vested in the individual to attach an exempt status to existing property interests. The property interest is the debtor’s vested economic interests in the property itself, the court stated. The statutory text and legislative history of BAPCPA, the court stated, indicate that the term “interest” refers to vested economic interests in the property that were acquired by the debtor within the 1,215-day period preceding the filing of the petition. Accordingly, the court held that Rogers was entitled to her full homestead exemption under Texas state law. OPINION:DeMoss, J.; DeMoss, Dennis and Owen, JJ.

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