11 Usc 522

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LEXSTAT 11 USC 522
UNITED STATES CODE SERVICE

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*** CURRENT THROUGH PL 111-43, APPROVED 07/31/2009 ***
TITLE 11. BANKRUPTCY

CHAPTER 5. CREDITORS, THE DEBTOR, AND THE ESTATE
SUBCHAPTER II. DEBTOR'S DUTIES AND BENEFITS
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11 USCS § 522
THE CASE NOTES SEGMENT OF THIS DOCUMENT HAS BEEN SPLIT INTO 2 DOCU-
MENTS.
THIS IS PART 1.
USE THE BROWSE FEATURE TO REVIEW THE OTHER PART(S).
§ 522. Exemptions
(a) In this section--

(1) "dependent" includes spouse, whether or not actually dependent; and
(2) "value" means fair market value as of the date of the filing of the petition or, with respect to
property that becomes property of the estate after such date, as of the date such property becomes
property of the estate.
(b) (1) Notwithstanding section 541 of this title [11 USCS § 541], an individual debtor may exempt
from property of the estate the property listed in either paragraph (2) or, in the alternative, para-
graph (3) of this subsection. In joint cases filed under section 302 of this title [11 USCS § 302] and
individual cases filed under section 301 or 303 of this title [11 USCS § 301 or 303] by or against
debtors who are husband and wife, and whose estates are ordered to be jointly administered under
Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not elect to exempt
property listed in paragraph (2) and the other debtor elect to exempt property listed in paragraph (3)
of this subsection. If the parties cannot agree on the alternative to be elected, they shall be deemed
to elect paragraph (2), where such election is permitted under the law of the jurisdiction where the
case is filed.
(2) Property listed in this paragraph is property that is specified under subsection (d), unless the
State law that is applicable to the debtor under paragraph (3)(A) specifically does not so authorize.
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(3) Property listed in this paragraph is--

(A) subject to subsections (o) and (p), any property that is exempt under Federal law, other than
subsection (d) of this section, or State or local law that is applicable on the date of the filing of the
petition at the place in which the debtor's domicile has been located for the 730 days immediately
preceding the date of the filing of the petition or if the debtor's domicile has not been located at a
single State for such 730-day period, the place in which the debtor's domicile was located for 180
days immediately preceding the 730-day period or for a longer portion of such 180-day period than
in any other place;
(B) any interest in property in which the debtor had, immediately before the commencement of
the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a ten-
ant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law; and
(C) retirement funds to the extent that those funds are in a fund or account that is exempt from
taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of
1986 [26 USCS § 401, 403, 408, 408A, 414, 457, or 501(a)].
If the effect of the domiciliary requirement under subparagraph (A) is to render the debtor ineligi-
ble for any exemption, the debtor may elect to exempt property that is specified under subsection
(d).
(4) For purposes of paragraph (3)(C) and subsection (d)(12), the following shall apply:
(A) If the retirement funds are in a retirement fund that has received a favorable determination
under section 7805 of the Internal Revenue Code of 1986 [26 USCS § 7805], and that determination
is in effect as of the date of the filing of the petition in a case under this title, those funds shall be
presumed to be exempt from the estate.
(B) If the retirement funds are in a retirement fund that has not received a favorable determina-
tion under such section 7805 [26 USCS § 7805], those funds are exempt from the estate if the debtor
demonstrates that--
(i) no prior determination to the contrary has been made by a court or the Internal Revenue
Service; and
(ii) (I) the retirement fund is in substantial compliance with the applicable requirements of the
Internal Revenue Code of 1986 [26 USCS §§ 1 et seq.]; or
(II) the retirement fund fails to be in substantial compliance with the applicable requirements
of the Internal Revenue Code of 1986 [26 USCS §§ 1 et seq.] and the debtor is not materially re-
sponsible for that failure.
(C) A direct transfer of retirement funds from 1 fund or account that is exempt from taxation
under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986 [26
USCS § 401, 403, 408, 408A, 414, 457, or 501(a)], under section 401(a)(31) of the Internal Revenue
Code of 1986 [26 USCS § 401(a)(31)], or otherwise, shall not cease to qualify for exemption under
paragraph (3)(C) or subsection (d)(12) by reason of such direct transfer.
(D) (i) Any distribution that qualifies as an eligible rollover distribution within the meaning of
section 402(c) of the Internal Revenue Code of 1986 [26 USCS § 402(c)] or that is described in
clause (ii) shall not cease to qualify for exemption under paragraph (3)(C) or subsection (d)(12) by
reason of such distribution.
(ii) A distribution described in this clause is an amount that--
(I) has been distributed from a fund or account that is exempt from taxation under section
401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986 [26 USCS § 401,
403, 408, 408A, 414, 457, or 501(a)]; and
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(II) to the extent allowed by law, is deposited in such a fund or account not later than 60
days after the distribution of such amount.
(c) Unless the case is dismissed, property exempted under this section is not liable during or after
the case for any debt of the debtor that arose, or that is determined under section 502 of this title [11
USCS § 502] as if such debt had arisen, before the commencement of the case, except--
(1) a debt of a kind specified in paragraph (1) or (5) of section 523(a) [11 USCS § 523(a)] (in
which case, notwithstanding any provision of applicable nonbankruptcy law to the contrary, such
property shall be liable for a debt of a kind specified in section 523(a)(5) [11 USCS § 523(a)(5)]);
(2) a debt secured by a lien that is--
(A) (i) not avoided under subsection (f) or (g) of this section or under section 544, 545, 547,
548, 549, or 724(a) of this title [11 USCS § 544, 545, 547, 548, 549, or 724(a)]; and
(ii) not void under section 506(d) of this title [11 USCS § 506(d)]; or
(B) a tax lien, notice of which is properly filed;
(3) a debt of a kind specified in section 523(a)(4) or 523(a)(6) of this title [11 USCS § 523(a)(4)
or 523(a)(6)] owed by an institution-affiliated party of an insured depository institution to a Federal
depository institutions regulatory agency acting in its capacity as conservator, receiver, or liquidat-
ing agent for such institution; or
(4) a debt in connection with fraud in the obtaining or providing of any scholarship, grant, loan,
tuition, discount, award, or other financial assistance for purposes of financing an education at an
institution of higher education (as that term is defined in section 101 of the Higher Education Act of
1965 (20 U.S.C. 1001)).
(d) The following property may be exempted under subsection (b)(2) of this section:
(1) The debtor's aggregate interest, not to exceed $ 20,200 in value, in real property or personal
property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns
property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the
debtor or a dependent of the debtor.
(2) The debtor's interest, not to exceed $ 3,225 in value, in one motor vehicle.
(3) The debtor's interest, not to exceed $ 525 in value in any particular item or $ 10,775 in aggre-
gate value, in household furnishings, household goods, wearing apparel, appliances, books, animals,
crops, or musical instruments, that are held primarily for the personal, family, or household use of
the debtor or a dependent of the debtor.
(4) The debtor's aggregate interest, not to exceed $ 1,350 in value, in jewelry held primarily for
the personal, family, or household use of the debtor or a dependent of the debtor.
(5) The debtor's aggregate interest in any property, not to exceed in value $ 1,075 plus up to $
10,125 of any unused amount of the exemption provided under paragraph (1) of this subsection.
(6) The debtor's aggregate interest, not to exceed $ 2,025 in value, in any implements, profes-
sional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.
(7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance
contract.
(8) The debtor's aggregate interest, not to exceed in value $ 10,775 less any amount of property of
the estate transferred in the manner specified in section 542(d) of this title [11 USCS § 542(d)], in
any accrued dividend or interest under, or loan value of, any unmatured life insurance contract
owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a
dependent.
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(9) Professionally prescribed health aids for the debtor or a dependent of the debtor.
(10) The debtor's right to receive--
(A) a social security benefit, unemployment compensation, or a local public assistance benefit;
(B) a veterans' benefit;
(C) a disability, illness, or unemployment benefit;
(D) alimony, support, or separate maintenance, to the extent reasonably necessary for the sup-
port of the debtor and any dependent of the debtor;
(E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract
on account of illness, disability, death, age, or length of service, to the extent reasonably necessary
for the support of the debtor and any dependent of the debtor, unless--
(i) such plan or contract was established by or under the auspices of an insider that employed
the debtor at the time the debtor's rights under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the
Internal Revenue Code of 1986 [26 USCS § 401(a), 403(a), 403(b), or 408].
(11) The debtor's right to receive, or property that is traceable to--
(A) an award under a crime victim's reparation law;
(B) a payment on account of the wrongful death of an individual of whom the debtor was a de-
pendent, to the extent reasonably necessary for the support of the debtor and any dependent of the
debtor;
(C) a payment under a life insurance contract that insured the life of an individual of whom the
debtor was a dependent on the date of such individual's death, to the extent reasonably necessary for
the support of the debtor and any dependent of the debtor;
(D) a payment, not to exceed $ 20,200, on account of personal bodily injury, not including pain
and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the
debtor is a dependent; or
(E) a payment in compensation of loss of future earnings of the debtor or an individual of whom
the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor
and any dependent of the debtor.
(12) Retirement funds to the extent that those funds are in a fund or account that is exempt from
taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of
1986 [26 USCS § 401, 403, 408, 408A, 414, 457, or 501(a)].
(e) A waiver of an exemption executed in favor of a creditor that holds an unsecured claim against
the debtor is unenforceable in a case under this title with respect to such claim against property that
the debtor may exempt under subsection (b) of this section. A waiver by the debtor of a power un-
der subsection (f) or (h) of this section to avoid a transfer, under subsection (g) or (i) of this section
to exempt property, or under subsection (i) of this section to recover property or to preserve a trans-
fer, is unenforceable in a case under this title.
(f)
(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid
the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an ex-
emption to which the debtor would have been entitled under subsection (b) of this section, if such
lien is--
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(A) a judicial lien, other than a judicial lien that secures a debt of a kind that is specified in sec-
tion 523(a)(5) [11 USCS § 523(a)(5)]; or
(B) a nonpossessory, nonpurchase-money security interest in any--
(i) household furnishings, household goods, wearing apparel, appliances, books, animals,
crops, musical instruments, or jewelry that are held primarily for the personal, family, or household
use of the debtor or a dependent of the debtor;
(ii) implements, professional books, or tools, of the trade of the debtor or the trade of a de-
pendent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a dependent of the debtor.
(2)
(A) For the purposes of this subsection, a lien shall be considered to impair an exemption to the
extent that the sum of--
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no liens on the
property;
exceeds the value that the debtor's interest in the property would have in the absence of any
liens.
(B) In the case of a property subject to more than 1 lien, a lien that has been avoided shall not be
considered in making the calculation under subparagraph (A) with respect to other liens.
(C) This paragraph shall not apply with respect to a judgment arising out of a mortgage foreclo-
sure.
(3) In a case in which State law that is applicable to the debtor--
(A) permits a person to voluntarily waive a right to claim exemptions under subsection (d) or
prohibits a debtor from claiming exemptions under subsection (d); and
(B) either permits the debtor to claim exemptions under State law without limitation in amount,
except to the extent that the debtor has permitted the fixing of a consensual lien on any property or
prohibits avoidance of a consensual lien on property otherwise eligible to be claimed as exempt
property;
the debtor may not avoid the fixing of a lien on an interest of the debtor or a dependent of the
debtor in property if the lien is a nonpossessory, nonpurchase-money security interest in imple-
ments, professional books, or tools of the trade of the debtor or a dependent of the debtor or farm
animals or crops of the debtor or a dependent of the debtor to the extent the value of such imple-
ments, professional books, tools of the trade, animals, and crops exceeds $ 5,475.
(4)
(A) Subject to subparagraph (B), for purposes of paragraph (1)(B), the term "household goods"
means--
(i) clothing;
(ii) furniture;
(iii) appliances;
(iv) 1 radio;
(v) 1 television;
(vi) 1 VCR;
(vii) linens;
(viii) china;
(ix) crockery;
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(x) kitchenware;
(xi) educational materials and educational equipment primarily for the use of minor dependent
children of the debtor;
(xii) medical equipment and supplies;
(xiii) furniture exclusively for the use of minor children, or elderly or disabled dependents of
the debtor;
(xiv) personal effects (including the toys and hobby equipment of minor dependent children
and wedding rings) of the debtor and the dependents of the debtor; and
(xv) 1 personal computer and related equipment.
(B) The term "household goods" does not include--
(i) works of art (unless by or of the debtor, or any relative of the debtor);
(ii) electronic entertainment equipment with a fair market value of more than $ 550 in the ag-
gregate (except 1 television, 1 radio, and 1 VCR);
(iii) items acquired as antiques with a fair market value of more than $ 550 in the aggregate;
(iv) jewelry with a fair market value of more than $ 550 in the aggregate (except wedding
rings); and
(v) a computer (except as otherwise provided for in this section), motor vehicle (including a
tractor or lawn tractor), boat, or a motorized recreational device, conveyance, vehicle, watercraft, or
aircraft.
(g) Notwithstanding sections 550 and 551 of this title [11 USCS §§ 550 and 551], the debtor may
exempt under subsection (b) of this section property that the trustee recovers under section
510(c)(2), 542, 543, 550, 551, or 553 of this title [11 USCS § 510(c)(2), 542, 543, 550, 551, or 553],
to the extent that the debtor could have exempted such property under subsection (b) of this section
if such property had not been transferred, if--
(1)
(A) such transfer was not a voluntary transfer of such property by the debtor; and
(B) the debtor did not conceal such property; or
(2) The debtor could have avoided such transfer under subsection (f)(1)(B) of this section.
(h) The debtor may avoid a transfer of property of the debtor or recover a setoff to the extent that
the debtor could have exempted such property under subsection (g)(1) of this section if the trustee
had avoided such transfer, if--
(1) such transfer is avoidable by the trustee under section 544, 545, 547, 548, 549, or 724(a) of
this title [11 USCS § 544, 545, 547, 548, 549, or 724(a)] or recoverable by the trustee under section
553 of this title [11 USCS § 553]; and
(2) the trustee does not attempt to avoid such transfer.
(i) (1) If the debtor avoids a transfer or recovers a setoff under subsection (f) or (h) of this section,
the debtor may recover in the manner prescribed by, and subject to the limitations of, section 550 of
this title [11 USCS § 550], the same as if the trustee had avoided such transfer, and may exempt any
property so recovered under subsection (b) of this section.
(2) Notwithstanding section 551 of this title [11 USCS § 551], a transfer avoided under section
544, 545, 547, 548, 549, or 724(a) of this title [11 USCS § 544, 545, 547, 548, 549, or 724(a)], un-
der subsection (f) or (h) of this section, or property recovered under section 553 of this title [11
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USCS § 553], may be preserved for the benefit of the debtor to the extent that the debtor may ex-
empt such property under subsection (g) of this section or paragraph (1) of this subsection.
(j) Notwithstanding subsections (g) and (i) of this section, the debtor may exempt a particular kind
of property under subsections (g) and (i) of this section only to the extent that the debtor has ex-
empted less property in value of such kind than that to which the debtor is entitled under subsection
(b) of this section.
(k) Property that the debtor exempts under this section is not liable for payment of any administra-
tive expense except--
(1) the aliquot share of the costs and expenses of avoiding a transfer of property that the debtor
exempts under subsection (g) of this section, or of recovery of such property, that is attributable to
the value of the portion of such property exempted in relation to the value of the property recovered;
and
(2) any costs and expenses of avoiding a transfer under subsection (f) or (h) of this section, or of
recovery of property under subsection (i)(1) of this section, that the debtor has not paid.
(l) The debtor shall file a list of property that the debtor claims as exempt under subsection (b) of
this section. If the debtor does not file such a list, a dependent of the debtor may file such a list, or
may claim property as exempt from property of the estate on behalf of the debtor. Unless a party in
interest objects, the property claimed as exempt on such list is exempt.
(m) Subject to the limitation in subsection (b), this section shall apply separately with respect to
each debtor in a joint case.
(n) For assets in individual retirement accounts described in section 408 or 408A of the Internal
Revenue Code of 1986 [26 USCS § 408 or 408A], other than a simplified employee pension under
section 408(k) of such Code [26 USCS § 408(k)] or a simple retirement account under section
408(p) of such Code [26 USCS § 408(p)], the aggregate value of such assets exempted under this
section, without regard to amounts attributable to rollover contributions under section 402(c),
402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal Revenue Code of 1986 [26 USCS §
402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8)], and earnings thereon, shall not exceed $
1,095,000 in a case filed by a debtor who is an individual, except that such amount may be in-
creased if the interests of justice so require.
(o) For purposes of subsection (b)(3)(A), and notwithstanding subsection (a), the value of an inter-
est in--
(1) real or personal property that the debtor or a dependent of the debtor uses as a residence;
(2) a cooperative that owns property that the debtor or a dependent of the debtor uses as a resi-
dence;
(3) a burial plot for the debtor or a dependent of the debtor; or
(4) real or personal property that the debtor or a dependent of the debtor claims as a homestead;
shall be reduced to the extent that such value is attributable to any portion of any property that the
debtor disposed of in the 10-year period ending on the date of the filing of the petition with the in-
tent to hinder, delay, or defraud a creditor and that the debtor could not exempt, or that portion that
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the debtor could not exempt, under subsection (b), if on such date the debtor had held the property
so disposed of.
(p) (1) Except as provided in paragraph (2) of this subsection and sections 544 and 548 [11 USCS
§§ 544 and 548], as a result of electing under subsection (b)(3)(A) 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 $
136,875 in value in--
(A) real or personal property that the debtor or a dependent of the debtor uses as a residence;
(B) a cooperative that owns property that the debtor or a dependent of the debtor uses as a resi-
dence;
(C) a burial plot for the debtor or a dependent of the debtor; or
(D) real or personal property that the debtor or dependent of the debtor claims as a homestead.
(2)
(A) The limitation under paragraph (1) shall not apply to an exemption claimed under subsec-
tion (b)(3)(A) by a family farmer for the principal residence of such farmer.
(B) For purposes of paragraph (1), 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.
(q) (1) As a result of electing under subsection (b)(3)(A) to exempt property under State or local
law, a debtor may not exempt any amount of an interest in property described in subparagraphs (A),
(B), (C), and (D) of subsection (p)(1) which exceeds in the aggregate $ 136,875 if--
(A) the court determines, after notice and a hearing, that the debtor has been convicted of a fel-
ony (as defined in section 3156 of title 18 [18 USCS § 3156]), which under the circumstances, dem-
onstrates that the filing of the case was an abuse of the provisions of this title; or
(B) the debtor owes a debt arising from--
(i) any violation of the Federal securities laws (as defined in section 3(a)(47) of the Securities
Exchange Act of 1934 [15 USCS § 78c(a)(47)]), any State securities laws, or any regulation or or-
der issued under Federal securities laws or State securities laws;
(ii) fraud, deceit, or manipulation in a fiduciary capacity or in connection with the purchase or
sale of any security registered under section 12 or 15(d) of the Securities Exchange Act of 1934 [15
USCS § 78l or 78o(d)] or under section 6 of the Securities Act of 1933 [15 USCS § 77f];
(iii) any civil remedy under section 1964 of title 18; or
(iv) any criminal act, intentional tort, or willful or reckless misconduct that caused serious
physical injury or death to another individual in the preceding 5 years.
(2) Paragraph (1) shall not apply to the extent the amount of an interest in property described in
subparagraphs (A), (B), (C), and (D) of subsection (p)(1) is reasonably necessary for the support of
the debtor and any dependent of the debtor.
HISTORY:
(Nov. 6, 1978, P.L. 95-598, Title I, § 101, 92 Stat. 2586; July 10, 1984, P.L. 98-353, Title III,
Subtitle A, § 306, Subtitle H, § 453, 98 Stat. 353, 375; Oct. 27, 1986, P.L. 99-554, Title II, Subtitle
C, § 283(i), 100 Stat. 3117; Nov. 29, 1990, P.L. 101-647, Title XXV, Subtitle B, § 2522(b), 104
Stat. 4866; Oct. 22, 1994, P.L. 103-394, Title I, § 108(d), Title III, §§ 303, 304(d), 310, Title V, §
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501(d)(12), 108 Stat. 4112, 4132, 4133, 4137, 4145; Feb. 12, 1998, 63 Fed. Reg. 7179; Nov. 1,
2000, P.L. 106-420, § 4, 114 Stat. 1868; Feb. 20, 2001, 66 Fed. Reg. 10910.)
(As amended Feb. 24, 2004, 69 Fed. Reg. 8482; April 20, 2005, P.L. 109-8, Title II, Subtitle B, §
216, Subtitle C, § 224(a), (e)(1), Title III, §§ 307, 308, 313(a), 322(a), 119 Stat. 55, 62, 65, 81, 87,
96; Feb. 14, 2007, 72 Fed. Reg. 7082.)
HISTORY; ANCILLARY LAWS AND DIRECTIVES
Prior law and revision:

Legislative Statements
Section 522 of the House amendment represents a compromise on the issue of exemptions be-
tween the position taken in the House bill, and that taken in the Senate amendment. Dollar amounts
specified in section 522(d) of the House bill have been reduced from amounts as contained in H.R.
8200 as passed by the House. The States may, by passing a law, determine whether the Federal ex-
emptions will apply as an alternative to State exemptions in bankruptcy cases.
Section 522(c)(1) tracks the House bill and provides that dischargeable tax claims may not be col-
lected out of exempt property.
Section 522(f)(2) is derived from the Senate amendment restricting the debtor to avoidance of
nonpossessory, nonpurchase money security interests.
Exemptions: Section 522(c)(1) of the House amendment adopts a provision contained in the
House bill that dischargeable taxes cannot be collected from exempt assets. This changes present
law, which allows collection of dischargeable taxes from exempt property, a rule followed in the
Senate amendment. Nondischargeable taxes, however, will continue to the [be] collectable out of
exempt property. It is anticipated that in the next session Congress will review the exemptions from
levy currently contained in the Internal Revenue Code [title 26] with a view to increasing the ex-
emptions to more realistic levels.
Senate Report No. 95-989
Subsection (a) of this section defines two terms: "dependent" includes the debtor's spouse,
whether or not actually dependent; and "value" means fair market value as of the date of the filing
of the petition [see the 1984 amendment to subsec. (a)(2) of this section].
Subsection (b) tracks current law. It permits a debtor the exemptions to which he is entitled under
other Federal law and the law of the State of his domicile. Some of the items that may be exempted
under Federal laws other than title 11 include:
Foreign Service Retirement and Disability payments, 22 U.S.C. 1104 [replaced by 22 U.S.C.
4060(c)];
Social security payments, 42 U.S.C. 407;
Injury or death compensation payments from war risk hazards, 42 U.S.C. 1717;
Wages of fishermen, seamen, and apprentices, 46 U.S.C. 601 [Replaced by 46 U.S.C. 11108,
11109];
Civil service retirement benefits, 5 U.S.C. 729, 2265 [replaced by 5 U.S.C. 8346];
Longshoremen's and Harbor Workers' Compensation Act death and disability benefits, 33 U.S.C.
916;
Railroad Retirement Act annuities and pensions, 45 U.S.C. 228(L) [replaced by 45 U.S.C. 231m];
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11 USCS § 522
Veterans benefits, 45 U.S.C. 352(E) [Railroad unemployment benefits are covered by 45 U.S.C.
352(e)];
Special pensions paid to winners of the Congressional Medal of Honor, 38 U.S.C. 3101 [Veterans
benefits generally are covered by 38 U.S.C. 3101]; and
Federal homestead lands on debts contracted before issuance of the patent, 43 U.S.C. 175.
He may also exempt an interest in property in which the debtor had an interest as a tenant by the
entirety or joint tenant to the extent that interest would have been exempt from process under appli-
cable nonbankruptcy law.
Under proposed section 541, all property of the debtor becomes property of the estate, but the
debtor is permitted to exempt certain property from property of the estate under this section. Prop-
erty may be exempted even if it is subject to a lien, but only the unencumbered portion of the prop-
erty is to be counted in computing the "value" of the property for the purposes of exemption.
As under current law, the debtor will be permitted to convert nonexempt property into exempt
property before filing a bankruptcy petition. The practice is not fraudulent as to creditors, and per-
mits the debtor to make full use of the exemptions to which he is entitled under the law.
Subsection (c) insulates exempt property from prepetition claims other than tax claims (whether
or not dischargeable), and other than alimony, maintenance, or support claims that are excepted
from discharge. The bankruptcy discharge does not prevent enforcement of valid liens. The rule of
Long v. Bullard, 117 U.S. 617 (1886), is accepted with respect to the enforcement of valid liens on
nonexempt property as well as on exempt property. Cf. Louisville Joint Stock Land Bank v. Rad-
ford, 295 U.S. 555, 583 (1935).
Subsection (c)(3) [probably a reference to subsec (c)(2) of this section] permits the collection of
dischargeable taxes from exempt assets. Only assets exempted from levy under Section 6334 of the
Internal Revenue Code [title 26] or under applicable state or local tax law cannot be applied to sat-
isfy these tax claims. This rule applies to prepetition tax claims against the debtor regardless of
whether the claims do or do not receive priority and whether they are dischargeable or nondis-
chargeable. Thus, even if a tax is dischargeable vis-a-vis the debtor's after-acquired assets, it may
nevertheless be collectible from exempt property held by the estate. (Taxes incurred by the debtor's
estate which are collectible as first priority administrative expenses are not collectible from the
debtor's estate which are collectible as first priority administrative expenses are not collectible from
the debtor's exempt assets.)
Subsection (d) [subsec. (e) of this section] protects the debtor's exemptions, either Federal or
State, by making unenforceable in a bankruptcy case a waiver of exemptions or a waiver of the
debtor's avoiding powers under the following subsections.
Subsection (e) [subsec. (f) of this section] protects the debtor's exemptions, his discharge, and thus
his fresh start by permitting him to avoid certain liens on exempt property. The debtor may avoid a
judicial lien on any property to the extent that the property could have been exempted in the absence
of the lien, and may similarly avoid a nonpurchase-money security interest in certain household and
personal goods. The avoiding power is independent of any waiver of exemptions.
Subsection (f) [subsec. (g) of this section] gives the debtor the ability to exempt property that the
trustee recovers under one of the trustee's avoiding powers if the property was involuntarily trans-
ferred away from the debtor (such as by the fixing of a judicial lien) and if the debtor did not con-
ceal the property. The debtor is also permitted to exempt property that the trustee recovers as the
result of the avoiding of the fixing of certain security interests to the extent that the debtor could
otherwise have exempted the property.
Page 11
11 USCS § 522
Subsection (g) [subsec. (h) of this section] provides that if the trustee does not exercise an avoid-
ing power to recover a transfer of property that would be exempt, the debtor may exercise it and ex-
empt the property, if the transfer was involuntary and the debtor did not conceal the property. If the
debtor wishes to preserve his right to pursue any action under this provision, then he must intervene
in any action brought by the trustee based on the same cause of action. It is not intended that the
debtor be given an additional opportunity to avoid a transfer or that the transferee should have to
defend the same action twice. Rather, the section is primarily designed to give the debtor the rights
the trustee could have, but has not, pursued. The debtor is given no greater rights under this provi-
sion than the trustee, and thus, the debtor's avoiding powers under proposed sections 544, 545, 547,
and 548, are subject to proposed 546, as are the trustee's powers.
These subsections are cumulative. The debtor is not required to choose which he will use to gain
an exemption. Instead, he may use more than one in any particular instance, just as the trustee's
avoiding powers are cumulative.
Subsection (h) [subsec. (i) of this section] permits recovery by the debtor of property transferred
by an avoided transfer from either the initial or subsequent transferees. It also permits preserving a
transfer for the benefit of the debtor. In either event, the debtor may exempt the property recovered
or preserved.
Subsection (i) [subsec. (j) of this section] makes clear that the debtor may exempt property under
the avoiding subsections (f) and (h) only to the extent he has exempted less property than allowed
under subsection (b).
Subsection (j) [subsec. (k) of this section] makes clear that the liability of the debtor's exempt
property is limited to the debtor's aliquot share of the costs and expenses recovery of property that
the trustee recovers and the debtor later exempts, and any costs and expenses of avoiding a transfer
by the debtor that the debtor has not already paid.
Subsection (k) [subsec. (l) of this section] requires the debtor to file a list of property that he
claims as exempt from property of the estate. Absent an objection to the list, the property is ex-
empted. A dependent of the debtor may file it and thus be protected if the debtor fails to file the list.
Subsection (l) [subsec. (m) of this section] provides the rule for a joint case.
House Report No. 95-595
Subsection (a) of this section defines two terms: "dependent" includes the debtor's spouse,
whether or not actually dependent; and "value" means fair market value as of the date of the filing
of the petition.
Subsection (b), the operative subsection of this section, is a significant departure from present
law. It permits an individual debtor in a bankruptcy case a choice between exemption systems. The
debtor may choose the Federal exemptions prescribed in subsection (d), or he may choose the ex-
emptions to which he is entitled under other Federal law and the law of the State of his domicile. If
the debtor chooses the latter, some of the items that may be exempted under other Federal laws in-
clude:
--Foreign Service Retirement and Disability payments, 22 U.S.C. 1104 [replaced by 22 U.S.C.
4060(c)];
--Social security payments, 42 U.S.C. 407;
--Injury or death compensation payments from war risk hazards, 42 U.S.C. 1717;
--Wages of fishermen, seamen, and apprentices, 46 U.S.C. 601 [Replaced by 46 U.S.C. 11108,
11109];
--Civil service retirement benefits, 5 U.S.C. 729, 2265 [replaced by 5 U.S.C. 8346];
Page 12
11 USCS § 522
--Longshoremen's and Harbor Workers' Compensation Act death and disability benefits, 33
U.S.C. 916;
--Railroad Retirement Act annuities and pensions, 45 U.S.C. 228(l) [replaced by 45 U.S.C. 231m];
--Veterans benefits, 45 U.S.C. 352(E) [railroad unemployment benefits are covered by 45 U.S.C.
352(e)];
--Special pensions paid to winners of the Congressional Medal of Honor, 38 U.S.C. 3101 [veter-
ans benefits generally are covered by 38 U.S.C. 3101]; and
--Federal homestead lands on debts contracted before issuance of the patent, 43 U.S.C. 175.
He may also exempt an interest in property in which the debtor had an interest as a tenant by the
entirety or joint tenant to the extent that interest would have been exempt from process under appli-
cable nonbankruptcy law. The Rules will provide for the situation where the debtor's choice of ex-
emption, Federal or State, was improvident and should be changed, for example, where the court
has ruled against the debtor with respect to a major exemption.
Under proposed 11 U.S.C. 541, all property of the debtor becomes property of the estate, but the
debtor is permitted to exempt certain property from property of the estate under this section. Prop-
erty may be exempted even if it is subject to a lien, but only the unencumbered portion of the prop-
erty is to be counted in computing the "value" of the property for the purposes of exemption. Thus,
for example, a residence worth $ 30,000 with a mortgage of $ 25,000 will be exemptable to the ex-
tent of $ 5,000. This follows current law. The remaining value of the property will be dealt with in
the bankruptcy case as is any interest in property that is subject to a lien.
As under current law, the debtor will be permitted to convert nonexempt property into exempt
property before filing a bankruptcy petition. See Hearings, pt. 3, at 1355-58. The practice is not
fraudulent as to creditors and permits the debtor to make full use of the exemptions to which he is
entitled under the law.
Subsection (c) insulates exempt property from prepetition claims, except tax and alimony, main-
tenance, or support claims that are excepted from discharge. The bankruptcy discharge will not pre-
vent enforcement of valid liens. The rule of Long v. Bullard, 117 U.S. 617 (1886) [6 S.Ct. 917, 29
L.Ed. 1004], is accepted with respect to the enforcement of valid liens on nonexempt property as
well as on exempt property. Cf. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 583
(1935) [55 S.Ct. 854].
Subsection (d) specifies the Federal exemptions to which the debtor is entitled. They are derived
in large part from the Uniform Exemptions Act, promulgated by the Commissioners of Uniform
State Laws in August, 1976. Eleven categories of property are exempted. First is a homestead to the
extent of $ 10,000 [now $ 18,450], which may be claimed in real or personal property that the
debtor or a dependent of the debtor uses as a residence. Second, the debtor may exempt a motor ve-
hicle to the extent of $ 1500 [now $ 2,950]. Third, the debtor may exempt household goods, furnish-
ings, clothing, and similar household items, held primarily for the personal, family, or household
use of the debtor or a dependent of the debtor. "Animals" includes all animals, such as pets, live-
stock, poultry, and fish, if they are held primarily for personal, family or household use. The limita-
tion for third category items is $ 300 [now $ 475] on any particular item. The debtor may also ex-
empt up to $ 750 [now $ 1,225] of personal jewelry.
Paragraph (5) permits the exemption of $ 500 [now $ 975], plus [up to $ 9,250 of] any unused
amount of the homestead exemption, in any property, in order not to discriminate against the non-
homeowner. Paragraph (6) grants the debtor up to $ 1000 [now $ 1,850] in implements, professional
books, or tools, of the trade of the debtor or a dependent. Paragraph (7) exempts a life insurance
contract, other than a credit life insurance contract, owned by the debtor. This paragraph refers to
Page 13
11 USCS § 522
the life insurance contract itself. It does not encompass any other rights under the contract, such as
the right to borrow out the loan value. Because of this provision, the trustee may not surrender a life
insurance contract, which remains property of the debtor if he chooses the Federal exemptions.
Paragraph (8) permits the debtor to exempt up to $ 5000 [now $ 9,850] in loan value in a life insur-
ance policy owned by the debtor under which the debtor or an individual of whom the debtor is a
dependent is the insured. The exemption provided by this paragraph and paragraph (7) will also in-
clude the debtor's rights in a group insurance certificate under which the insured is an individual of
whom the debtor is a dependent (assuming the debtor has rights in the policy that could be ex-
empted) or the debtor. A trustee is authorized to collect the entire loan value on every life insurance
policy owned by the debtor as property of the estate. First, however, the debtor will choose which
policy or policies under which the loan value will be exempted. The $ 5000 figure [now $ 4000] is
reduced by the amount of any automatic premium loan authorized after the date of the filing of the
petition under section 542(d). Paragraph (9) exempts professionally prescribed health aids.
Paragraph (10) exempts certain benefits that are akin to future earnings of the debtor. These in-
clude social security, unemployment compensation, or public assistance benefits, veteran's benefits,
disability, illness, or unemployment benefits, alimony, support, or separate maintenance (but only to
the extent reasonably necessary for the support of the debtor and any dependents of the debtor), and
benefits under a certain stock bonus, pension, profitsharing, annuity or similar plan based on illness,
disability, death, age or length of service. Paragraph (11) allows the debtor to exempt certain com-
pensation for losses. These include crime victim's reparation benefits, wrongful death benefits (with
a reasonably necessary for support limitation), life insurance proceeds (same limitation), compensa-
tion for bodily injury, not including pain and suffering ($ 10,000 limitation [now $ 7,500]), and loss
of future earnings payments (support limitation). This provision in subparagraph (D)(11) is de-
signed to cover payments in compensation of actual bodily injury, such as the loss of a limb, and is
not intended to include the attendant costs that accompany such a loss, such as medical payments,
pain and suffering, or loss of earnings. Those items are handled separately by the bill.
Subsection (e) protects the debtor's exemptions, either Federal or State, by making unenforceable
in a bankruptcy case a waiver of exemptions or a waiver of the debtor's avoiding powers under the
following subsections.
Subsection (f) protects the debtor's exemptions, his discharge, and thus his fresh start by permit-
ting him to avoid certain liens on exempt property. The debtor may avoid a judicial lien on any
property to the extent that the property could have been exempted in the absence of the lien, and
may similarly avoid a nonpurchase-money security interest in certain household and personal
goods. The avoiding power is independent of any waiver of exemptions.
Subsection (g) gives the debtor the ability to exempt property that the trustee recovers under one
of the trustee's avoiding powers if the property was involuntarily transferred away from the debtor
(such as by the fixing of a judicial lien) and if the debtor did not conceal the property. The debtor is
also permitted to exempt property that the trustee recovers as the result of the avoiding of the fixing
of certain security interests to the extent that the debtor could otherwise have exempted the prop-
erty.
If the trustee does not pursue an avoiding power to recover a transfer of property that would be
exempt, the debtor may pursue it and exempt the property, if the transfer was involuntary and the
debtor did not conceal the property. If the debtor wishes to preserve his right to pursue an action
under this provision, then he must intervene in any action brought by the trustee based on the same
cause of action. It is not intended that the debtor be given an additional opportunity to avoid a trans-
fer or that the transferee have to defend the same action twice. Rather, the section is primarily de-
Page 14
11 USCS § 522
signed to give the debtor the rights the trustee could have pursued if the trustee chooses not to pur-
sue them. The debtor is given no greater rights under this provision than the trustee, and thus the
debtor's avoiding powers under proposed 11 U.S.C. 544, 545, 547, and 548, are subject to proposed
11 U.S.C. 546, as are the trustee's powers.
These subsections are cumulative. The debtor is not required to choose which he will use to gain
an exemption. Instead, he may use more than one in any particular instance, just as the trustee's
avoiding powers are cumulative.
Subsection (i) permits recovery by the debtor of property transferred in an avoided transfer from
either the initial or subsequent transferees. It also permits preserving a transfer for the benefit of the
debtor. Under either case the debtor may exempt the property recovered or preserved.
Subsection (k) makes clear that the debtor's aliquot share of the costs and expenses [for] recovery
of property that the trustee recovers and the debtor later exempts, and any costs and expenses of
avoiding a transfer by the debtor that the debtor has not already paid.
Subsection (l) requires the debtor to file a list of property that he claims as exempt from property
of the estate. Absent an objection to the list, the property is exempted. A dependent of the debtor
may file it and thus be protected if the debtor fails to file the list.
Subsection (m) [this subsec. does not exist; as to subsec. (m), see below] requires the clerk of the
bankruptcy court to give notice of any exemptions claimed under subsection (l), in order that parties
in interest may have an opportunity to object to the claim.
Subsection (n) [subsec. (m) of this section] provides the rule for a joint case: each debtor is enti-
tled to the Federal exemptions provided under this section or to the State exemptions, whichever the
debtor chooses.
Effective date of section:

This section became effective on October 1, 1979, pursuant to § 402(a) of Act Nov. 6, 1978, P.L.
95-598, which appears as a note preceding 11 USCS § 101.
Amendments:
1984. Act July 10, 1984 (applicable to cases filed 90 days after enactment as provided by § 522(a)
of such Act, which appears as 11 USCS § 101 note), in subsec. (a), in para. (2), inserted "or, with
respect to property that becomes property of the estate after such date, as of the date such property
becomes property of the estate"; in subsec. (b), substituted the introductory matter for one which
read: "Notwithstanding section 541 of this title, an individual debtor may exempt from property of
the estate either--"; and substituted subsec. (c) for one which read:
"(c) Unless the case is dismissed, property exempted under this section is not liable during or after
the case for any debt of the debtor that arose, or that is determined under section 502 of this title as
if such claim had arisen before the commencement of the case, except--
"(1) a debt of a kind specified in section 523(a)(1) or section 523(a)(5) of this title; or
"(2) a lien that is--
"(A) not avoided under section 544, 545, 547, 548, 549, or 724(a) of this title;
Page 15
11 USCS § 522
"(B) not voided under section 506(d) of this title; or

"(C)
(i) a tax lien, notice of which is properly filed; and
"(ii) avoided under section 545(2) of this title.".
Such Act further (effective as above), in subsec. (d), in para. (3), inserted "or $ 4,000 in aggregate
value" and substituted para. (5) for one which read: "The debtor's aggregate interest, not to exceed
in value $ 400 plus any unused amount of the exemption provided under paragraph (1) of this sub-
section, in any property."; in subsec. (e), substituted "an exemption" for "exemptions"; and substi-
tuted subsec. (m) for one which read: "This section shall apply separately with respect to each
debtor in a joint case.".
1986. Act Oct. 27, 1986 (effective 30 days after enactment on 10/27/86, and applicable as provided
by § 302 of such Act, which appears as 28 USCS § 581 note), in subsec. (h)(1), substituted "title"
for "tittle" following "section 553 of this"; and in subsec. (i)(2), substituted "this" for "his" follow-
ing "subsection (g) of".
1990. Act Nov. 29, 1990, in subsec. (c), in para. (1), deleted "or" following the semicolon, in para.
(2)(B), substituted "; or" for the concluding period, and added para. (3).
1994. Act Oct. 22, 1994 (effective on enactment and inapplicable with respect to cases commenced
prior to enactment, as provided by § 702 of such Act, which appears as 11 USCS § 101 note), in
subsec. (b), substituted "Federal Rules of Bankruptcy Procedure" for "Bankruptcy Rules"; in sub-
sec. (d), in para. (1), substituted "$ 15,000" for "$ 7,500", in para. (2), substituted "$ 2,400" for "$
1,200", in para. (3), substituted "$ 400" for "$ 200", and "$ 8,000" for "$ 4,000", in para. (4), substi-
tuted "$ 1,000" for "$ 500", in para. (5), substituted "$ 800" for "$ 400", and "$ 7,500" for "$
3,750", in para. (6), substituted "$ 1,500" for "$ 750", in para. (8), substituted "$ 8,000" for "$
4,000", in para. (10)(E)(iii), substituted "or 408" for "408, or 409" and substituted "Internal Revenue
Code of 1986" for "Internal Revenue Code of 1954 (26 U.S.C. 401(a), 403(a), 403(b), 408, or
409)", and in para. (11)(D), substituted "$ 15,000" for "$ 7,500"; and in subsec. (f), in para. (2), re-
designated subparas. (A)-(C) as cls. (i)-(iii), respectively, redesignated paras. (1) and (2) as sub-
paras. (A) and (B), respectively, redesignated the introductory matter as para. (1), added a new para.
(2), in para. (1), in the introductory matter, as so redesignated, inserted "but subject to paragraph
(3)", in para. (1)(A), inserted ", other than a judicial lien that secures a debt--" and cls. (i) and (ii),
and added para. (3).
1998. Effective April 1, 1998, and applicable to cases commenced on or after such date, as provided
by 11 USCS § 104(b), the dollar amounts in subsec. (d) were automatically adjusted by substituting
"$ 16,150" for "$ 15,000" in para. (1), by substituting "$ 2,575" for "$ 2,400" in para. (2), by substi-
tuting "$ 425" for "$ 400" and "$ 8,625" for "$ 8,000" in para. (3), by substituting "$ 1,075" for "$
1,000" in para. (4), by substituting "$ 850" for "$ 800" and "$ 8,075" for "$ 7,500" in para. (5), by
substituting "$ 1,625" for "$ 1,500" in para. (6), by substituting "$ 8,625" for "$ 8,000" in para. (8),
and by substituting "$ 16,150" for "$ 15,000" in para. (11)(D).
Page 16
11 USCS § 522
2000. Act Nov. 1, 2000, in subsec. (c), in para. (2)(B), deleted "or" following the concluding semi-
colon; in para. (3), substituted "; or" for a concluding period, and added para. (4).
2005. Act April 20, 2005 (effective 180 days after enactment and inapplicable to cases commenced
before the effective date, as provided by § 1501 of such Act, which appears as 11 USCS § 101
note), in subsec. (b), inserted the paragraph designator "(1)" preceding "Notwithstanding" and, in
such paragraph as so designated, substituted "paragraph (3)" for "paragraph (2)" wherever appear-
ing, substituted "paragraph (2)" for "paragraph (1)" wherever appearing, and deleted "Such property
is--" following "where the case is filed.", redesignated former paras. (1) and (2) as paras. (2) and
(3), respectively, and, in para. (2) as redesignated, substituted the text for text which read: "property
that is specified under subsection (d) of this section, unless the State law that is applicable to the
debtor under paragraph (2)(A) of this subsection specifically does not so authorize; or, in the alter-
native,", in para. (3) as redesignated, substituted "Property listed in this paragraph is--
"(A) Any property"
for "(A) any property" and, in subpara. (A), substituted "730 days" for "180 days", substituted "or
if the debtor's domicile has not been located at a single State for such 730-day period, the place in
which the debtor's domicile was located for 180 days immediately preceding the 730-day period or
for a longer portion of such 180-day period than in any other place" for ", or for a longer portion of
such 180-day period than in any other place", and deleted "and" following the concluding semico-
lon, in subpara. (B), substituted "; and" for a concluding period, added subpara. (C), and added the
concluding matter, and added para. (4); in subsec. (c), substituted para. (1) for one which read: "(1)
a debt of a kind specified in section 523(a)(1) or 523(a)(5) of this title;"; in subsec. (d), in the intro-
ductory matter, substituted "subsection (b)(2)" for "subsection (b)(1)", and added para. (12); in sub-
sec. (f), in para. (1)(A), substituted "of a kind that is specified in section 523(a)(5); or" for a dash
and cls. (i) and (ii), which read:
Page 17
11 USCS § 522
"(i) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or sup-
port of such spouse or child, in connection with a separation agreement, divorce decree or other or-
der of a court of record, determination made in accordance with State or territorial law by a gov-
ernmental unit, or property settlement agreement; and
"(ii) to the extent that such debt--
"(I) is not assigned to another entity, voluntarily, by operation of law, or otherwise; and
"(II) includes a liability designated as alimony, maintenance, or support, unless such liability
is actually in the nature of alimony, maintenance or support;",
and added para. (4); in subsec. (g)(2), substituted "subsection (f)(1)(B)" for "subsection (f)(2)";
and added subsec. (n).
Such Act further (applicable to cases commenced under Title 11, USCS, on or after the date of
enactment, as provided by § 1501(b)(2) of such Act, which appears as 11 USCS § 101 note), in sub-
sec. (b)(3)(A), inserted "subject to subsections (o) and (p); added subsecs. (o)-(q).
by 11 USCS § 104(b), the dollar amounts in this section were automatically adjusted, in subsec. (d),
by substituting "$ 20,200" for "$ 18,450" in para. (1), by substituting "$ 3,225" for "$ 2,950" in
para. (2), by substituting "$ 525" for "$ 475" and "$ 10,775" for "$ 9,850" in para. (3), by substitut-
ing "$ 1,350" for "$ 1,225" in para. (4), by substituting "$ 1,075" for "$ 975" and "$ 10,125" for "$
9,250" in para. (5), by substituting "$ 2,025" for "$ 1,850" in para. (6), by substituting "$ 10,775"
for "$ 9,850" in para. (8), and by substituting "$ 20,200" for "$ 18,450" in para. (11)(D); in subsec.
(f), by substituting "$ 5,475" for "$ 5,000" in para. (3), and by substituting "$ 550" for "$ 500"
wherever appearing in para. (4); in subsec. (n), by substituting "$ 1,095,000" for "$ 1,000,000"; and
in subsecs. (p) and (q), by substituting "$ 136,875" for "$ 125,000".
NOTES:
Related Statutes & Rules:

Allowance of claims or interests, 11 USCS § 502.
Administrative expenses payable out of nonexempt estate, 11 USCS § 503.
Exception to discharge for tax or customs duty, 11 USCS § 523(a)(1).
Exception to discharge for alimony or support obligations, 11 USCS § 523(a)(5).
Property of the estate, 11 USCS § 541.
Automatic transfer in good faith under life insurance contract, 11 USCS § 542(d).
Trustee as lien creditor and successor to certain creditors and purchasers, 11 USCS § 544.
Treatment of statutory liens, 11 USCS § 545.
Avoidance of preferences, 11 USCS § 547.
Avoidance of fraudulent transfers and obligations, 11 USCS § 548.
Avoidance of certain postpetition transactions, 11 USCS § 549.
Liability of transferee of avoided transfer, 11 USCS § 550.
Automatic preservation of avoided transfer, 11 USCS § 551.
Setoff, 11 USCS § 553.
Treatment of liens not avoided under other sections, 11 USCS § 724.
Denial of discharge for debtor's failure to perform duties, 11 USCS § 727.
Exemptions, USCS Federal Rules of Bankruptcy Procedure, Rule 4003.
Page 18
11 USCS § 522
This section is referred to in 11 USCS §§ 101, 104, 106, 110, 349, 502, 542, 551, 552, 722, 1123;
26 USCS §§ 1017, 1398; 28 USCS § 3014; 29 USCS § 1405.
Research Guide:
Federal Procedure:
29 Moore's Federal Practice (Matthew Bender 3d ed.), ch 705, Admiralty Arrest and Attachment §
705.07.
5 Fed Proc L Ed, Bankruptcy §§ 9:259, 301, 329, 535, 549, 550, 685.
5A Fed Proc L Ed, Bankruptcy §§ 9:851, 853, 854, 858, 860-864, 866, 867, 871, 873, 880-882,
884, 886, 889-908, 910-922, 936, 937, 957, 959, 1046, 1047, 1222, 1251, 1252, 1408, 1448, 1494,
1502, 1509, 1512.
11 Fed Proc L Ed, Enforcement of Judgments § 31:82.
Am Jur:
9 Am Jur 2d, Bankruptcy §§ 1, 15, 34, 114, 134-136, 140, 145, 294, 565, 614, 681.
9A Am Jur 2d, Bankruptcy §§ 935, 948, 949, 1080, 1250, 1251, 1261, 1269, 1285, 1303, 1334,
1395-1398, 1400, 1403, 1404, 1407, 1410, 1412-1418, 1420, 1421, 1425, 1427, 1430, 1435, 1437,
1438, 1440, 1446-1449, 1452-1454, 1456, 1458, 1462, 1463, 1465, 1467-1470, 1472, 1479, 1480,
1482-1501, 1503-1507; 1509, 1511-1521, 1523, 1526, 1528, 1530-1532, 1534, 1536, 1539, 1540,
1542, 1543, 1545-1548, 1551-1553, 1557, 1561, 1562, 1586, 1588, 1593.
9B Am Jur 2d, Bankruptcy §§ 1674, 1701, 1702, 1994, 1996, 2004, 2028, 2100, 2171, 2175.
9C Am Jur 2d, Bankruptcy §§ 2218, 2262, 2267, 2324, 2325, 2591, 2649, 2658, 2677, 2792, 2796,
2817, 2827, 2832.
9D Am Jur 2d, Bankruptcy §§ 3008, 3254, 3322, 3529, 3533, 3549, 3562.
9E Am Jur 2d, Bankruptcy §§ 3761-3764.
31 Am Jur 2d, Exemptions § 5.
60A Am Jur 2d, Pensions and Retirement Funds § 737.
Am Jur Trials:
105 Am Jur Trials, Arbitration and Mediation of Bankruptcy Disputes, p. 125.
Am Jur Proof of Facts:

104 Am Jur Proof of Facts 3d, Proof Under the Fair Debt Collection Practices Act, p. 1.
107 Am Jur Proof of Facts 3d, Proof of Contempt for Violation of Bankruptcy Discharge Injunc-
tion (11 U.S.C.A. § 524(a)(2) [11 USCS § 524(a)(2)]) by Individual Debtor, p. 97.
Page 19
11 USCS § 522
Forms:
3 Bender's Federal Practice Forms, Form 8(IX):122, Federal Rules of Civil Procedure.
14 Bender's Federal Practice Forms, Forms 4575, 4576, Admiralty--Bankruptcy Forms.
5 Collier Forms Manual (3d ed. rev), Forms CS14.12, Discharge.
5 Collier Forms Manual (3d ed. rev), Forms CS15.04, Discrimination.
5 Collier Forms Manual (3d ed. rev), Forms CS17.02, CS17.03, CS17.13-CS17.15, CS17.22-
CS17.26, CS17.32, CS17.33, Exemptions and Lien Avoidance.
4A Fed Procedural Forms L Ed, Bankruptcy (2004) §§ 9:796-807.
4A Am Jur Pl & Pr Forms (2004), Bankruptcy, §§ 134, 135, 295, 296, 298, 302-306.
10A Am Jur Pl & Pr Forms (2005), Exemptions, §§ 24-26.
Commercial Law:
1 Debtor-Creditor Law (Matthew Bender), ch 8, Fair Debt Collection § 8.07.
1 Debtor-Creditor Law (Matthew Bender), ch 9, Garnishment and Exemptions § 9.09.
1 Debtor-Creditor Law (Matthew Bender), ch 10, Repossessions § 10.02.
1 Debtor-Creditor Law (Matthew Bender), ch 13, Foreclosure Defense §§ 13.13, 13.14.
2B Debtor-Creditor Law (Matthew Bender), ch 24, Secured Transactions §§ 24.06, 24.09.
3 Debtor-Creditor Law (Matthew Bender), ch 27, Enforcements of Money Judgments: Objectives
and Restrictions § 27.03.
3 Debtor-Creditor Law (Matthew Bender), ch 31, Income Garnishment § 31.06.
3A Debtor-Creditor Law (Matthew Bender), ch 33, Bankruptcy Law § 33.05.
3A Debtor-Creditor Law (Matthew Bender), ch 34, Consumer Bankruptcy §§ 34.10, 34.11, 34.14.
3B Debtor-Creditor Law (Matthew Bender), ch 35, Assignments for the Benefit of Creditors §
35.07.
4 Debtor-Creditor Law (Matthew Bender), ch 39, Spendthrift Trusts and Their Functional Substi-
tutes § 39.04.
Bankruptcy:
1 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1, Overview of Bankruptcy Law PP
1.02, 1.03.
1 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 3, Jurisdiction and Powers of District
Courts and Bankruptcy Courts P 3.01.
1 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 4, Venue of Cases and Proceedings P
4.02.
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 101, Definitions PP 101.32, 101.36,
101.53.
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 104, Adjustment of Dollar Amounts
PP 104.01, 104.03.
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 105, Power of Court P 105.04.
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 109, Who May Be a Debtor P 109.02.
Page 20
11 USCS § 522
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 110, Bankruptcy Petition Preparers P
110.LH.
2 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 302, Joint Cases PP 302.05, 302.07.
3 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 348, Effect of Conversion P 348.07.
3 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 362, Automatic Stay PP 362.03,
362.05, 362.06, 362.LH.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 502, Allowance of Claims or Interests
PP 502.03, 502.05, 502.06, 502.09, 502.LH.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 506, Determination of Secured Status
P 506.03.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 521, Debtor's Duties PP 521.04,
521.10.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 522, Exemptions PP 522.01 et seq.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 523, Exceptions to Discharge PP
523.07, 523.11.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 524, Effect of Discharge PP 524.02,
524.03.
4 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 527, Disclosures P 527.04.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 541, Property of the Estate PP 541.04,
541.05, 541.07, 541.10, 541.11, 541.16, 541.22C.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 546, Limitations on Avoiding Powers
P 546.02.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 547, Preferences PP 547.03, 547.04.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 550, Liability of Transferee of
Avoided Transfer P 550.01.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 551, Automatic Preservation of
Avoided Transfer P 551.01.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 553, Setoff P 553.03.
5 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 554, Abandonment of Property of the
Estate P 554.02.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 700, General Analysis of Chapter 7 P
700.04.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 704, Duties of Trustee P 704.02.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 722, Redemption P 722.02.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 724, Treatment of Certain Liens P
724.02.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 726, Distribution of Property of the
Estate P 726.03.
6 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 727, Discharge P 727.02.
7 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1107, Rights, Powers and Duties of
Debtor in Possession P 1107.02.
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1141, Effect of Confirmation P
1141.05.
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1300, General Analysis of Chapter 13
PP 1300.12, 1300.68, 1300.81, 1300.93, 1300.94, 1300.LH.
Page 21
11 USCS § 522
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1303, Rights and Powers of Debtors P
1303.04.
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1322, Contents of Plan PP 1322.06,
1322.14, 1322.19.
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1325, Confirmation of Plan PP
1325.05, 1325.06, 1325.08.
8 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1328, Discharge P 1328.09.
9 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1007, Lists, Schedules and State-
ments; Time Limits PP 1007.03, 1007.11.
9 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1015, Consolidation or Joint Admini-
stration of Cases Pending in Same Court PP 1015.04, 1015.RH.
9 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 1019, Conversion of a Chapter 11 Re-
organization Case, Chapter 12 Family Farmer's Debt Adjustment Case, or Chapter 13 Individual's
Debt Adjustment Case to a Chapter 7 Liquidation Case P 1019.10.
9 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 4003, Exemptions PP 4003.02-
4003.05, 4003.RH.
9 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 4004, Grant or Denial of Discharge P
4004.05.
10 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 7001, Scope of Rules of Part VII P
7001.03.
10 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 7008, General Rules of Pleading P
7008.07.
10 Collier on Bankruptcy (Matthew Bender 15th ed. rev), ch 7017, Parties Plaintiff and Defen-
dant; Capacity; Public Officers P 7017.03.
1 Collier Bankruptcy Practice Guide, ch 1, Initial Client Contact PP 1.03, 1.04, 1.09, 1.50.
1 Collier Bankruptcy Practice Guide, ch 4, Issues for Consideration Prior to Filing P 4.03.
1 Collier Bankruptcy Practice Guide, ch 15, Preparation of Lists, Schedules and Statements PP
15.03, 15.04.
1 Collier Bankruptcy Practice Guide, ch 17, Venue P 17.03.
1 Collier Bankruptcy Practice Guide, ch 18, Consolidation and Joint Administration P 18.07.
2 Collier Bankruptcy Practice Guide, ch 26, Duties of a Chapter 7 Trustee P 26.03.
2 Collier Bankruptcy Practice Guide, ch 36, Examinations PP 36.51, 36.53.
2 Collier Bankruptcy Practice Guide, ch 37, Conversion and Dismissal PP 37.03, 37.06, 37.10,
37.17.
3 Collier Bankruptcy Practice Guide, ch 53, Validity of Liens PP 53.01, 53.03.
3 Collier Bankruptcy Practice Guide, ch 62, Turnover of Property P 62.12.
4 Collier Bankruptcy Practice Guide, ch 64, Preferences P 64.02.
4 Collier Bankruptcy Practice Guide, ch 66, Setoffs P 66.07.
4 Collier Bankruptcy Practice Guide, ch 74, Exemptions PP 74.01-74.04, 74.06, 74.08-74.12,
74.14, 74.50, 74.52-74.54, 74.59, 74.61-74.67.
4 Collier Bankruptcy Practice Guide, ch 75, Discharge and Objections to Discharge PP 75.02,
75.26.
6 Collier Bankruptcy Practice Guide, ch 93, Taxes P 93.05.
6 Collier Bankruptcy Practice Guide, ch 100, Adjustment of Debts of a Family Farmer or Fisher-
man with Regular Annual Income P 100.61.
Page 22
11 USCS § 522
6 Collier Bankruptcy Practice Guide, ch 101, Administration of the Chapter 13 Case and the
Chapter 13 Plan (Appointment and Qualification of Chapter 13 Trustee; Duties of Chapter 13 Trus-
tee; Proposal of Plan; Objections to Plan; Confirmation of Plan; Payout Under Plan; Discharge and
Objections To Discharge) PP 101.06, 101.08, 101.09, 101.64B.
6 Collier Bankruptcy Practice Guide, ch 123, Post-Closing (Chapter 7) and Postconfirmation
(Chapter 11) Problems PP 123.01, 123.05, 123.62a.
1 Collier Bankruptcy Manual, ch 1, Overview of Bankruptcy Law PP 1.02, 1.03.
1 Collier Bankruptcy Manual, ch 3, Jurisdiction and Powers of District Courts and Bankruptcy
Courts P 3.01.
1 Collier Bankruptcy Manual, ch 4, Venue of Cases and Proceedings P 4.02.
1 Collier Bankruptcy Manual, ch 101, Definitions PP 101.32, 101.36, 101.53.
1 Collier Bankruptcy Manual, ch 104, Adjustment of Dollar Amounts PP 104.01, 104.03.
1 Collier Bankruptcy Manual, ch 109, Who May Be a Debtor P 109.02.
1 Collier Bankruptcy Manual, ch 302, Joint Cases PP 302.05, 302.07.
1 Collier Bankruptcy Manual, ch 348, Effect of Conversion P 348.07.
1 Collier Bankruptcy Manual, ch 362, Automatic Stay PP 362.03, 362.05, 362.06.
2 Collier Bankruptcy Manual, ch 502, Allowance of Claims or Interests PP 502.03, 502.09.
2 Collier Bankruptcy Manual, ch 506, Determination of Secured Status P 506.03.
2 Collier Bankruptcy Manual, ch 521, Debtor's Duties P 521.08.
2 Collier Bankruptcy Manual, ch 522, Exemptions PP 522.01 et seq.
2 Collier Bankruptcy Manual, ch 523, Exceptions to Discharge PP 523.06, 523.10.
2 Collier Bankruptcy Manual, ch 524, Effect of Discharge PP 524.02, 524.03.
2 Collier Bankruptcy Manual, ch 527, Disclosures P 527.04.
2 Collier Bankruptcy Manual, ch 541, Property of the Estate PP 541.04, 541.17, 541.23C.
2 Collier Bankruptcy Manual, ch 547, Preferences P 547.10.
2 Collier Bankruptcy Manual, ch 550, Liability of Transferee of Avoided Transfer P 550.01.
2 Collier Bankruptcy Manual, ch 551, Automatic Preservation of Avoided Transfer P 551.01.
2 Collier Bankruptcy Manual, ch 553, Setoff P 553.02.
2 Collier Bankruptcy Manual, ch 554, Abandonment of Property of the Estate P 554.02.
2 Collier Bankruptcy Manual, ch 700, General Analysis of Chapter 7 P 700.04.
2 Collier Bankruptcy Manual, ch 704, Duties of Trustee P 704.02.
2 Collier Bankruptcy Manual, ch 722, Redemption P 722.02.
2 Collier Bankruptcy Manual, ch 724, Treatment of Certain Liens P 724.02.
2 Collier Bankruptcy Manual, ch 726, Distribution of Property of the Estate P 726.03.
2 Collier Bankruptcy Manual, ch 727, Discharge P 727.02.
3 Collier Bankruptcy Manual, ch 1141, Effect of Confirmation P 1141.05.
3 Collier Bankruptcy Manual, ch 1300, General Analysis of Chapter 13 P 1300.03.
3 Collier Bankruptcy Manual, ch 1303, Rights and Powers of Debtors P 1303.04.
3 Collier Bankruptcy Manual, ch 1322, Contents of Plan PP 1322.06, 1322.14, 1322.19.
3 Collier Bankruptcy Manual, ch 1325, Confirmation of Plan PP 1325.05, 1325.06, 1325.08.
3 Collier Bankruptcy Manual, ch 1328, Discharge P 1328.09.
Annotations:
Page 23
11 USCS § 522
What property is exempt from individual debtor's bankruptcy estate under § 522 of Bankruptcy
Code of 1978 (11 USCS § 522), as amended, and similar predecessor provisions--Supreme Court
cases. 161 L Ed 2d 1259.
Authority of Congress under bankruptcy provision ("bankruptcy clause") in Federal Constitu-
tion's Art. I, § 8, cl. 4, to legislate on subject of bankruptcies--Supreme Court cases. 163 L Ed 2d
1241.
Avoidance Under § 522(f)(1) of Bankruptcy Code (11 U.S.C.A. § 522(f)(1) [11 USCS § 522(f)(1)])
of Judicial Lien on Debtor's Exempt Real Property. 14 ALR Fed 2d 593.
Reopening Bankruptcy Case, Pursuant to § 350(b) of the Bankruptcy Code (11 U.S.C.A. § 350(b)
[11 USCS § 350(b)]), to Add or Properly Schedule Omitted Creditor or Debt in "No Asset" Case in
Which Deadline Was Not Set for Filing Proof of Claim. 25 ALR Fed 2d 1.
Construction and Application of 11 U.S.C.A. § 541(a)(5)(A) [11 USCS § 541(a)(5)(A)], and
Predecessor Statute, Respecting Property Vesting in Bankrupt after Bankruptcy by Bequest, Devise,
or Inheritance. 38 ALR Fed 2d 11.
Wife's claim to alimony or other allowances in divorce or separation suit as passing, or exempt
from passing, to trustee in wife's bankruptcy, under § 70(a) of Bankruptcy Act, ([former] 11 USCS §
110(a)). 10 ALR Fed 881.
Construction and application of proviso to § 70(a)(5) of Bankruptcy Act ([former] 11 USCS §
110(a)(5)) permitting bankrupt to hold insurance policy free from creditors' claims if he pays cash
surrender value to trustee. 20 ALR Fed 861.
Avoidance under 11 USCS § 522(f)(2) of the Bankruptcy Code of 1978 of nonpossessory, non-
purchase-money security interest in debtor's exempt personal property. 55 ALR Fed 353.
Avoidance under § 522(f)(1) of Bankruptcy Code of 1978 (11 USCS § 522(f)(1)) of judicial lien
on debtor's exempt personal property. 124 ALR Fed 465.
Individual retirement accounts as exempt property in bankruptcy. 133 ALR Fed 1.
Validity of Legal Claim Predicated on Nonmarital Same-Sex Relationship. 8 ALR6th 339.
Assumption of Mortgage on Real Property as Consideration for Conveyance That Is Attacked as
Fraudulent. 15 ALR6th 241.
Matters Constituting Unauthorized Practice of Law in Bankruptcy Proceedings. 32 ALR6th 531.
Endowment policy as life insurance within exemption law. 30 ALR2d 751.
What state exemption law, in point of time, governs bankrupt's exemption rights. 61 ALR2d 748.
Sufficiency of scheduling of creditor's residence or address in bankruptcy proceeding, and pre-
sumptions and burden of proof in connection therewith. 68 ALR2d 955.
Validity of contractual stipulation or provision waiving debtor's exemption. 94 ALR2d 967.
Texts:
10 Banking Law (Matthew Bender), ch 175, Loan Repayment § 175.08.
3B Benedict on Admiralty, Debtor's Exemptions § 14.
3B Benedict on Admiralty, Operation of the Estate by the Debtor in Possession or the Trustee §
21.
Cohen's Handbook of Federal Indian Law (Matthew Bender), ch 7, Civil Jurisdiction § 7.07.
Page 24
11 USCS § 522
Law Review Articles:

Braucher. A Guide to Interpretation of the 2005 Bankruptcy Law. 16 Am Bankr Inst L Rev 349,
Winter 2008.
Sobel; Eggertsen; Bernstein. Pension-Related Claims in Bankruptcy. 56 Am Bankr L J 155,
Spring 1982.
Hertz. Bankruptcy Code Exemptions: Notes on the Effect of States Law. 54 Am Bankr LJ 339,
Fall 1980.
Scuchman; Whorer. Personal Bankruptcy Data for Opt-Out Hearings and Other Purposes. 56 Am
Bankr LJ 1, Winter 1982.
Brown. Taking Exception to a Debtor's Discharge: The 2005 Bankruptcy Amendments Make It
Easier. 79 Am Bankr LJ 419, Spring 2005.
Waldron; Berman. Principled Principles of Statutory Interpretation: A Judicial Perspective after
Two Years of BAPCPA. 81 Am Bankr LJ 195, Summer 2007.
Ahart. The Liability of Property Exempted in Bankruptcy for Pre-Petition Domestic Support Ob-
ligations after BAPCPA: Debtors Beware. 81 Am Bankr LJ 233, Summer 2007.
Rao. Bankruptcy 2.0(05): Chapters, Changes, and Challenges: Testing the Limits of Statutory
Construction Doctrines: Deconstructing the 2005 Bankruptcy Act. 55 Am U L Rev 1427, June
2006.
Rao. Testing the Limits of Statutory Construction Doctrines: Deconstructing the 2005 Bankruptcy
Act. 55 Am UL Rev 1427, June 2006.
Haines. Section 522's Opt-Out Clause: Debtor's Bankruptcy Exemptions in a Sorry State. 1983
Ariz St L J 1, 1983.
Fox. Section 522(b)(1): An Examination and Evaluation of the Opt-Out Proviso. 1983 Ariz St L J
395, 1983.
Samole; Rosendorf. Homestead Exemption No Longer "Debtors' Paradise". 24-10 ABIJ 6, De-
cember 2005.
Fagone. Involuntary Individual Chapter 11 Post-BAPCPA as a Collection Device? 25-10 ABIJ
28, December 2006.
Mitrani. A Year Older, a Year Wiser: The Evolution of BAPCPA and Florida's Homestead Ex-
emption. 26-2 ABIJ 10, March 2007.
Moratzka. Tipping the Cap: § 522(p) and the Ch. 7 Debtor. 26-3 ABIJ 14, April 2007.
Bartell. The Peripatetic Debtor: Choice Of Law And Choice Of Exemptions. 22 Bank Dev J 401,
Spring 2006.
Evans; Lewis. An Empirical Economic Analysis of the 2005 Bankruptcy Reforms. 24 Bank Dev J
327, 2008.
Vukowich. Bankruptcy Commission's Proposal Regarding Bankrupts' Exemption Rights. 63 Cal
L Rev 1439, December 1975.
Protection of a Debtor's "Fresh Start" Under the New Bankruptcy Code. 29 Catholic U L Rev
843, Summer 1980.
Eisenberg. Denial of Exemptions in Bankruptcy Proceedings. 81 Com L J 510, December 1976.
Resnick; Finkel. Tenant by the Entirety in Liquidation Under the Bankruptcy Code: When a
House may not be a Home. 86 Com LJ 286, August/September 1981.
Hughes. Code Exemptions: Far-Reaching Achievement. 28 DePaul L Rev 1025, Summer 1979.
Wolf. Divorce, bankruptcy, and metaphysics: avoidance of marital liens under § 522(f) of the
Bankruptcy Code, 31 Fam L Q 513, Fall 1997.
Page 25
11 USCS § 522
Peterson. Protecting the former spouse's property settlement under the Bankruptcy Reform Act of
1994. 69 Fla BJ 52, December 1995.
Abrams. Recreation Rental Arising From Nonpayment Will Prevail Over Buyer's Homestead
Rights. 7 Fla St U L Rev 709, 1979.
Lien Avoidance Under Section 522(f) of the Bankruptcy Code: Is Retrospective Application Con-
stitutional? 49 Fordham L Rev 615, March 1981.
Cushman; Miller. Effect of the New Bankruptcy Law on Traditional Surety Rights. 16 Forum
1011, Summer 1981.
Dobbs; Anderson. Bankruptcy Law Changes Will Affect Business Cases Too: The Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005. 11 Ga Bar J 32, October 2005.
Vukowich. Debtors' Exemption Rights. 62 Geo L J 779, February 1974.
Constitutionality of Retroactive Lien Avoidance Under Bankruptcy Code Section 522(f). 94 Harv
L Rev 1616, May 1981.
Waxman; Rucki. Chapter 7 Bankruptcy Abuse: Means Testing is Presumptive, but "Totality" is
Determinative. 45 Hous L Rev 901, Summer 2008.
The New Bankruptcy Code: A Comparison of Texas and Federal Exemptions. 17 Houston L Rev
373, January 1980.
Bankruptcy Code of 1978 and its Effect Upon Tenancies by the Entireties. 13 Ind L Rev 761,
April 1980.
Determining Constitutionality of the Bankruptcy Code "Opt-Out" Provisions; A Critical Look at
In Re Sullivan [680 F2d 1131]. 15 Ind L Rev 849, Fall 1982.
Hiatt. Bankruptcy: Avoidance of Non-Possessory Non-Purchase Money Liens Perfected Between
Enactment of the Reform Act and Commencement of the Procedure. 50 J Kan BA 275, Winter
1981.
Mapother. Federal Exemptions Under The Bankruptcy Code. 44 Ky Bench & B 12, January
1980.
The Transformation Rule Under Section 522 of the Bankruptcy Code of 1978. 84 Michigan L Rev
109, October 1985.
Bankruptcy--Loss of Exemptions in Bankruptcy--the Section 6 Proviso. 41 Mo L Rev 84, Winter
1976.
Dickerson. Race Matters in Bankruptcy Reform. 71 Mo L Rev 919, Fall 2006.
Bukowich. Debtor's Exemption Rights Under the Bankruptcy Reform Act. 58 N C L Rev 667,
April 1980.
Bennett. Bankruptcy and Matrimonial Assets. 132 New LJ 991, October 21, 1982.
Resnick. House May Not be a Home: Liquidation Under the Bankruptcy Act. 53 NYS B J 272,
1981.
Olidge. Divorce liens under Section 522(f) of the federal Bankruptcy Code: resolving tensions be-
tween family and bankruptcy law. 67 NYU L Rev 879, October 1992.
Woodward. Exemptions, Option Out, and Bankruptcy Reform. 43 Ohio St LJ 335.
Hill. Lien Avoidance Under Section 522(f); can it be Utilized by the Debtor after the Closing of
his Bankruptcy Case. 38 Pers Finance L Q Rep 7, Winter 1984.
Waterman. A Primer for the General Practitioner: Consumer Bankruptcies. 77 PA Bar Assn.
Quarterly 93, July 2006.
DeWitt. Application of the New Bankruptcy Code to Real Estate Financing. 14 Real Prop Prob
& Tr J 410, Summer 1979.
Countryman. For a New Exemption Policy in Bankruptcy. 14 Rutgers L Rev 678, 1960.
Page 26
11 USCS § 522
Resnick. Prudent Planning or Fraudulent Transfer? The Use of Nonexempt Assets to Purchase or
Improve Exempt Property on the Wave Of Bankruptcy. 31 Rutgers L Rev 615, 1978.
Stern. State Exemption Law In Bankruptcy: The Excepted Creditor as a Medium for Appraising
Aspects of Bankruptcy Reform. 33 Rutgers L Rev 70, Fall 1980.
Fitzgerald. We All Live in a Yellow Submarine: BAPCPA's Impact on Family Law Matters. 31 S
Ill U LJ 563, Spring 2007.
Dunham. Tracing the Proceeds of Exempt Assets in Bankruptcy and Non-Bankruptcy Cases.
1978 S Illinois U L J 317.
Pedlar. Community Property and the Bankruptcy Reform Act of 1978. 11 St Mary's L J 349,
1979.
Teofan; Creel. The Trustee's Avoiding Powers Under the Bankruptcy Act and the New Code: A
Comparative Analysis. 11 St Mary's LJ 311, 1979.
Hynes. Personal Bankruptcy in the 21st Century: Emerging Trends and New Challenges: Credit
Markets, Exemptions, and Households With Nothing to Exempt. 7 Theoretical Inq L 493, July
2006.
Section 522(f): A Proposal for the Survival of Purchase Money Security Interest Following Refi-
nancing. 18 Tulsa L J 280, Winter 1982.
Landry. Individual Chapter 11 Reorganizations: Big Problems with the New "Big" Chapter 13.
29 U Ark Little Rock L Rev 251, Winter 2007.
The General Exemption of Section 522(d)(5) of the 1978 Bankruptcy Code. 49 U Chi L Rev 564,
Spring 1982.
Tabb. The Top Twenty Issues in the History of Consumer Bankruptcy. 2007 U Ill L Rev 9, 2007.
Wedoff. Major Consumer Bankruptcy Effects of BAPCPA. 2007 U Ill L Rev 31, 2007.
Braucher. The Challenge to the Bench and Bar Presented by the 2005 Bankruptcy Act: Resistance
Need Not be Futile. 2007 U Ill L Rev 93, 2007.
Estates by the Entirety in Bankruptcy. 15 U Mich J L Ref 399, Winter 1982.
Avoiding Liens Under the New Bankruptcy Code: Construction and Application of Section
522(f). 15 U Mich J L Ref 577, Spring 1982.
Hemmings. Bankruptcy Exemptions; State Law or Federal Policy? 35 U Pitt L Rev 630, Spring
1974.
Controversy Surrounding Exemption Uniformity: The Opt-Out Provision of Section 522 of the
New Bankruptcy Code. 13 U Tol L Rev 1111, Spring 1982.
Clark. Preferences Under the Old and New Bankruptcy Acts. 12 Uniform Commercial Code L J
154, Fall 1979.
Austin. California Evidence Code--Federal Rules of Evidence: The Bankruptcy Clause and the
Eleventh Amendment: An Uncertain Boundary Between Federalism and State Sovereignty. 42 USF
L Rev 383, Fall 2007.
Plumb. The Recommendations of the Commission on the Bankruptcy Laws--Exempt and Immune
Property. 61 Va L Rev 1, February 1975.
Ferris. Bankruptcy law--avoidance of divorce liens under section 522(f)(1) of the Bankruptcy
Code: all's fair in love and divorce. 14 W New England L Rev 221, 1992.
Gilles. The Judgment-Proof Society. 63 Wash & Lee L Rev 603, Spring 2006.
Moringiello. A tale of two codes: examining § 522(f) of the Bankruptcy Code, § 9-103 of the Uni-
form Commercial Code and the proper role of state law in bankruptcy. 79 Wash U LQ 863, Fall
2001.
Page 27
11 USCS § 522
Bankruptcy Reform Act of 1978: An Exemption Windfall for Joint Debtors? 18 Western L Rev
80, Fall 1981.
Moringiello. Has Congress Slimmed Down the Hogs?: A Look at the BAPCPA Approach to Pre-
Bankruptcy Planning. 15 Widener LJ 615, 2006.
Price; Dalton. From Downhill to Slalom: An Empirical Analysis of the Effectiveness of BAPCPA
(and Some Unintended Consequences). 26 Yale L & Pol'y Rev 135, Fall 2007.
Emerging Issues Analysis

1. Collier on New Chapter 13 Discharge Requirements Under Section 1328(f), (g) and (h) of
the Code
Section 1328 of the Bankruptcy Code provides for a discharge after the debtor has fully com-
plied with his or her chapter 13 plan, and also for a hardship discharge in cases in which the debtor
cannot complete payments under the plan due to circumstances for which the debtor should not be
held accountable. This Emerging Issues Analysis covers the new chapter 13 discharge requirements
under section 1328(f), (g), and (h) of the Code.
2. Collier on Standing and Authority to Pursue Preference Recoveries
This Emerging Issues Analysis covers standing and authority to pursue preference recoveries,
including the authority to pursue the avoidance of preferential transfers in "the trustee" under Bank-
ruptcy Code section 547; examiners in chapter 11 proceedings; postconfirmation appointed repre-
sentatives; secured lenders and other purported assignees; and the ability of creditors' committees in
interest to pursue preference actions derivatively.
3. Collier on Limitations on State Homestead Exemption Claims
In order to prevent abuse by some debtors, section 522 of the Bankruptcy Code added two sub-
sections that limit the use of state homestead exemptions. This Emerging Issues Analysis explains
the monetary limit when the property was acquired within 1,215 days prior to the filing of the bank-
ruptcy case.
4. Collier on Discharge of Debts in a Chapter 11 Case
This Emerging Issues Analysis covers the discharge of debts in a chapter 11 case, including top-
ics such as discharge of the debts of a debtor that is not an individual, discharge of the debts of an
individual debtor, enjoining the collection of nondischargeable debt, discharge in a liquidating
chapter 11 case, waiver of discharge, and the reaffirmation of debts.
5. Collier on Denial of Discharge Based on Previous Discharge in a Chapter 7 Case
Debtors beware: if you have previously been granted a discharge in a Chapter 7 case, you can be
denied a discharge in your current case if it is filed too soon after your previous discharge. What
are the relevant time periods that prevent successive discharges? The following article explains the
applicability of different time periods as they apply to Chapter 7, 11 and 12 cases.
6. Collier on the Definition of "Insolvent" Under the Bankruptcy Code
Under the Bankruptcy Code, there is no requirement that a debtor be insolvent to obtain relief
under title 11. Section 109(d) states "only a person that may be a debtor under chapter 7 may be a
debtor under chapter 11." No requirement of insolvency is enunciated for filing under either chap-
ter. This Emerging Issues Analysis discusses the definition of "insolvent" under the Code.
Page 28
11 USCS § 522
7. Collier on Overview of the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005: Consumer Bankruptcy
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ended seven years of
congressional silence on bankruptcy laws. This Emerging Issues Analysis addresses issues pertain-
ing to consumer bankruptcy, including consumer credit counseling and briefing, the ability to dis-
miss Chapter 7 cases for abuse, filing obligations and sanctions for failure to comply with the rules,
the scope of an automatic stay, and exemptions.
8. Collier on Succession of Trustee to Rights to Unsecured Creditor under Section 544(b)
Bankruptcy Code subsection 544(b) gives the trustee the right to avoid any transfer of the debtor
or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding
an unsecured claim that is allowable under the Bankruptcy Code or by a creditor holding an unse-
cured claim for reimbursement or contribution that is not allowable only because of section 502(e).
Interpretive Notes and Decisions:

I.IN GENERAL 1. Generally 2. Constitutionality 3. Purpose 4. Construction 5.--Particular lan-
guage 6. Relationship with other laws 7.--Right of setoff § 523 8.--Other particular Bankruptcy
Code sections 9. Applicability to Chapter 11, 12 and 13 cases
II.APPLICABILITY OF STATE LAW EXEMPTIONS
A.In General 10. Generally 11. Applicable law 12. Uniformity not required 13. Amendment of
state exemption laws 14. Election of federal or state exemptions 15. Domicile of debtor as determin-
ing applicable state law 16.--Under particular circumstances 17. State court jurisdiction of claims
against exempt property 18. Miscellaneous
B.Constitutionality of State Exemption Laws 19. Generally 20. Homestead statutes 21. Stat-
utes restricting lien avoidance
C.Opt-Out by States
1.In General 22. Generally 23. Claim of "other federal exemptions" 24. Preemption of state
statutes exempting ERISA plans 25. Opt-out of particular states
2.Application of Other Provisions of § 522 26. Generally 27. Separate application of exemp-
tions to joint debtors 28. Lien avoidance 29.--Dependence on entitlement to exemption under state
law 30.--Particular applications
III.ENTITLEMENT TO EXEMPTIONS
A.In General 31. Generally 32. Head of household or family 33. Partner 34. Miscellaneous
B.Spouses 35. Generally 36. Stacking of exemptions 37.--Federal and state exemptions 38.--
State exemptions
IV.CLAIM AND ALLOWANCE OF EXEMPTIONS
A.In General 39. Generally 40. Necessity of claiming exemptions 41. Compliance with filing
requirements 42. Combination of federal and state exemptions 43. Effect of claiming exemption 44.
Title to exempt property 45. Res judicata 46. Miscellaneous
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11 USCS § 522
B.Time Exemptions are Determined 47. Generally 48. Filing of petition 49.--Under particular
circumstances 50. Converted cases
C.Amendment of Claimed Exemptions 51. Generally 52. Timeliness 53. Payment of fees 54.
Particular amendments
D.Objections
1.Generally 55. Generally 56. Standing to object 57. Sufficiency of objection 58. Procedure to
object 59. Notice 60. Burden of proof 61. Miscellaneous
2.Time Limits for Objections
a.In General 62. Generally 63. Former Rule 403 time limits 64. Unclear claim of exemptions
65. Amended exemptions 66. Particular objections
b.Effect of Failure to File Timely Objection 67. Generally 68. Absolute right to exemption 69.
Effect on avoiding liens
E.Fraudulent Conduct as Bar to Exemption
1.In General 70. Generally 71. Under particular circumstances
2.Conversion of Nonexempt Assets Into Exempt Assets 72. Generally 73. Homestead exemp-
tion 74. Life insurance exemption 75. Annuity exemption 76. Other particular exemptions
F.Valuation of Exempt Property 77. Generally 78. Deduction for transaction costs 79. Hear-
ing 80. Under particular circumstances
V.COLLECTION OF PREPETITION DEBT FROM EXEMPT PROPERTY 81. Gener-
ally 82. Tax debt or liens
VI.KINDS OF PROPERTY EXEMPT
A.In General 83. Generally 84. Debtor's "interest" as equity in property 85. "Wild card" and
spillover exemptions 86.--Use for specific property
B.Entireties and Joint Property Exempt From Process
1.In General 87. Generally 88. Under particular circumstances
2.Nonbankruptcy Law as Determining Exempt Status 89. Generally 90. Under particular
circumstances
C.Homestead
1.In General 91. Generally 92. Qualifications for exemption 93. Marshaling 94. Appreciation
since filing date 95. Residency 96. Ownership 97. Divorce or property settlements 98. Determina-
tion of exemption 99. Miscellaneous
2.Proceeds of Sale of Homestead 100. Generally 101. Foreclosure sales 102. Particular pro-
ceeds of other sales
3.Use or Occupancy 103. Generally 104. Dependents 105. Property inherited postpetition 106.
Unimproved property 107. Rental of property 108. Debtor's move or sale postpetition 109. Aban-
donment 110. Absence due to marital difficulties 111. Absence due to extreme circumstances 112.
Other particular circumstances
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11 USCS § 522
4.Particular Homestead Property 113. Adjacent or appurtenant property 114. Burial plot 115.
Cooperative 116. Farmland 117. Houseboat 118. Mobile home 119. Miscellaneous
5.Particular Homestead Exemptions 120. Federal homestead exemption 121. California 122.
Florida 123. Iowa 124. Kentucky 125. Massachusetts 126. Minnesota 127. Mississippi 128. New
York 129. Ohio 130. Oklahoma 131. Texas 132.--Business homestead exemption 133. Vermont
134. Virginia 135. Wyoming 136. Miscellaneous
D.Household Goods 137. Generally 138. Construction 139. Furniture 140. Flatware, china or
glassware 141. Guns 142. Motor vehicles 143. Television, VCR or stereo 144. Miscellaneous
E.Tools of the Trade or Profession 145. Generally 146. Animals and livestock 147. Farm
tools, machinery or equipment 148.--Particular items 149. Motor vehicles 150. Miscellaneous
F.Life Insurance 151. Generally 152. Unmatured life insurance contract 153. Cash surrender
value 154. Proceeds on life of person on whom debtor was dependent 155. Miscellaneous
G.Benefit Payments 156. Generally 157. Social security 158. Veteran's benefits 159. Disability
benefits 160. Worker's compensation 161. Other payments
H.Stock Bonus, Pension, Profit-Sharing, Annuity or Similar Plans
1.In General 162. Generally 163. Extent reasonably necessary for support
2.ERISA Qualified Plans 164. Generally 165. Exempt under "other federal law" under §
522(b)(2)(A) 166. Exempt under § 522(d)(10)(E)
3.Other Plans 167. Annuities 168.--Resulting from lawsuit settlement 169.--Lottery winnings
170. Debtor's participation interest in retirement system 171. Contributions to pension or retirement
plan 172. Individual Retirement Accounts 173.--Deference to IRS determinations 174.--Particular
accounts 175. Keogh plans 176. Pension or profit-sharing plans 177.--Particular plans and payments
178. Savings and investment plans 179. Simplified Employee Pension plans 180. Miscellaneous
I.Other Property 181. Generally 182. Animals and livestock 183. Art 184. Causes of action
185.--Personal injury actions and awards 186.----Multiple causes of action 187.----Particular causes
of action 188.--Other particular actions and awards 189. Damages and restitution 190. Equipment
191. Income tax refunds 192.--Based upon earned income tax credit 193. Inheritances 194. Insur-
ance proceeds from loss of exempt property 195. Licenses 196. Money or accounts 197. Motor ve-
hicles 198. Spousal support 199. Tax credits 200. Wages 201.--What constitutes exemptable wages
202.--Independent contractor earnings 203. Wearing apparel and jewelry 204. Miscellaneous
VII.WAIVER OF EXEMPTIONS 205. Generally 206. Validity of particular waivers
VIII.AVOIDANCE OF LIENS ON EXEMPT PROPERTY
A.In General 207. Generally 208. Constitutionality of lien avoidance 209.--Fifth Amendment
210.--Tenth Amendment 211. Purpose 212. Relationship with other laws 213. Application to Chap-
ter 12 214. Application to Chapter 13 215. Applicable law 216. Discretion of court 217. Sovereign
immunity 218. Effect of lien avoidance
B.Determination of Impairment of Exemptions
1.In General 219. Generally 220. Formal requirements 221. Ownership requirement
222. Debtor's interest in property
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11 USCS § 522
223. Equity as prerequisite

224. Entitlement to exemption as prerequisite
225.--Lien-encumbered property as non-exempt
226. Requirement exemption be claimed
227. Claim of federal or state exemption
228. Failure to object to exemption
229. Ability to challenge validity of exemption for lien avoidance purposes
230. Application of "wildcard" or spillover exemptions
231. Effect of abandonment
232. Effect of exemption stacking
233. Effect of waiver of exemption
234. Fraud as a defense to lien avoidance
235. Miscellaneous
2.Impairment of Exemption as Limiting Extent of Avoidance
236. Generally
237. Determination of value
238.--Particular determinations
239. Calculation of amount avoided
C.Practice and Procedure
240. Generally
241. Standing
242. Time limitations
243.--Subsequent to discharge
244.--Reopened case
245.--Under other particular circumstances
246. Burden of proof
247. Res judicata
248. Miscellaneous
D.Retroactive Application of Lien Avoidance Provisions
1.In General
249. Generally
250. Particular liens
251.--Security interests
2.Constitutionality
252. Generally
253. Due process
254. Taking without just compensation
255. Liens created prior to enactment date
257.----Particular applications
258.--Judicial liens
259.--Liens held by United States
260. Liens created during "gap period" between enactment and effective dates
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11 USCS § 522
262.--Particular applications
263.--Judicial liens
264.--Other liens
E.Particular Liens
1.In General
265. Generally
266. Statutory liens
267.--Tax liens
268. Mechanics' liens
269. Equitable liens
270. Consensual or voluntary liens
271.--Mortgage liens
272.--Consensual liens subsequent to avoidable liens
273. Miscellaneous
2.Judicial Liens
a.In General
274. Generally
275. Formal requirements
276. What constitutes judicial lien
277.--Liens arising from divorce
278.--Confessions of judgment
279.--Attorney liens
280.--Garnishment liens
281.--Equitable liens
282.--Other particular liens
283. Unenforceable or unattached judicial liens
284. Fixing of lien on debtor's interest
285. Effect of discharge or dischargeability of underlying debt
286. Miscellaneous
b.Avoidance of Particular Judicial Liens
287. Liens securing debt to spouse, former spouse or child
288. Liens on entireties or jointly owned property
289. Liens on garnished funds of debtor
290. Other particular liens avoided
291. Other particular liens partially avoided
292. Other particular liens not avoided
3.Security Interests
a.In General
293. Generally
294. Purchase money security interests
295.--Effect of renewal or refinancing
296.--Effect of consolidation
297.--Effect of other modifications
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11 USCS § 522
298. Nonpossessory, nonpurchase money security interests

299. Miscellaneous
b.Impairment of Particular Exempt Property
(1).Household Goods
300. Generally
301. What constitutes "household goods"
302. Animals and livestock
303. Furniture or appliances
304. Guns
305. Money or accounts
306. Motor vehicles
307. Recreational items
308. Television, VCR or stereo
309. Miscellaneous
(2).Tools of the Trade or Profession
310. Generally
311. Farm tools, machinery, equipment or animals
312.--Farmer or farming requirement
313. Motor vehicles
314. Equipment
315. Other particular property
IX.DEBTOR'S POWER TO EXEMPT TRANSFERRED PROPERTY
A.In General
316. Generally
317. Avoidance by trustee
318. Avoidance by debtor
319. Standing of Chapter 11, 12 and 13 debtors
320. Sufficiency of complaint and its effect
321. Creditor opposition
322. Transfer avoidable by debtor under § 522(f)
323. Transfer avoidable by debtor under § 544
324. Transfer or property reserved for debtor's benefit
325. Miscellaneous
B.Involuntary Transfers
1.In General
326. Generally
327. Concealment of property
2.Particular Transfers
328. Preferences
329. Security interests
330. Setoffs
331. Tax sales or liens
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11 USCS § 522
332. Water or sewer liens

333. Wage assignments
334. Miscellaneous
C.Particular Property
335. Real property
336. Motor vehicles
337. Wages of debtor
338. Insurance proceeds
339. Miscellaneous
I.IN GENERAL 1. Generally

Bankruptcy court did not err by holding that trustees of Chapter 7 estates could transfer their
avoidance powers under 11 USCS § 544 and 11 USCS § 522. Duckor Spradling & Metzger v Baum
Trust (In re P.R.T.C., Inc.) (1999, CA9 Cal) 177 F3d 774, 99 CDOS 3665, 99 Daily Journal DAR
4734, 34 BCD 480, 42 CBC2d 269.
Fresh start guaranteed by bankruptcy, and supported by exemption scheme, does not entitle
debtor to maintain lifestyle to which he was accustomed in better times. Sheehan v Morehead (In re
Morehead) (2002, CA4 W Va) 283 F3d 199, CCH Bankr L Rptr P 78614.
If debtor needs property for fresh start or necessities of life, debtor must follow exemption proc-
ess under 11 USCS § 522. In re Guerrero (1983, ND Ind) 30 BR 463.
Congress has exclusive jurisdiction to determine precisely what exemptions debtor may claim
and, under Bankruptcy Code, intended that, in joint case, each debtor be entitled to exemptions. In
re Thompson (1980, BC ED Va) 2 BR 380, 5 BCD 1302, 1 CBC2d 467.
Although, under prior law, bankrupt was able to claim as exempt property which was allowable
as exempt by federal law or state law, Bankruptcy Code takes different approach, and contains own
exemption provisions, in 11 USCS § 522, but gives debtor option of electing to take federal exemp-
tions or exemptions provided under federal non-bankruptcy law and state law. In re Meyers (1980,
BC ED Mich) 2 BR 603, 5 BCD 1306, 1 CBC2d 470.
Bankruptcy courts have jurisdiction over exempt property to enforce mandates of 11 USCS §
522, and court has power to determine which exemption statutes are applicable. In re Volk (1983,
BC DC SD) 26 BR 457, 9 BCD 1382, 7 CBC2d 1096.
Debtor's exercise of right under 11 USCS § 522(b) to exempt certain property operates to re-
move exempted property from estate and return it to debtor for his fresh start. In re Berkovics
(1985, BC ED Va) 50 BR 223.
Even exempt property under 11 USCS § 522 must initially be regarded as property of estate un-
der 11 USCS § 541 and then claimed and distributed as exempt. In re Poynor (1987, BC ND Tex)
68 BR 919.
Exemption may be defined as right given by law to debtor to retain portion of his personal prop-
erty free from seizure and sale by his creditors under judicial process; its grant or withdrawal is to-
tally dependent on will of state, and is normally enacted on grounds of public policy for humane or
generous purpose. In re Komet (1989, BC WD Tex) 104 BR 799.
Page 35
11 USCS § 522
Exemption is interest of debtor in property that is withdrawn from bankruptcy estate, and placed
outside reach of creditors. In re Cohen (2001, BC DC NJ) 263 BR 724.
11 USCS § 522(f) applies only when lien impairs exemption. In re Poppe (2004, BC DC Neb)
52 CBC2d 394.
Debtor in bankruptcy is entitled to exempt certain assets from bankruptcy estate under 11 USCS
§§ 522, 541. Sticka v Casserino (In re Casserino) (2003, BAP9) 290 BR 735, 2003 CDOS 2193,
2003 Daily Journal DAR 2799, affd (2004, CA9) 379 F3d 1069, CCH Bankr L Rptr P 80147.
2. Constitutionality
Opt-out section of 11 USCS § 522(b)(1) does not violate constitutional provision that empowers
Congress "to establish uniform laws on the subject of bankruptcies"; Supreme Court applied con-
cept of geographical uniformity in upholding Bankruptcy Act of 1898, and the Court has upheld
validity of 45 USCS §§ 701-794 on geographical uniformity rule as well as cited cases for proposi-
tion that "Congress can give effect to allowance of exemptions prescribed by state law without vio-
lating uniformity requirement"; arguments posed by debtors regarding the correctness of geographi-
cal uniformity rule are not persuasive. In re Sullivan (1982, CA7 Ill) 680 F2d 1131, 9 BCD 140, 6
CBC2d 972, CCH Bankr L Rptr P 68700, cert den (1982) 459 US 992, 74 L Ed 2d 388, 103 S Ct
349.
11 USCS § 552(b)(1), which authorizes state to opt out of federal exemption scheme and allows
states to elect differing exemption structures, is exercise of legislative prerogative to establish "uni-
form law" under Article 1 § 8 Clause 4 of United States Constitution and therefore falls within
scope of bankruptcy authority provided to Congress. Rhodes v Stewart (1983, CA6 Tenn) 705 F2d
159, 10 BCD 596, 8 CBC2d 451, CCH Bankr L Rptr P 69140, cert den (1983) 464 US 983, 78 L Ed
2d 361, 104 S Ct 427 and (criticized in In re Cross (2000, BC ND Ind) 255 BR 25).
11 USCS § 522 (b)(1) and (b)(2)(A) are not violative of Article I, § 8, clause 4 of Constitution;
further, § 522(b)(1) is not unconstitutional delegation of congressional legislative power but rather
it's recognition of concurrent legislative power of state legislatures to enact laws governing bank-
ruptcy exemption. In re Lausch (1981, MD Fla) 16 BR 162, 6 CBC2d 59.
Congress did not improperly delegate its authority in permitting states to opt out of federal ex-
emption scheme under 11 USCS § 522(b)(1). In re Lausch (1981, BC MD Fla) 12 BR 55, affd
(1981, MD Fla) 16 BR 162, 6 CBC2d 59.
11 USCS § 522(b) is not unconstitutional on grounds that it creates dual system of exemptions
which varies from state to state in violation of Bankruptcy Clause of United States Constitution, re-
quiring uniform laws on subject of bankruptcies. In re Thompson (1988, BC WD Wis) 82 BR 985,
19 CBC2d 297.
Delegation of power by Congress creating "opt-out" provision of 11 USCS § 522(b)(2) is not in-
appropriate delegation of federal power, but, rather, enactment of § 522(b)(2) was nothing more
than long-standing recognition by Congress of existing exemption laws of states; provision does
nothing more than authorize states to determine extent of exemptions available to its citizens, and
retention of power by state is certainly acceptable division of power between state and federal gov-
ernments. In re Snape (1994, BC MD Fla) 172 BR 361, 31 CBC2d 1565, 8 FLW Fed B 182.
"Opt-out" provision of 11 USCS § 522(b) did not violate creditors' due process rights and did
not constitute "taking," since it was rationally related to fresh start made available to debtors under
Page 36
11 USCS § 522
Bankruptcy Code, enacted in recognition of impossibility of enacting federal legislation that could
take into account various circumstances and conditions existing from state-to-state, and was rational
means of addressing that difficulty. In re Butcher (1995, BC DC Md) 189 BR 357, 8 Fourth Cir &
Dist Col Bankr Ct Rep 238, CCH Bankr L Rptr P 76824, affd (1997, CA4 Md) 125 F3d 238, 9
Fourth Cir & Dist Col Bankr Ct Rep 467, CCH Bankr L Rptr P 77501.
11 USCS § 522(f) does not violate Takings Clause of Fifth Amendment where lien being
avoided does not antedate, but rather was created after enactment of and subject to, § 522(f). In re
Snyder (1999, BC DC Mass) 231 BR 437, affd in part and mod in part on other grounds (2000,
BAP1) 249 BR 40, affd (2001, CA1) 248 F3d 1127, reported in full (2001, CA1) 2 Fed Appx 46.
11 USCS § 522(b)(3), as amended by Bankruptcy Abuse and Prevention and Consumer Protec-
tion Act of 2005, Pub. L. 109-8, 119 Stat. 23, does not violate uniformity requirement found in U.S.
Const. art. 1, § 8, Cl. 4, because it applies uniformly throughout U.S. to all debtors who sought pro-
tection under Bankruptcy Code within 730 days of moving from one state to another. In re Urban
(2007, BC DC Mont) 361 BR 910.
Georgia's opt out statute, O.C.G.A. § 44-13-100(b), does not violate Uniformity Clause of
United States Constitution, U.S. Const. art. I, § 8, cl. 4, merely because it restricts its application to
those that are currently domiciled in Georgia as opposed to those who are currently domiciled in
another state. In re Chandler (2007, BC ND W Va) 362 BR 723.
Deadline for filing objections to exemptions did not bar Chapter 7 Trustee's enforcing 11 USCS
§ 522(g) prohibition on exemption of property recovered under 11 USCS §§ 549 and 550. In re
Villegas (2007, BC DC NM) 364 BR 781.
11 USCS § 522(b)(3)(A) does not violate due process or equal protection under Fifth Amend-
ment. In re Varanasi (2008, BC SD Ohio) 59 CBC2d 935.
Trustee's argument that 11 USCS § 522(b)(3)(A) was unconstitutional taking failed because un-
secured creditors did not have property interest that was protected under Takings Clause of Fifth
Amendment. In re Varanasi (2008, BC SD Ohio) 59 CBC2d 935.
11 USCS § 522(b)(3)(A) does not violate Uniformity Clause of U.S. Constitution. In re Varanasi
(2008, BC SD Ohio) 59 CBC2d 935.
Law at issue in this case was federal law not state law since 11 USCS § 522(b)(3)(A) merely in-
corporated state law into application of federal law; thus, trustee's Contract Clause challenge failed
because there was no state law at issue in this case. 11 USCS § 522(b)(3)(A) does not violate Con-
tract Clause. In re Varanasi (2008, BC SD Ohio) 59 CBC2d 935.
Provision under 11 USCS § 522(b)(1) which authorizes state to "opt out" of federal exemption
scheme is constitutional, notwithstanding objections based on uniformity, legislative intent, federal
pre-emption, and congressional delegation of authority. In re Stinson (1984, BAP9) 36 BR 946.
3. Purpose
Fresh start guaranteed by bankruptcy, and supported by exemption scheme, does not entitle
debtor to maintain lifestyle to which he was accustomed in better times. Sheehan v Morehead (In re
Morehead) (2002, CA4 W Va) 283 F3d 199, CCH Bankr L Rptr P 78614.
Page 37
11 USCS § 522
Congress did not intend 11 USCS § 522(f)(2)(C) as exception to otherwise avoidable liens.
Banknorth, N.A. v Hart (In re Hart) (2003, CA1) 328 F3d 45, 41 BCD 79, CCH Bankr L Rptr P
78845.
Clear intent of 11 USCS § 522(f)(1) is to give debtors fresh start. Unifund C.C.R. Partners v
Sheckard (In re Sheckard) (2008, ED Pa) 394 BR 56.
Federal exemption scheme reflects Federal interest in seeing that debtor who petitions bank-
ruptcy court for relief comes out with adequate possessions to begin fresh start; alternative to home-
stead exemption, in 11 USCS § 522(d)(5) permitting exemption in value of $ 400 plus unused
amount of homestead exemption, is reflection of Congressional intention not to discriminate against
nonhomeowner, or homeowner with little or no equity. In re Upright (1979, BC ND NY) 1 BR 694,
5 BCD 1124, 1 CBC2d 229.
Exemption laws have 5 basic purposes: to provide debtor enough money to survive, to protect
debtor's dignity and cultural and religious identity, to afford means of financial rehabilitation, to
protect family unit from impoverishment, and to spread burden of debtor's support from society to
his creditors. In re Hahn (1980, BC SD Iowa) 5 BR 242, 2 CBC2d 761.
Purpose of 11 USCS § 522(b)(2)(B) is to give debtors benefit of any immunity from execution
process they may have under state law. In re Hovatter (1982, BC DC Del) 25 BR 123.
Intent of 11 USCS § 522(f) is to assist debtor in his rehabilitation at expense of judicial lien
creditors and creditors holding consensual nonpurchase money liens on consumer goods of kind
specified and fact that liens would be effective under state law is immaterial and is no more related
to right to avoid liens under 11 USCS § 522(f) than it is to right granted under 11 USCS § 544. In re
Velasquez (1984, BC DC Idaho) 44 BR 1021.
Purpose of 11 USCS § 522 is to remove exempt property from debtor's estate and, after dis-
charge, from claims of unsecured creditors. In re Duss (1987, BC WD Wis) 79 BR 821.
Enactment of and legislative history to 11 USCS § 522(f)(1) suggest that Congress intended that
otherwise unsecured creditor not receive more by virtue of its judgment than it could otherwise ob-
tain, and fact that bankruptcy followed in close proximity to particular creditor's obtaining judgment
against debtor does not give that creditor special status under Bankruptcy Code. In re March (1988,
BC ED Pa) 83 BR 270 (criticized in Lilley v United States (In re Lilley) (1995, BC ED Pa) 181 BR
809, CCH Bankr L Rptr P 76534, 75 AFTR 2d 2166, 95 TNT 100-27).
11 USCS § 522 was enacted to ensure that debtors come out of bankruptcy with adequate pos-
sessions to obtain fresh start. In re Cohen (2001, BC DC NJ) 263 BR 724.
11 USCS § 522(p) is not designed to deal with fraudulent conversions of property at all; it is
simply cap to be applied in cases in which debtor happens to have acquired interest in homestead
within three years and four months prior to filing bankruptcy. In re Rasmussen (2006, BC MD Fla)
349 BR 747, 19 FLW Fed B 395.
Where Department of Housing and Urban Development, which violated automatic stay under
circumstances where there was no evidence it did so willfully, sought retroactive relief by annul-
ment of stay, annulment would have thwarted intent of both Congress and state in providing statu-
tory mechanisms for equality of creditor treatment (11 USCS § 362) and debtor's fresh start, Va.
Code Ann. § 34-4, 11 USCS § 522(b), (c); therefore, equities of case did not favor annulment of
stay. Moore v United States HUD (In re Moore) (2006, BC WD Va) 350 BR 650.
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11 USCS § 522
4. Construction
State's "opt-out" exemption statute must be liberally construed in order to give full effect to leg-
islative intent of providing fresh start. In re Keyworth (1985, DC Colo) 47 BR 966, 12 BCD 1137,
CCH Bankr L Rptr P 70314.
Courts must not substantially depart from express language of exemption statutes in interpreting
them and where state exemptions statute uses term without limitation, qualification, or definition,
with intent to avoid constantly recurring questions as to whether or not particular item of personal
property came within meaning of term, Bankruptcy Court will follow policy of state Supreme Court
in construing exemptions liberally in favor of debtors. In re Hahn (1980, BC SD Iowa) 5 BR 242, 2
CBC2d 761.
Exemptions under state law should be given broad reading when it furthers congressional pur-
pose of fresh start, is appropriate for type of property, and is consistent with literal reading of state
law. In re Smith (1982, BC DC Md) 23 BR 708.
11 USCS § 522(f) is meant to be strictly construed; mere inconvenience is not enough to allow
debtor to avoid lien. In re Meany (1982, BC DC Kan) 35 BR 3.
Exemption laws are to be construed liberally in favor of debtor. In re Burchard (1983, BC ED
Mo) 2 BAMSL 604.
Exemption statute is entitled to construction liberal to debtor absent intent to delay, hinder, or
defraud creditors of payments made thereunder. In re Worthington (1983, BC WD Ky) 28 BR 736.
Exemption statutes are to be liberally construed. In re Cycyk (1983, BC ND Ohio) 29 BR 722, 6
Ohio BR 511.
Bankruptcy Court will look to similar state and Bankruptcy Code exemption statutes for guid-
ance in interpreting Missouri's statute exempting pensions where there are no Missouri cases inter-
preting statutory exemption, but language is identical to federal exemption in 11 USCS §
522(d)(10)(E) and to many state exemption statutes. In re Bartlett (1986, BC WD Mo) 67 BR 455.
State and federal exemption statutes are to be liberally construed for benefit of debtor. In re
Stanhope (1987, BC DC Mont) 76 BR 165.
Bankruptcy exemptions under 11 USCS § 522 are to be construed liberally in favor of debtor.
In re Shaffer (1987, BC DC SC) 78 BR 783, 16 BCD 807.
11 USCS § 522(b)(2)(A) must be interpreted as was its predecessor, Bankruptcy Act § 6, to be
neutral with respect to nature and extent of exemptions arising under other federal laws, regardless
of source or purpose. In re Komet (1989, BC WD Tex) 104 BR 799.
In construing 11 USCS § 522(d)(10)(E), it must be remembered that exemption statutes are to be
construed liberally in favor of debtor. In re Cilek (1990, BC WD Wis) 115 BR 974, 11 UCCRS2d
937.
Exemption statutes shall be liberally construed in favor of debtor, pursuant to 11 USCS § 522.
In re Staniforth (1990, BC WD Wis) 116 BR 127, 20 BCD 962 (criticized in Hartje Lumber v Brach
(In re Brach) (1995, BC WD Wis) 195 BR 897) and (criticized in Hartje Lumber v Boshardy (In re
Boshardy) (1995, BC WD Wis) 1995 Bankr LEXIS 2043).
Page 39
11 USCS § 522
Exemptions in bankruptcy are provided for under 11 USCS § 522 and those exemptions that
may be claimed are provided for in 11 USCS § 522(d) (the federal bankruptcy exemptions) or under
11 USCS § 522(b)(2), (nonbankruptcy exemptions), and under 11 USCS § 522(b)(1), unless state
has opted out of federal bankruptcy exemptions, in which case only those exemptions allowable un-
der 11 USCS § 522(b)(2) are available. In re Zaidi (2002, BC ED Va) 293 BR 861.
Benefits awarded as compensation for lost future earnings can qualify for broader exemption
permitted under 11 USCS § 522(d)(10)(C) without being precluded from less generous exemption
allowed under 11 USCS § 522(d)(11)(E) when 11 USCS § 522(d)(10)(C) exemption is unavailable.
In re Sanchez (2007, BC WD Mich) 362 BR 342.
No bankruptcy law shall be construed to eliminate property rights which existed before law was
enacted in absence of explicit command from Congress, thus, state court would not give retroactive
effect to federal exemption that had no state counterpart. Savitz v Ciccotelli (1985) 342 Pa Super
399, 493 A2d 81.
Unpublished Opinions
Unpublished: 11 USCS § 522(f)(2)(B) excludes only those liens that have already been avoided-
-that is, those which are no longer liens; it does not instruct courts to exclude junior unavoidable
liens and that does not appear to have been for lack of attention to detail; further, 11 USCS §
522(f)(2)(B) does not refer to priority position of liens under state law; rather, that subsection sim-
ply states that when liens have already been avoided, they should not be considered in impairment
calculation. Cadle Co. v Taras (In re Taras) (2005, CA11 Ga) 131 Fed Appx 167, reported at (2005,
CA11 Ga) 143 Fed Appx 308.
5.--Particular language
In determining whether state law exempts property from bankruptcy estate, court's task is to dis-
cern will of state legislature: what was exemption scheme that legislature wished to make available
to state's residents as alternative to federal exemptions set forth in Bankruptcy Code; while state
courts frequently refer to statutes which prohibit only certain forms of judicial process as "exemp-
tion" statutes, term "exemption" conventionally connotes protection against all forms of process,
and therefore it is appropriate to give word "exemption" its common meaning in absence of any leg-
islative indication to contrary. In re Geise (1993, CA7 Wis) 992 F2d 651, CCH Bankr L Rptr P
75226.
There is no sufficient basis for concluding that literal application of term "all other liens" in
statutory formula under 11 USCS § 522(f)(2)(A) produces result demonstrably at odds with inten-
tions of its drafters; therefore, court's task is simply to apply 11 USCS § 522(f)(2)(A) as Congress
wrote it. Kolich v Antioch Laurel Veterinary Hosp. (In re Kolich) (2003, CA8 Mo) 328 F3d 406, 41
BCD 75, 49 CBC2d 1896, CCH Bankr L Rptr P 78840.
Where appellee debtor acquired title to Texas property prior to marriage and prior to statutory
period of 11 USCS § 522(p)(1)(D), contrary to argument of appellant creditor, she was entitled to
her full homestead exemption notwithstanding divorce decree's later awarding it to her; "interest" in
§ 522 consistently referred to some vested economic interest in property, such as in § 522(b)(3)(B),
which characterized interest as tenant by entirety or joint tenant as "interest in property," and §
522(d)(1), which stated that debtor could exempt her "aggregate interest," not to exceed certain
value, in real property that debtor used as residence, and § 522(p)(2)(B), which stated that "any
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11 USCS § 522
amount of interest" did not include any interest transferred from debtor's previous principal resi-
dence that was acquired outside statutory period. Wallace v Rogers (In re Rogers) (2008, CA5 Tex)
513 F3d 212, CCH Bankr L Rptr P 81081.
Wording of 11 USCS § 522(b)(2)(B), "exempt from process under applicable nonbankruptcy
law," includes common law immunity as well as statutory exemption from process. Ray v Dawson
(1981, ED Tenn) 14 BR 822, 8 BCD 273, 5 CBC2d 404, CCH Bankr L Rptr P 68422.
Phrase "any property" in 11 USCS § 522(d)(5) means just that; property need not be of kind oth-
erwise exempt under various provisions in subsection (d). In re Upright (1979, BC ND NY) 1 BR
694, 5 BCD 1124, 1 CBC2d 229.
Phrase "any property" is unambiguous and in interpreting it court need not look to Uniform Ex-
emption Act or Bankruptcy Commission Report; only qualification for "any property" is that it be
property of estate and therefore unused portion of $ 7,500 allowance of 11 USCS § 522(d)(1) may
be applied to any property of estate, without limitations, under 11 USCS § 522(d)(5) since in enact-
ing 11 USCS § 522(d)(5) Congress intended that nonhomeowner could use $ 7,500 homestead ex-
emption for any other property. In re Brock (1981, BC WD Mich) 10 BR 67, 4 CBC2d 436, CCH
Bankr L Rptr P 67925.
Spouse of farmer may avoid lien on farm equipment pursuant to 11 USCS § 522(f)(2)(B); defini-
tion of "dependent" contained in § 522(a)(1) includes spouse, whether or not actually dependent. In
re Decker (1983, BC ND Ind) 34 BR 640, CCH Bankr L Rptr P 69496.
Phrase "debtor's interest" in 11 USCS § 522(d), which outlines federal exemption, does not
mean only debtor's equity. In re Lillard (1984, BC WD Ark) 38 BR 433.
Language in 11 USCS § 522(a), which provides that "dependent" may include spouse whether
or not actually dependent, does not apply to Ohio homestead exemption which requires occupancy
of residence by debtor or debtor's dependent because language of § 522 does not appear to contem-
plate that definition will be employed in interpretation of state exemption statutes, particularly in
light of fact that Ohio has opted out of federal scheme. In re Shinners (1986, BC ND Ohio) 60 BR
139.
"Agriculture" as used in Virginia exemption statute is not confined solely to raising of crops;
even if it were, fact that Chapter 7 debtors, who cultivated 500 acres of land, derived greater part of
income from sale and transportation of livestock does not take them outside definition of "one en-
gaged in the business of agriculture." In re Newsome (1986, BC ED Va) 60 BR 169.
Words "to the extent that" in 11 USCS § 522(f)(1), (f)(2), and (f)(3) are words of limitation
meaning "by the amount that" and not "if;" § 522(f)(3) is not limitation on dollar amount of prop-
erty that may be claimed as exempt before lien avoidance is prohibited, but is instead limitation on
amount of avoidance provided to debtors in §§ 522(f)(1) and (f)(2), measured by difference between
value of exempt property and $ 5,000. In re Duvall (1998, BC WD Tex) 218 BR 1008.
In 11 USCS § 522(f)(1)(B)(ii), phrase "of the trade" modifies implements, professional books,
and tools. In re Thompson (2001, BC WD Okla) 263 BR 134.
Chapter 7 trustee's and debtor's former spouse's objection to debtor's claim of exemption in her
residence was sustained, where debtor voluntarily granted her mother second mortgage within pref-
erence period, and within two weeks of filing of objections, mother discharged mortgage; interpret-
ing 11 USCS § 522(g)'s language, "property that trustee recovers," to require actual recovery by
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11 USCS § 522
trustee would produce result demonstrably at odds with intentions of drafters, where trustee indi-
cated intention to take action to recover, but had not actually recovered, property under 11 USCS §§
550, 551. In re Ringham (2003, BC DC Mass) 294 BR 204.
11 USCS § 522(h) does not contemplate full avoidance of transfer, but rather only permits
debtor to exercise trustee's avoiding powers "to extent that debtor could have exempted such prop-
erty." Osting v Blockberger (In re Osting) (2005, BC ND Ohio) 337 BR 297.
In context of 11 USCS § 522(p)(1), "amount of interest that was acquired" by debtors was equity
resulting from rollover of equity derived from sale of prior homestead; while appreciation did occur,
it did not occur due to any act of debtors and accordingly it was not interest "acquired by debtor"
during 1,215-day period; fact that homestead may have appreciated substantially in value during
1,215-day period did not constitute acquisition of interest in debtors' homestead for purposes of §
522(p). In re Rasmussen (2006, BC MD Fla) 349 BR 747, 19 FLW Fed B 395.
In context of 11 USCS § 522(p)(1), addition of clause "by debtor" after "acquires" implies more
than passive acquisition, such as by appreciation; it implies active acquisition of equity such as by
affirmative act of down payment or mortgage pay down. In re Rasmussen (2006, BC MD Fla) 349
BR 747, 19 FLW Fed B 395.
In context of 11 USCS § 522(p)(1), use of phrase "in aggregate" implies that successive acquisi-
tions of equity by debtor are to be aggregated; if aggregate amount of these acquisitions during
1,215-day period exceeds in value $ 125,000, excess will not be exempt. In re Rasmussen (2006,
BC MD Fla) 349 BR 747, 19 FLW Fed B 395.
"Owes," as it is used in 11 USCS § 522(q)(1)(B), means that debt was owed on date of petition
without regard to any payments on debt that were made post-petition. In re Presto (2007, BC SD
Tex) 376 BR 554.
In 11 USCS § 522, Congress uses "paragraph" to refer to numbered portions of statute which fall
under subsections; specifically, panel found that (1) 11 USCS § 522(f) is subsection; (2) 11 USCS §
522(f)(2) is paragraph; and (3) 11 USCS § 522(f)(2)(C) is subparagraph. Peoples Heritage Bank,
N.A. v Hart (In re Hart) (2002, BAP1) 282 BR 70, 49 CBC2d 74.
Meaning of "the date of filing of petition" is clear and unambiguous and does not distinguish be-
tween voluntary and involuntary debtors. Tanzi v Comerica Bank-California (In re Tanzi) (2003,
BAP9) 297 BR 607, 2003 CDOS 7643, 41 BCD 212.
Unpublished: 11 USCS 522(f)(2)(A)(ii) states that computation of impairment shall include "all
other liens on property;" United States Court of Appeals for Eighth Circuit interprets term "all other
liens on property" to include junior liens and § 522(f)(2) does not distinguish between senior liens
and junior liens, between those having greater and lesser priority under state law. Cadle Co. v Taras
(In re Taras) (2005, CA11 Ga) 131 Fed Appx 167, reported at (2005, CA11 Ga) 143 Fed Appx 308.
6. Relationship with other laws
Under Mandatory Victims Restitution Act, codified in relevant part at 18 USCS § 3613, gov-
ernment, in effect, possessed tax lien against debtor's property, triggering one of explicit exceptions
to Bankruptcy Code's protection afforded to homestead exemption, pursuant to 11 USCS §
522(c)(2)(B). United States v Hyde (2007, CA1 Mass) 497 F3d 103.
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11 USCS § 522
Bankruptcy court properly decided that postpetition sale of debtor's home, for which he had ob-
tained homestead exemption under Mass. Gen. Laws ch. 188, § 1, did not cause sale proceeds to
lose their exempt status and become subject to pre-petition debt because such would be at odds with
immunizing effect of 11 USCS § 522(c); despite creditor's arguments that result was unfair because
debtor allegedly acted dishonestly, in deciding which pre-petition debts could be satisfied from oth-
erwise exempt property, U.S. Congress did not list nondischargeable debts pursuant to 11 USCS §
523(a) among those itemized in 11 USCS § 522(c)(1)-(3). Pasquina v Cunningham (In re Cunning-
ham) (2008, CA1 Mass) 513 F3d 318, CCH Bankr L Rptr P 81093.
In light of policy underlying enactment of 11 USCS §§ 522 and 547, Md. Code Ann., Cts. &
Jud. Proc. § 11-504(e) permitted debtor, who filed petition for relief under Chapter 7 of U.S. Bank-
ruptcy Code, to recover money that was withheld from his wages, pursuant to writ of garnishment,
during 90-day period that preceded date he filed his petition. Bank of Am. v Stine (2003) 379 Md 76,
839 A2d 727.
Bankruptcy court ruling approving IRS' set-off under 26 USCS § 6402 of refund of debtor's
taxes against accrued pre-petition tax liability was affirmed because, since her right to refund was
extinguished when IRS exercised its set-off option, there was no asset for debtor to claim as exemp-
tion under 11 USCS § 522(b). Beaucage v United States IRS (2006, DC Mass) 342 BR 408.
Entire employee investment program funds earned or accrued by Chapter 7 debtor prepetition
are property of estate because Bankruptcy Code prevails over ERISA and because debtor's right of
access departs from traditional state spendthrift exception, although debtor is permitted to exempt $
100 from proceeds delivered to trustee under Indiana intangible personal property exemption. In re
Pulley (1989, BC ND Ind) 111 BR 715, 11 EBC 2288, CCH Bankr L Rptr P 73268.
Massachusetts homestead statute making exemption inapplicable to debts incurred prior to re-
cording of homestead declaration is preempted by 11 USCS § 522(c) to extent that Massachusetts
statute permits exempt property to be liable for debts other than those expressly enumerated in §
522(c)(1)-(3) since exempt property, whether exempted under state or federal law, can only be li-
able for types of debts set forth in § 522(c). In re Whalen-Griffin (1997, BC DC Mass) 206 BR 277
(criticized in In re Fracasso (1997, BC DC Mass) 210 BR 221).
Based upon Bankruptcy Code and Federal Rules of Bankruptcy Procedure, bankruptcy court
found that various Chapter 7 trustees' objections to creditors' claims should be overruled where
these objections failed to invoke any statutory support for denial of claim. In re Taylor (2003, BC
ND Ind) 289 BR 379.
Debtor's 11 USCS § 542 turnover action failed where debtor claimed 11 USCS § 522 exemption
in entire amount, and that exemption was allowed because no timely objection was raised; as con-
sequence debtor's tax refund was of no value or benefit to debtor's estate. Nase v GNC Cmty. Fed.
Credit Union (In re Nase) (2003, BC WD Pa) 297 BR 12, 41 BCD 185, 50 CBC2d 1242, 92 AFTR
2d 5944.
Bankruptcy court held that determination as to lien priority was required to be made under state
law; court rejected lienholder's position and found that 11 USCS § 522(f) provided no basis for de-
termination of relative priorities of competing liens without regard to their type or nature, but in-
stead provided basis for avoidance of certain liens that depended on their type or nature. Zampatti v
Scenery Hill Dev., Inc. (In re Zampatti) (2003, BC WD Pa) 300 BR 415.
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11 USCS § 522
Language of D.C. Code Ann. § 15-501(a)(11)(D) did not create any cognizable exemption;
court could give no effect to D.C. Code Ann. § 15-501(11)(D) because legislature failed to specify
source of payment that was to be exempted. In re Lewis (2004, BC DC Dist Col) 305 BR 610.
In context of 11 USCS § 522(g), trustee need not take formal action to "recover" property for
benefit of estate; under 11 USCS § 544, if creditor has security interest, but its lien is not perfected,
trustee automatically steps into position having priority over creditor. In re Hicks (2006, BC WD
Mo) 342 BR 596.
11 USCS § 522(m) does not create any rights under state laws that do not otherwise exist; §
522(m)'s reference to "this section" makes clear that it applies to new § 522(p), provision limiting
homestead exemption. In re Rasmussen (2006, BC MD Fla) 349 BR 747, 19 FLW Fed B 395.
If thrift savings plan (TSP) account (more formally known as thrift savings fund account) ac-
count were property of bankruptcy estate such that exemptibility of account became issue, 26 USCS
§ 7701(j)(1) appeared to supply basis for treating debtor's TSP account as exemptible. In re Gill
(2007, BC DC Dist Col) 100 AFTR 2d 6356.
Although 11 USCS § 522(b)(3) had been amended to require debtor to reside for 730 days in
state before using that state's homestead exemption, venue provisions of 28 USCS § 1408 had not
been similarly revised and bankruptcy petition was appropriate in court located where debtor had
resided for 180 days. In re Jevne (2008, BC SD Fla) 387 BR 301, 21 FLW Fed B 282.
If property is excluded from bankruptcy estate at time of bankruptcy filing, subsequent change
in its form does not bring it into estate unless another statutory provision would capture it as post-
petition asset. Cisneros v Kim (In re Kim) (2000, BAP9) 257 BR 680, 2001 CDOS 750, 2001 Daily
Journal DAR 1087, 37 BCD 80, 25 EBC 2121, CCH Bankr L Rptr P 78365, affd (2002, CA9) 35
Fed Appx 592.
Bankruptcy appellate panel adopted majority rule and held that where Chapter 13 debtors lacked
standing to bring lien avoidance proceeding, pursuant to 11 USCS § 544, and bankruptcy court was
without subject matter jurisdiction to determine complaint. Hansen v Hansen (In re Hansen) (2005,
BAP10) 332 BR 8.
Debtors claimed that interpreting "benefits" under Mont. Code Ann. § 25-13-608(1)(f) to include
stock proceeds at issue would have been consistent with exemptions such as those in 11 USCS §
522(d)(10)(E), but court disagreed; agreement, guarantee, and promissory note contained no direc-
tion or indication that monthly payments one debtor received from sale of stock, which then paid for
debtor's end-of-life medical care and medications, were intended as benefits that qualified under
specific sections of 26 USCS §§ 401(a), 403(a), (b), 408, and federal exemptions, which in any
event did not apply in opt-out state like Montana, provided no support for debtors' claim that ex-
emption they claimed was reasonable. In re Archer (2006) 2006 MT 82, 332 Mont 1, 136 P3d 563.
7.--Right of setoff § 523
Where debtor properly exempted her 1995 federal income tax refund, and 1990 and 1991 tax
debts for which IRS intercepted her refund were dischargeable debts, setoff against those debts was
impermissible under 11 USCS § 522(c), since IRS's right of setoff under § 553(a) must yield to
Debtor's right to exempt and protect assets under § 522(c). United States v Jones (In re Jones)
(1999, MD Ala) 230 BR 875, 41 CBC2d 1270, 99-1 USTC P 50366, 83 AFTR 2d 1893 (criticized in
In re Martinez (2000, BC WD Tex) 258 BR 364, 87 AFTR 2d 303) and (criticized in In re Bourne
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11 USCS § 522
(2001, BC ED Tenn) 262 BR 745) and (criticized in Junio v Astoria Fed. Savs. (2002, ED NY) 2002
US Dist LEXIS 25735).
11 USCS § 522(c) stating that exempt property shall not be held liable for debtor's prepetition
debts takes precedence over 11 USCS § 553 right of setoff so that income tax refund would not be
set off against prior year's unpaid tax liability where IRS had not filed prepetition lien. Commis-
sioner v Alexander (In re Alexander) (1999, WD Ky) 245 BR 280, 99-2 USTC P 50903, 84 AFTR 2d
6543.
Reading 11 USCS § 522(c) as paramount to 11 USCS § 553 in many instances completely de-
stroys offset right of creditor, and therefore would render applicability of § 553 contradictory to its
plain language; thus, bankruptcy court erred in allowing 11 USCS § 522(c) to modify rights pro-
vided for in 11 USCS § 553 to extent that 11 USCS § 522(c) functioned to limit IRS's setoff right to
amount of their priority tax claim against debtors. United States v White (2007, MD Pa) 365 BR
457, 99 AFTR 2d 1479.
By virtue of 11 USCS § 522(c)(1), exempt status of Chapter 13 debtor's claim for tax refund
does not shield it from IRS's right of setoff. In re Munson (1999, BC CD Ill) 241 BR 410, 42 CBC2d
1818, 84 AFTR 2d 6010, revd, remanded (2000, CD Ill) 248 BR 343, 43 CBC2d 1883, 2000-1
USTC P 50456, 85 AFTR 2d 1912 (criticized in In re Ronnie Dowdy, Inc. (2004, BC ED Ark) 314
BR 182, 94 AFTR 2d 5562).
Creditor's right to setoff under 11 USCS § 553 must yield to debtor's right to exempt and protect
assets under 11 USCS § 522. In re Pace (2000, BC WD Mo) 257 BR 918, 45 CBC2d 948 (criticized
in In re Bourne (2001, BC ED Tenn) 262 BR 745) and (criticized in In re Allen (2001, BC ND Iowa)
266 BR 713, 47 CBC2d 218).
Because creditor's right to setoff under 11 USCS § 553 yields to debtor's right to exempt and
protect assets under 11 USCS § 522, "security" provided in 11 USCS § 506, which is based on setoff
rights under 11 USCS § 553, must likewise yield; thus, creditor is only secured to extent that setoff
is not limited by debtor's exemptions. In re Pace (2000, BC WD Mo) 257 BR 918, 45 CBC2d 948
(criticized in In re Bourne (2001, BC ED Tenn) 262 BR 745) and (criticized in In re Allen (2001, BC
ND Iowa) 266 BR 713, 47 CBC2d 218).
Creditor's right of setoff under 11 USCS § 553 does not yield to debtor's right to exempt and
protect assets under 11 USCS § 522. In re Martinez (2000, BC WD Tex) 258 BR 364, 87 AFTR 2d
303.
11 USCS § 522(c) does not prevent offset (11 USCS § 553) against exempt property. In re Allen
(2001, BC ND Iowa) 266 BR 713, 47 CBC2d 218 (criticized in Dollar Bank, FSB v Tarbuck (In re
Tarbuck) (2004, BC WD Pa) 318 BR 78).
Chapter 7 debtor's claim to exemption for portion of money in his bank account was allowed;
bank could not claim money as setoff to deficiency owed to bank as result of foreclosure of debtor's
mortgage because debtor's right to exemption was superior to creditor's right to set off what was
owed it. Dollar Bank, FSB v Tarbuck (In re Tarbuck) (2004, BC WD Pa) 318 BR 78.
Exempt property under 11 USCS § 522 is not subject to setoff under 11 USCS § 553. Dollar
Bank, FSB v Tarbuck (In re Tarbuck) (2004, BC WD Pa) 318 BR 78.
Where bankruptcy debtor's mortgagee, federal agency, set off debtor's federal income tax refund
against debtor's foreclosure deficiency obligation, fact that debtor claimed exemption in portion of
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11 USCS § 522
refund did not preclude setoff because debtor only had right to refund after setoff and thus refund
never became property of debtor's estate. In re Baucom (2006, BC WD Mo) 339 BR 504, 97 AFTR
2d 1679.
Chapter 7 debtor was not entitled to turnover of federal income tax refund, which had been off-
set pre-petition from debt owed by debtor on defaulted mortgage with federal government agency,
because, although debtor claimed refund as exempt under 11 USCS § 522, refund never became
property of estate, having been properly offset under 11 USCS § 553 prior to filing of debtor's peti-
tion. Houchens v U.S. Dep't of Agri. Dev. (In re Houchens) (2008, BC WD Ky) 384 BR 472.
8.--Other particular Bankruptcy Code sections
By defining application of 11 USCS § 522, Congress intended to allow debtor electing exemp-
tions not to be obstructed by 11 USCS § 541 so that for purposes of exemption under § 522, deter-
mination of what is property of debtor's estate under § 541 may be disregarded and § 541 does not
bind debtor from making election of state or federal exemptions; thus, even though property held by
debtor as tenant by entirety is property of estate pursuant to § 541 and even though trustee has
power to sell both real and personal property as part of debtor's estate, debtor may elect protection
of state law by statutory exemption and immunity from process for entireties property when only
one spouse is debtor and this election is only affirmative act necessary for debtor to exempt entire-
ties property from bankruptcy. In re Barsotti (1980, BC WD Pa) 7 BR 205, 6 BCD 1295, 3 CBC2d
306, CCH Bankr L Rptr P 67931.
11 USCS § 1325(a)(5)(B) and 11 USCS § 522(f) are not inconsistent because lien is claimed
only to extent of creditor's interest in estate property and since exempt property is not property of
estate, these lien creditors would be unsecured creditors except to extent that value of assets exceed
allowable exemptions applicable thereto. In re Berrong (1985, BC DC Colo) 53 BR 640, 13 CBC2d
Definition of farmer in 11 USCS § 101(17) does not apply in determining exemptions and lien
avoidance issues in opt-out state. In re Smith (1987, BC SD Iowa) 78 BR 922.
Chapter 7 trustee may not utilize 11 USCS § 548(a)(1) and § 550 to set aside debtor's homestead
exemption after deadline for filing an objection has expired pursuant to § 522(l) and F.R.B.P. 4003.
Ezrol v Lane (In re Lane) (1995, BC SD Fla) 190 BR 125, 9 FLW Fed B 251 (criticized in In re
Tabone (2000, BC MD Fla) 247 BR 541, 35 BCD 279, 13 FLW Fed B 148).
Clear language of § 522(c) protects exempt property, regardless of form, from prepetition debts,
and to include exempt property within confines of § 1325's definition of disposal income directly
conflicts with § 522(c). In re Kerr (1996, BC ND Ill) 199 BR 370.
Trustee was entitled to subtract $ 10,000 in damages incurred for contempt from debtors' ex-
empt portion of proceeds of sale of their residence; damages were not administrative expenses
within meaning of 11 USCS § 503(b)(1)(A), since they were not necessary, or § 522(k), at least as
between estate and debtors. In re Swanson (1997, BC DC NJ) 207 BR 76, CCH Bankr L Rptr P
77340.
There is no conflict between 11 USCS § 363 and 11 USCS § 522(f), and creditor's argument that
debtor has no equity in property and should not be allowed to avoid creditor's judgment lien because
creditor will foreclose on property anyway is not persuasive. In re Plott (1998, BC ND Ohio) 220
BR 596.
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11 USCS § 522
Chapter 13 debtor could amend schedules to claim exemption for unliquidated claim for per-
sonal injury arising out of post confirmation automobile accident since case was still open, but
claim not be exempted because it was not property of estate since 11 USCS § 1327 vests property of
estate in debtor upon confirmation. In re Brown (2001, BC MD Ga) 260 BR 311.
When sums garnished from Chapter 7 debtor's wages during 90 days prior to bankruptcy were
restored to estate by reason of preference litigation, such cash was entitled to same exempt status
that it would have enjoyed had no preference occurred so that garnishing creditor could not argue
that debtor lacked standing to recover preference under 11 USCS § 522(h) and (i) on grounds that
asset in question was no longer cash. Price v Mfrs. & Traders Trust Co. (In re Price) (2001, BC WD
NY) 260 BR 653, 46 CBC2d 76.
Bankruptcy court properly granted relief from stay to allow bank to foreclose, where debtors
provided no valid basis for objecting to bank's stay motion, since equity in property is not "good
cause" for debtor to contest stay motion in Chapter 7 case, 11 USCS § 506(d) does not confer avoid-
ing power on Chapter 7 no-asset debtor with regard to consensual junior lien in situation where sen-
ior lien(s) exceed(s) value of property, and 11 USCS § 522(f) does not permit debtor to avoid con-
sensual lien. In re Davenport (2001, BC WD Ky) 266 BR 787, 38 BCD 114, 47 CBC2d 75 (criti-
cized in Talbert v City Mortg. Servs. (2002, WD Mich) 2002 US Dist LEXIS 10464).
Creditor's tax lien survived debtor's discharge under 11 USCS § 522(c), and although it appeared
that creditor's renewal of tax lien was to gain lien on debtor's postpetition property, no violation of
bankruptcy discharge injunction of 11 USCS § 524(a) could be found because it was debtor's burden
under 11 USCS § 523(c) and Fed. R. Bankr. P. 4007(c) to initiate dischargeability action with re-
spect to tax obligation and no determination of dischargeability had been requested or made, thus,
debtor's complaint under 11 USCS § 524 was dismissed without prejudice. Jarrett v Ohio (In re
Jarrett) (2002, BC ND Ohio) 293 BR 127.
Bankruptcy court concluded that state court final order directing return of money to debtor's cli-
ents was not void as violation of automatic stay of 11 USCS § 362 where it did not implicate prop-
erty of debtor's estate under 11 USCS § 541; debtor was entitled to claim $ 5,000 as exempt prop-
erty, pursuant to 11 USCS § 522; Del. Code Ann. tit. 10, § 4914. In re Hull (2003, BC DC Del) 41
BCD 218.
Where debtor filed bankruptcy prior to entry of judgment of divorce, automatic stay did not ap-
ply to wife's state court action for equitable distribution of debtor's property that was not property of
bankruptcy estate, e.g. exempt property, postpetition earnings, property abandoned by trustee, or
debtor surplus, but wife's motion for relief from stay as to estate property was denied because Chap-
ter 7 Trustee, as hypothetical lien judgment creditor, had superior interest to that of wife. In re
Howell (2004, BC DC NJ) 311 BR 173, 52 CBC2d 786.
Non-debtor ex-wife's pre-petition equitable distribution right to in kind relief constituted prop-
erty interest (and likely pre-petition claim), and that survived bankruptcy; neither bankruptcy trustee
via 11 USCS § 544(a) nor debtor via 11 USCS §§ 544(a), 522(h), could henceforth avoid property
interest and court could not conceive of another method by which property interest could be
avoided. Verner v Verner (In re Verner) (2005, BC WD Pa) 318 BR 778.
There is no independent statutory directive akin to 11 USCS § 522(c) that protects property that
has vested pursuant to 11 USCS § 1327(b); accordingly, there is no conflict between recapture pro-
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11 USCS § 522
visions of 11 USCS § 348 as applied to property that has vested in debtor under 11 USCS § 1327(b).
In re Fonke (2005, BC SD Tex) 321 BR 199.
Language of 11 USCS § 522(c) controls over 11 USCS § 348(f) based on their legislative his-
tory, inconsistent structure of 11 USCS § 348(f), and specificity of 11 USCS § 522(c). In re Fonke
(2005, BC SD Tex) 321 BR 199.
Debtor elected to use federal exemptions provided by 11 USCS § 522(d) rather than applicable
state or local exemptions; consequently, she was not subject to 11 USCS § 522(q)(1) and, by exten-
sion, 11 USCS § 727(a)(12), and debtor's landlord's request that court bar entry of discharge pursu-
ant to that same provision failed. In re Jacobs (2006, BC DC Dist Col) 342 BR 114.
In order to sustain objection that debtors' claimed exemption of homestead property that was ob-
tained from transfer of non-exempt property shortly before debtors filed bankruptcy, so that prop-
erty could not be considered exempt, pursuant to 11 USCS § 522(o), trustee needed to provide evi-
dence of debtors' intent to actually hinder, delay, or defraud creditors, in same manner that such
showings were required under 11 USCS § 548 and 11 USCS § 727. In re Agnew (2006, BC DC Kan)
355 BR 276.
Impact of so-called "hanging paragraph" referencing paragraph 5 of 11 USCS § 1325(a) on se-
cured creditor's rights when vehicle is surrendered is significantly different from impact of 11 USCS
§ 522(f) because liens affected by "hanging paragraph" are not destroyed but rather are protected to
extent of value of collateral; in contrast, if lien impairs debtor's exemption claim, § 522(f) permits
debtor to destroy lien thereon, relegating claim to unsecured status. Americredit Fin. Servs. v Lanier
(In re Lanier) (2007, BC MD Pa) 372 BR 727.
Bankruptcy court denied Chapter 13 debtors' motion seeking order allowing them to strip off
judgment lien bank held on their principal residence, pursuant to 11 USCS § 522(f); although mort-
gage company and another bank held senior recorded mortgages on debtors' residence, when those
amounts were subtracted from fair market value of debtors' residence, debtors had equity in their
residence to which judgment lien could and did attach; as such, judgment lien was not valueless and
11 USCS § 1322(b)(2) prohibited debtors from removing lien. In re Grimes (2007, BC WD Ky) 376
BR 811.
Special treatment afforded to some creditors holding purchase money security interests, pursu-
ant to 11 USCS § 1325(a) potentially conflicts with policy considerations of 11 USCS § 522(f) of
providing debtors with fresh starts, however, law as written by Congress needed to be applied. In re
Matthews (2007, BC DC SC) 378 BR 481.
Even if bankruptcy court had discharged certain tax liabilities in personam, any property that be-
longed to taxpayer when he filed his bankruptcy petition was still encumbered in rem under 11
USCS § 522(c)(2)(B) by tax lien for which notice had been filed pursuant to I.R.C. 6331(a). Woods
v Comm'r (2006) TC Memo 2006-38, 91 CCH TCM 852.
Generally, only trustee may bring action to avoid prepetition transfer; however, pursuant to 11
USCS § 522(g) and (h), debtor has standing to avoid transfer if property transferred would have
been exempt, property was not transferred voluntarily, and trustee has not sought to bring avoidance
action. James v Planters Bank (In re James) (2001, BAP8) 257 BR 673, 37 BCD 76, 45 CBC2d 787.
9. Applicability to Chapter 11, 12 and 13 cases
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11 USCS § 522
Court agreed with bankruptcy court's finding that debtor could not claim exemption for earnings
under 11 USCS § 522 by relying upon Vt. Stat. Ann. tit. 12, § 3170(b)(1) (Lexis Supp. 2001), be-
cause statute was designed for purpose of restricting wage garnishment, and it was inapplicable to
bankruptcy. Riendeau v Canney (In re Riendeau) (2002, DC Vt) 293 BR 832, affd (2003, CA2 Vt)
336 F3d 78.
11 USCS § 522 is applicable to Chapter 13 cases, as provided by 11 USCS § 103. In re Jordan
(1980, BC DC NJ) 5 BR 59, 6 BCD 630, 2 CBC2d 635.
Despite the provision of 11 USCS § 103(a), that Chapters 1, 3, and 5 of the Bankruptcy Code
are applicable in proceedings filed under Chapters 7, 11, and 13, exemption provisions of 11 USCS
§ 522 are not applicable in Chapter 13 proceedings, § 522 being inconsistent with Chapter 13 in
that, as presently structured, property of debtor under Chapter 13 remains in debtor's possession
while exemptions become important when debtor is permitted to keep only what is deemed to be
exempt; therefore, no part of § 522 is available to Chapter 13 debtor. In re Morgan (1981, BC DC
Del) 18 BR 17.
Although 11 USCS § 522(a)(1) is applicable to individual debtors in Chapter 11, exemptions
have limited usage in Chapter 11 cases; exemptions must be considered in determining whether ob-
jecting creditors are receiving more through Chapter 11 plan than they would under Chapter 7 liqui-
dation, and individual debtor may claim exemptions in plan of liquidation proposed by his creditors;
as long as spouse's needs are met and alimony rights are adequately protected, Chapter 11 debtor
should be given reasonable time to select exemptions. In re Summerlin (1983, BC ED NC) 26 BR
875.
Debtor in Chapter 13 case may avoid, under 11 USCS § 522(f), creditor's judgment lien to extent
it impairs his exemptions, regardless of whether creditor had properly levied on that judgment. In
re Tash (1987, BC DC NJ) 80 BR 304.
11 USCS § 522(h) limits benefit which individual debtor may derive from trustee's avoiding
powers in Chapter 13 case to exemptions available under 11 USCS § 522(b). In re Tash (1987, BC
DC NJ) 80 BR 304.
Debtor's right to retain exempt properties under 11 USCS § 522 was unaffected by absolute pri-
ority rule of 11 USCS § 1129(b)(2)(C)(ii) because creditors could not subject debtor's exempt prop-
erty to involuntary liquidation. In re Henderson (2005, BC MD Fla) 18 FLW Fed B 139, corrected
(2005, BC MD Fla) 321 BR 550, 18 FLW Fed B 143.
Proceeds from settlement of pre-petition lawsuit that were received post-petition were dispos-
able income under 11 USCS § 1325(b)(1) where there was no evidence that they were reasonably
necessary for maintenance or support of debtors or their dependents and under plain reading of §
1325(b), disposable income was not expressly limited by 11 USCS § 522(c); instead, disposable in-
come was only limited by that which was reasonably necessary for debtors' (or their dependents')
maintenance or support. In re Launza (2005, BC ND Tex) 54 CBC2d 318.
Where bankruptcy debtor leased and operated restaurant in hotel and debtor's bank claimed se-
curity interest in post-petition receivables owed to debtor by hotel for room service charges col-
lected by hotel, bank failed to produce any evidence demonstrating that any portion of guest charges
could be identified as proceeds of inventory on which bank had lien on petition date. Timothy
Dean's, Inc. v White (In re Timothy Dean Rest. & Bar) (2006, BC DC Dist Col) 342 BR 1.
Page 49
11 USCS § 522
Debtor's transmutation of his community property, marital home, to joint tenancy did not forfeit
his homestead rights under Cal. Code Civ. Proc. § 704.720(a) and interest did not fall within bar of
11 USCS § 522(g) because there was little equity in property and there was nothing for trustee to
recover by avoiding fraudulent transfer; therefore, debtor's proposed Chapter 13 plan met require-
ments of 11 USCS § 1325(a)(4) and was confirmed over objection of creditor with unliquidated
claim. In re Osborn (2006, BC ND Cal) 346 BR 204.
Debtor's transmutation of his community property, marital home, to joint tenancy did not forfeit
his homestead rights under Cal. Code Civ. Proc. § 704.720(a) and interest did not fall within bar of
11 USCS § 522(g) because there was little equity in property and there was nothing for trustee to
recover by avoiding fraudulent transfer; therefore, debtor's proposed Chapter 13 plan met require-
ments of 11 USCS § 1325(a)(4) and was confirmed over objection of creditor with unliquidated
claim. In re Osborn (2006, BC ND Cal) 346 BR 204.
II.APPLICABILITY OF STATE LAW EXEMPTIONS
A.In General 10. Generally
Nothing in 11 USCS § 522(b) limits state's power to restrict scope of its exemptions; indeed,
state could theoretically accord no exemptions at all. Owen v Owen (1991) 500 US 305, 114 L Ed
2d 350, 111 S Ct 1833, 91 CDOS 3710, 91 Daily Journal DAR 6043, 21 BCD 1164, 24 CBC2d 850,
CCH Bankr L Rptr P 73963 (superseded by statute as stated in In re Parrish (1995, BC WD Wis)
186 BR 246, CCH Bankr L Rptr P 76786).
Nothing in 11 USCS § 522 suggests that state cannot determine exemptions according to date
debts were incurred, and allow different amounts for exemptions fixed at date of debts, if that is
state law at time petition is filed. First Nat'l Bank v Norris (1983, CA11 Ala) 701 F2d 902, 10 BCD
473, 8 CBC2d 1078 (criticized in In re Betz (2002, BC DC Mass) 273 BR 313).
When Chapter 7 debtor elects to claim exemption under state law pursuant to 11 USCS § 522,
he is required to comply with state law in effect at time of filing his petition in bankruptcy; state ex-
emptions which debtor may elect to claim may be more or less generous than federal exemptions,
and they need not be identical or even comparable to exemptions established under federal law. In
re Golden (1986, CA9 Cal) 789 F2d 698, CCH Bankr L Rptr P 71125.
Debtors sometimes may exempt property that states protect from civil execution pursuant to 11
USCS § 522(b)(2)(A); they may use exemption for implements, professional books, or tools, of
trade under 11 USCS § 522(f)(2)(B) despite existence of security interests in those items. In re
Erickson (1987, CA7 Wis) 815 F2d 1090, CCH Bankr L Rptr P 71725.
Bankruptcy Appellate Panel was correct in determining that debtor's claim of special exemp-
tions under Cal. Civ. Proc. Code § 703.140 after filing for bankruptcy was not precluded by her pre-
bankruptcy exemption filing under California statutory law; debtor's attempt at consecutive exemp-
tion use under different state statutes and fact situations did not violate California's election of
remedies doctrine. Little v Reaves (In re Reaves) (2002, CA9) 285 F3d 1152, 2002 CDOS 3019,
2002 Daily Journal DAR 3679, CCH Bankr L Rptr P 78632.
State may not create exemption which conflicts with federal bankruptcy law. In re Love (1985,
ED NC) 54 BR 947.
Federal exemptions are not applicable where state has specifically vetoed exemptions under op-
tion given by 11 USCS § 522 to each state, and under such circumstances issue of whether property
Page 50
11 USCS § 522
is exempt homestead is to be decided under state law; value and status of exempt property in bank-
ruptcy is determined as of date petition is filed, and where debtors arrange to retain possession of
homestead until day after bankruptcy petition was filed, at which time they moved into leased prem-
ises, under applicable state homestead exemption, state court case holding that property remains
homestead exemption until sale is closed, is dispositive. In re Crump (1980, BC SD Fla) 2 BR 222,
5 BCD 1235, 1 CBC2d 378, CCH Bankr L Rptr P 67444.
It is not role of bankruptcy court to determine whether state exemption statutes are imprudent
nor that authority granted by Congress to state legislators is too broadly granted. In re Worthington
(1983, BC WD Ky) 28 BR 736.
For nonbankruptcy exemption to qualify as exemption under 11 USCS § 522(b)(2)(A), nonbank-
ruptcy law is sufficient if it provides an exemption from process and need not specify that exemp-
tion be available in bankruptcy. In re Stewart (1983, BC DC Utah) 32 BR 132, 11 BCD 27, CCH
While right to exemptions is determined as of date petition is filed, this rule is subject to qualifi-
cation and interpretation, e.g., where state has opted out, 11 USCS § 522(b)(2)(A) refers to state or
local law that is applicable on date of filing of petition and state has considerable freedom in creat-
ing exemptions and eligibility requirements for those exemptions; if applicable state law contem-
plates examination into debtor's past or future, court is not precluded from making appropriate in-
quiries where circumstances warrant. In re Kolsch (1986, BC DC Nev) 58 BR 67.
11 USCS § 522(b)(2), which incorporates state law on exemptions into Bankruptcy Code, con-
fers on individual Chapter 7 debtors same rights to exempt property from creditors' claims in bank-
ruptcy as exist under applicable state law but may not be construed so as to afford debtors greater
rights vis-a-vis creditors in bankruptcy than they are entitled to outside of bankruptcy. In re
McConchie (1988, BC DC Mass) 94 BR 245, CCH Bankr L Rptr P 72560.
Federal law places no limits on generosity or lack thereon with which states may define exemp-
tion, and therefore when state has opted out of federal exemption scheme of 11 USCS § 522(d),
court must look to state law to determine source and scope of debtor's exemptions. In re Rawn
(1996, BC ED Cal) 199 BR 733.
Once debtor filed for relief under Bankruptcy Code, its provisions pre-empted exceptions to
Massachusetts homestead exemption. Haemonetics Corp. v Dupre (In re Dupre) (1997, BC DC
Mass) 208 BR 609, CCH Bankr L Rptr P 77418, vacated, remanded on other grounds (1999, DC
Mass) 238 BR 224, 42 CBC2d 1773, affd (2000, CA1 Mass) 229 F3d 1133, reported in full (2000,
CA1 Mass) 2000 US App LEXIS 20898.
States may not create exemptions that apply only in bankruptcy proceedings; doing so changes
distribution of assets between debtors and creditors, and therefore, frustrates full effectiveness of
federal law by changing balance between debtors and creditors that Congress created in Bankruptcy
Code. In re Cross (2000, BC ND Ind) 255 BR 25.
By preponderance of evidence bankruptcy court found that despite ownership of asset exempted
under state law, debtor lacked sufficient resources and income to pay her student loans without un-
due hardship; debtor met three-part Brunner test and requirements of 11 USCS § 523(a)(8), and
court determined that debtor's student loans were fully dischargeable. Armesto v N.Y. State Higher
Educ. Servs. Corp. (In re Armesto) (2003, BC WD NY) 298 BR 45.
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11 USCS § 522
Trustee's objection to debtor's claimed exemptions, pursuant to 11 USCS § 522(b), for three in-
surance policies was sustained as state statutory exemptions that debtor claimed under Mass. Gen.
Laws ch. 175, §§ 125 and 126 did not apply to protect debtor's interests in insurance policies. In re
Chevalier (2005, BC DC Mass) 330 BR 21.
11. Applicable law
Although state law controls what property is exempt, federal law determines availability of lien
avoidance under 11 USCS § 522(f)--debtor with state-created exemptions is entitled to § 522(f) pro-
tection. In re Robinson (1990, DC Colo) 114 BR 716.
State law which governs exemption of property is that law which is in effect on date bankruptcy
petition is filed, and debtors may claim federal exemption notwithstanding state statute prohibiting
debtor from utilizing federal exemptions, where debtors filed petition prior to effective date of such
state law. In re Boozer (1980, BC ND Ga) 4 BR 524, 6 BCD 529, 2 CBC2d 435, CCH Bankr L Rptr
P 67572.
Debtor's right to exemptions provided by state law must be determined solely with reference to
state law. In re Barnes (1980, BC MD Fla) 4 BR 600, CCH Bankr L Rptr P 67676.
State and not federal law determines nature and extent of debtor's interest in property in pro-
ceeding under Bankruptcy Code, since property interests are created and defined by state law; under
law of Pennsylvania, each spouse is seized of whole and not of any fraction of property, and
debtor's interest in premises was entire value of property. In re Hackett (1982, BC ED Pa) 23 BR
710.
Where state opts out of exemption provisions of 11 USCS § 522(d), determination of exemption
is matter of application of state law. In re Moore (1983, BC DC Md) 30 BR 197.
Bankruptcy Court must look to state law in determining scope of state created exemption. In re
Love (1984, BC ED NC) 42 BR 317, affd (1985, ED NC) 54 BR 947.
While right to exemptions is determined as of date petition is filed, this rule is subject to qualifi-
cation and interpretation, e.g., where state has opted out, 11 USCS § 522(b)(2)(A) refers to state or
local law that is applicable on date of filing of petition and state has considerable freedom in creat-
ing exemptions and eligibility requirements for those exemptions; if applicable state law contem-
plates examination into debtor's past or future, court is not precluded from making appropriate in-
quiries where circumstances warrant. In re Kolsch (1986, BC DC Nev) 58 BR 67.
In determining scope of exemptions under state opt-out provisions, Bankruptcy Court must look
to state law. In re Shaffer (1987, BC DC SC) 78 BR 783, 16 BCD 807.
In bankruptcy actions, federal courts decide merits of state exemptions, but validity of claimed
state exemption is controlled by applicable state law. In re Knudsen (1987, BC CD Cal) 80 BR 193.
Where Chapter 7 debtors have claimed exemptions under state law, Bankruptcy Court must look
to state law to determine whether or not items claimed as collateral by creditor may be exempted by
debtors under 11 USCS § 522(d). In re Griffiths (1988, BC WD Wash) 86 BR 639.
In states have that opted out of federal exemption scheme under 11 USCS § 522(d), what prop-
erty is exempt is determined by state law, but federal law determines what liens may be avoided. In
re Eveland (1988, BC ED Cal) 87 BR 117, CCH Bankr L Rptr P 72345.
Page 52
11 USCS § 522
Determination of whether exemption is available to Chapter 13 debtor under 11 USCS § 522 is

question of federal law, not state law. In re Hoffman (1988, BC WD Pa) 96 BR 46.
While the scope of exemptions in bankruptcy can be determined by laws of the various states
pursuant to 11 USCS § 522(b), states may not legislatively determine exclusions, as such statutes
are preempted by federal law; thus, a state statute declaring that a debtor's individual retirement ac-
count is not part of the bankruptcy estate is preempted by federal law. In re Van Nostrand (1995,
BC DC NJ) 183 BR 82, 33 CBC2d 1673.
Cash value of life insurance policies could not be fully exempted under state's insurance code
but had to be included within $ 60,000 limitation under its property code. In re Scott (1996, BC ND
Tex) 193 BR 805.
Bankruptcy court held that determination of whether particular benefit fell within scope of "pub-
lic assistance" exemption of 735 Ill. Comp. Stat. 5/12-1001(g)(1) entailed examination of purposes
of legislation that provided benefit, not in purpose that benefit may serve once it was in hands of
given debtor. In re Koch (2003, BC CD Ill) 299 BR 523, CCH Bankr L Rptr P 78944, 92 AFTR 2d
6410.
Bankruptcy court in Tennessee entered orders transferring Chapter 7 and Chapter 13 cases to
other districts after finding that residents of Arkansas and Mississippi had filed cases in improper
venue where (1) convenience of debtors was not valid concern; (2) bank accounts in Tennessee
were not principal assets; (3) debtor's salaried workplaces in Tennessee were not places of business
under 28 USCS § 1408; (4) postpetition assets were not considered in venue analysis; (5) court was
unable to apply equity while overlooking 28 USCS § 1408; and (6) exemptions claimed were not
governed by Tennessee law under 11 USCS § 522(b)(2)(A). In re Ross (2004, BC WD Tenn) 312 BR
879.
Formula for determining debtor's exemptions contained in 11 USCS § 522 (b)(3)(A) incorpo-
rated New Hampshire exemption law as applicable state law in this case because debtors had not
lived in Ohio for two years prior to filing this case, but they did live in New Hampshire for six
months prior to that two year period; therefore, debtors' election to use New Hampshire's homestead
exemption was not impermissible extraterritorial application of state law. In re Varanasi (2008, BC
SD Ohio) 59 CBC2d 935.
In bankruptcy actions, validity and scope of claimed state exemption is controlled by applicable
state law and state's rules of construction. Shelley v Kendall (In re Shelley) (1995, BAP9 Cal) 184
BR 356, 95 CDOS 5654, 95 Daily Journal DAR 9605, adopted, affd (1997, CA9) 110 F3d 68, re-
ported at (1997, CA9) 109 F3d 639, 97 CDOS 2162, 97 Daily Journal DAR 4007.
Minn. Stat. § 550.37, subd. 24, exempted funds in Individual Retirement Account or Individual
Retirement Annuity, each as defined in I.R.C. § 408, whether or not debtor had unlimited access to
account balance; IRA, as defined by I.R.C. § 408, was exempt property under Minn. Stat. § 550.37,
subd. 24, as limited by terms of Minn. Stat. § 550.37, subd. 24(a), to indexed present value and
sums reasonably necessary for support of debtor and debtor's spouse or dependents, as Minnesota
Legislature clearly intended that IRAs generally be exempt by expressly listing them, in contrast to
11 USCS § 522(d)(10)(E), which did not mention them by name. Clark v Lindquist (2004, Minn)
683 NW2d 784.
12. Uniformity not required
Page 53
11 USCS § 522
11 USCS § 522(b) expressly grants states broad discretion and open-ended opportunity to de-
termine what property may be exempt from bankruptcy estate, as long as state law does not conflict
with property exempt under federal law other than "laundry list" of federal exemptions specified in
11 USCS § 522(d); significantly, section does not mandate that debtors be guaranteed right to ex-
empt particular types of property; unambiguous language of 11 USCS § 522(b) implicitly indicates
state may exempt same property included in federal laundry list, more property than that included in
federal laundry list, or less property than that included in federal laundry list; states also may pre-
scribe their own requirements for exemptions, which may either circumscribe or enlarge list of ex-
empt property. In re McManus (1982, CA5 La) 681 F2d 353, 9 BCD 561, 6 CBC2d 1194, CCH
Bankr L Rptr P 68925, reh den (1982, CA5 La) 689 F2d 190 and reh den (1982, CA5 La) 689 F2d
190 and (ovrld as stated in In re Durban (2004, BC ND Tex) 2004 Bankr LEXIS 2032).
States may enact statutory exemption provisions which are less beneficial to debtor than those
permitted in federal exemption provisions; if Congress had intended to foreclose states from prom-
ulgating more restrictive exemptions it could simply have enacted exemption scheme currently em-
bodied in § 522(d) and not provided states with election to opt out and supremacy clause would
have prevented states from promulgating more restrictive and, therefore, inconsistent bankruptcy
exemptions. Rhodes v Stewart (1983, CA6 Tenn) 705 F2d 159, 10 BCD 596, 8 CBC2d 451, CCH
Bankr L Rptr P 69140, cert den (1983) 464 US 983, 78 L Ed 2d 361, 104 S Ct 427 and (criticized in
In re Cross (2000, BC ND Ind) 255 BR 25).
Where claimant of exemption in bankruptcy is established upon property for main purpose of
engaging in certain business and uses portion for dwelling purposes only that he may be convenient
to that business, property does not come within purpose of state statute allowing homestead exemp-
tion; but where place is primarily home of family and some business is engaged in on premises in
incidental way, conduct of such business does not deprive owner of right to homestead claim. In re
Shepardson (1928, DC Cal) 28 F2d 353.
Congress gave states wide latitude to provide their citizens with scheme of exemptions not in-
consistent with those of 11 USCS § 522 that will give debtors fresh start, and thus state statute need
not be identical to federal scheme to pass constitutional muster. In re Keyworth (1985, DC Colo) 47
BR 966, 12 BCD 1137, CCH Bankr L Rptr P 70314.
There is no clear Congressional intent for national uniformity with respect to exemptions, in
view of provision of 11 USCS § 522 allowing states to enact legislation prohibiting citizens of that
state from electing federal exemptions, and in view of wide divergence among exemptions provided
by individual states. In re Ford (1980, BC DC Md) 3 BR 559, 6 BCD 202, 1 CBC2d 840, CCH
Bankr L Rptr P 67429, affd (1981, CA4 Md) 638 F2d 14, 3 CBC2d 549, CCH Bankr L Rptr P
67768 and (superseded by statute as stated in In re Bell-Breslin (2002, BC DC Md) 283 BR 834) and
(criticized in In re Spears (2004, BC WD Mich) 308 BR 793).
Chapter 13 trustee's argument that exemption provisions of 11 USCS § 522(b)(3) violated uni-
formity clause, U.S. Const. art. I, § 8, cl. 4, because it allowed Montana debtor to use California ex-
emptions, failed, since similarly situated debtors received same treatment. Drummond v Urban (In
re Urban) (2007, BAP9) 375 BR 882.
13. Amendment of state exemption laws
Under opt-out state's exemption law, amount of debtor's exemption is determined by date debt
was incurred; where debt was incurred both before and after alteration in state exemption legisla-
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11 USCS § 522
tion, exemption will be apportioned. Goldsby v Stewart (1983, SD Ala) 46 BR 692, 12 CBC2d
1015.
Texas legislature's decision to permit retroactive application of 1983 homestead law amendment
withstands due process challenge, because it was eminently rational for Texas legislature to con-
clude that purposes of amendments, which were to increase protections afforded to all homestead
claimants as result of inflation and increased market demands and to end different treatment of ur-
ban and rural homesteads by basing both exemptions on acreage standards, could be more fully ef-
fectuated if its provisions were applied retroactively. In re Starns (1985, SD Tex) 52 BR 405, 13
CBC2d 853.
1981 amendment to Washington homestead statute providing that homestead is automatically
created in debtor's permanent residence from beginning of permanent occupancy should not be ap-
plied retroactively to dislodge judgment lien because such result would have no remedial effect but
would merely alter judgment creditor's status from secured to unsecured creditor; judgment credi-
tors who obtained lien on Chapter 7 debtor's property prior to debtor's official declaration of home-
stead, as required by pre-amendment statute, have interest in excess value of homestead property or
its proceeds superior to trustee. In re Wenner (1985, WD Wash) 61 BR 634.
Applicable state exemption law is determined for purposes of applying 11 USCS § 522 as of
date of order of relief under original petition, so that postpetition amendment of state exemption
law, permitting any natural person rather than head of family to claim homestead exemption, which
was effective prior to conversion of Chapter 11 to Chapter 7 does not affect debtor's right to claim
exemption. In re Butcher (1987, ED Tenn) 75 BR 441, affd without op (1988, CA6 Tenn) 848 F2d
189 and affd without op (1988, CA6 Tenn) 848 F2d 189.
Amendment increasing Iowa opt-out exemption for farming equipment from $ 5,000 to $ 10,000
does not affect lien avoidance provisions under Bankruptcy Code for purposes of determining
whether retroactive application of amendment violates contracts and takings clauses of Iowa and
federal constitutions. In re Van Hove (1987, ND Iowa) 78 BR 917.
Right of bankrupt to exemption is governed by state law in existence when petition is filed, and
where Wisconsin bankrupt had at least 6 debts owed prior to date upon which Wisconsin increased
bankruptcy exemption from $ 10,000 to $ 25,000, trustee is entitled to take and administer for all
creditors any funds obtained from homestead in excess of Wisconsin pre-amendment exemption,
inasmuch as it is law in Wisconsin that increase in exemptions is not allowable to bankrupt who has
incurred debts prior to effective date of such increase, and every bankrupt thereafter filing petition
is presumed to have known of that limitation. In re Holsten (1979, BC WD Wis) 4 BCD 1127, 19
CBC 771.
Proper exemption allowed under former Bankruptcy Act where state increased amount of al-
lowable exemption was to be determined in three steps: first, debtor was entitled to exemption
amount in effect before increase in homestead exemption, next, trustee was entitled to amount equal
to claim or claims as to which increase in exemption was ineffective because such claims predate
exemption increase; third bankrupt was entitled to balance of increase in exemption. In re Pappas
(1980, BC CD Cal) 2 BR 138.
Although state's increase in homestead exemption does not per se impair obligation of contracts
in violation of USCS Constitution, Article 1, § 10, if it is reasonable and in furtherance of valid so-
cial, economic, or protective functions of state, amendment made by state legislature increasing
Page 55
11 USCS § 522
value of exemption from $ 10,000 to $ 25,000, if applied retroactively, is violation of Constitution;

trustee may reach, for benefit of general creditors, that portion of difference between original ex-
emption value and new exemption value which would be subject to levy by actual creditors holding
preamendment claims so that exemption, as to creditors existing prior to amendment date, would be
preamendment exemption amount, and, as to creditors created after amendment date, exemption
would be present amount. In re Echavarren (1980, BC DC Idaho) 2 BR 215, 5 BCD 1229.
Debtors have right to maximum exemption which they are entitled to as of date of filing peti-
tion, but trustee has additional power to reach for benefit of creditors generally that portion of in-
crease in exemption, as result of amendment of state exemption statute, which could be subjected to
levy by actual creditors holding preamendment claims; debtors therefore are entitled to exemption
as it exists on date of bankruptcy, less aggregate of claims predating amendment to exemption stat-
ute, but with such aggregate limited to amount of increase in exemption. In re Murillo (1980, BC
CD Cal) 4 BR 612 (criticized in In re Betz (2002, BC DC Mass) 273 BR 313).
Under Alabama law resident may claim property as exempt under statutes in effect at time debt
was incurred, thus, where state law was amended effective May 19, 1980, under authority of 11
USCS § 522(d) to prohibit Alabama residents from claiming federal exemptions in bankruptcy and
increasing state exemptions and most if not all of debtor's prepetition debts listed in petition exe-
cuted on May 21, 1980 were incurred prior to May 19, 1980, debtor is limited to those exemptions
allowed prior to that date. In re Browning (1981, BC SD Ala) 13 BR 6.
Amendment to Iowa exemption statute to include exemption for profit-sharing plan does not
impair contractual relationship between debtor and debtor's former employer, who created pension
plan and who was creditor of debtor, because federal law precludes enforcement against assets of
plan qualifying under ERISA, 29 USCS § 1001, and because general creditor of debtor could not
have reached benefits under plan outside of bankruptcy in any event. In re Pettit (1985, BC SD
Iowa) 55 BR 394, affd (1985, SD Iowa) 57 BR 362.
Chapter 7 debtors' homestead rights are to be determined as of date of filing petition; thus, they
are entitled to $ 15,000 joint exemption in mobile home pursuant to Illinois homestead statute in
effect on date of filing rather than $ 10,000 which would have been allowed under statute in effect
on date of agreement to purchase home; applying statute in effect at time of petition neither substan-
tially impairs parties' contractual relationship nor is unreasonable or unnecessary for accomplish-
ment of important public purpose and thus is not violation of contract clause of constitution. In re
Hockinson (1986, BC ND Ill) 60 BR 250.
Although Chapter 7 debtors can now exempt from estate up to $ 20,000 in value of farm equip-
ment under amended Minnesota exemption statute, debtors here can only avoid creditor's lien to ex-
tent of $ 10,000 value in equipment because that was statutory limit at time security interest was
created; to hold otherwise would result in use of later-enacted statute to deprive creditor of earlier,
lawfully created, and sustained interest in property without compensation. In re Peters (1986, BC
DC Minn) 60 BR 711 (criticized in In re Larson (2001, BC DC Colo) 260 BR 174, 2001 Colo J C A
R 2723).
Bank is entitled to amounts in excess of $ 10,000 from debtor's spendthrift trust income which
were seized prior to effective date of amendment to Louisiana statute which increased exemption
from $ 10,000 to $ 20,000 per year; amounts less than $ 20,000 seized after effective date are ex-
empt and are therefore property of debtor under 11 USCS § 541; trustee has right only to so much of
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11 USCS § 522
beneficial interest in trust as would ordinary creditor outside bankruptcy. In re Prejean (1986, BC
WD La) 64 BR 71.
Chapter 7 debtor's right to claim property as his homestead is governed by amended Florida
Constitution, which provides that all "natural persons" may claim exemption, rather than by pre-
amendment constitution which allowed only heads of household to claim exemption, where, al-
though at time title vested in debtor amendment was not in effect, it became effective prior to time
when debtor filed his petition in bankruptcy. In re Owen (1986, BC MD Fla) 64 BR 258.
Amendment to Iowa farm machinery exemption increasing value of exemption from $ 5,000 to
$ 10,000 does not constitute unconstitutional taking, even though it decreases value of each of se-
cured creditor's liens which was created prior to amendment, because, given history of Iowa exemp-
tion statutes, secured creditor should have anticipated possibility of further periodic adjustments to
exemption statutes. In re Punke (1987, BC ND Iowa) 68 BR 936, 16 CBC2d 68.
Investment expectations of parties at time loan is made is prime consideration in determining
whether there is unconstitutional taking by amendment of exemption statute to increase value of
exemption subsequent to creation of security interest. In re Punke (1987, BC ND Iowa) 68 BR 936,
16 CBC2d 68.
In view of history of Iowa exemption regulation, whose purpose is support and protection of
debtor and his family, secured creditor's reasonable expectations have not been substantially im-
paired so as to violate federal contract clause by application of increased exemption for farm ma-
chinery in effect at time of Chapter 7 filing, but not in effect at time security agreement was entered
into; even if exemption law could be found to impair secured creditor's contractual interests with
debtor, amendment to exemption statute was enacted in response to and is justified by legitimate
public purpose and is not unreasonable or unnecessary exercise of state's police power. In re Punke
(1987, BC ND Iowa) 68 BR 936, 16 CBC2d 68.
Fact that amendment to Iowa exemption statute raising farm machinery exemption from $ 5,000
to $ 10,000 effectively denies secured creditor $ 5,000 of value of each of its liens created prior to
amendment of statute does not necessarily constitute illegal fifth amendment taking; rather, creditor
must provide strong evidence that taking of this right effects substantial impairment of security. In
re Punke (1987, BC ND Iowa) 68 BR 936, 16 CBC2d 68.
Application of amendment to Minnesota exemption statute increasing amount of rural home-
stead from 80 to 160 acres to preexisting unsecured debt, which was not reduced to judgment, does
not operate to impair substantially contractual relationship of Chapter 7 debtor and creditor; applica-
tion of amendment would be valid even if it did substantially impair parties' contractual relationship
since it is valid exercise of state's police power. In re Johnson (1987, BC DC Minn) 69 BR 988,
Even if state exemption amendments are not applied retrospectively under state provisions, 11
USCS § 522(b) allows for application of exemption statute increasing tools of trade exemption for
Chapter 7 debtor farmer if amendment is effective on date of filing. In re Towns (1987, BC SD
Iowa) 74 BR 563.
Debtors are not entitled to claim exemptions as result of amendments to Virginia poor debtor's
exemption statute which became effective after they filed Chapter 13 but before they converted to
Chapter 7; exemption statute in effect on date of bankruptcy filing controls, and conversion from
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11 USCS § 522
Chapter 13 to Chapter 7 does not advance date of filing to date of conversion under 11 USCS § 348.
In re Stroble (1991, BC WD Va) 127 BR 372, 3 Fourth Cir & Dist Col Bankr Ct Rep 418, CCH
Chapter 7 debtors, who filed their petitions during time that entitlement to exempt property was
limited to state exemptions under Arkansas law may not amend their schedules to claim federal ex-
emptions following amendment of Arkansas exemption statute which allows debtors to claim either
state or federal exemptions where Arkansas statute was not intended to have retroactive effect;
debtor's right to exemptions is generally determined as of date bankruptcy petition is filed, notwith-
standing any postpetition modification or amendment to state exemption law, except when amend-
ment to state statute is to be applied retroactively; Bankruptcy Rule 1009, which allows amendment
at any time, does not provide basis for debtors to amend in this case because implicit in that rule is
requirement that amendment be in compliance with applicable substantive law. In re Gardner
(1991, BC ED Ark) 139 BR 460.
With respect to application prospectively only of newly enacted exemption, Bankruptcy Courts
should administer exempt homestead assets and distribute to those eligible creditors holding prea-
mendment claims nonexempt portion of homestead. In re Morzella (1994, BC DC Conn) 171 BR
485, 32 CBC2d 4, CCH Bankr L Rptr P 76138.
Virginia debtor was entitled to rely on that opt-out state's exemptions even against claim based
on intentional tort so as to be nondischargeable under 11 USCS § 523(a)(6); even if Virginia home-
stead and "poor debtor's" exemptions could not under state law be asserted against claim based on
intentional tort, federal bankruptcy legislation was preemptive and creditor's claim did not fall
within any of enumerated bankruptcy-law exceptions to assertion of exemptions. In re Scott (1996,
BC ED Va) 199 BR 586, 8 Fourth Cir & Dist Col Bankr Ct Rep 749, CCH Bankr L Rptr P 77095
(criticized in McNeilly v Geremia (In re McNeilly) (2000, BAP1 RI) 249 BR 576).
Debtor could take advantage of state's expanded homestead exemption even though lien was
filed prior to enactment of increase in homestead exemption from $ 10,000 to $ 50,000; accord-
ingly, debtor could claim he $ 50,000 exemption and lien was avoided under 11 USCS § 522(f). In
re Trudell (2008, BC WD NY) 381 BR 441.
14. Election of federal or state exemptions
Defendants' motion for summary judgment, in which they argued that plaintiff should be barred
by doctrine of judicial estoppel from bringing his personal injury action against them, given that he
failed to list potential claim as asset in his bankruptcy petition, was denied without prejudice be-
cause while damages for pain and suffering and loss of future earnings were exempt under Md.
Code Ann., Cts. & Jud. Proc. § 11-504(b)(2), damages for lost wages, prepetition medical expenses,
injuries to property, and punitive damages were not exempt. Calafiore v Werner Enters. (2006, DC
Md) 418 F Supp 2d 795.
Debtor may elect to take set of exemptions prescribed in 11 USCS § 522(d) or those created by
state or local law and federal law other than subsection (d) so that debtor may choose from one set
or alternatively from other set, but not from both. In re Martin (1980, BC CD Cal) 6 BR 827.
Debtor, who did not claim exemptions for residential and real property or burial plot at time he
filed bankruptcy petition, may now exempt such property under 11 USCS § 522, where although
state law does not now permit such exemptions, at time debtor filed his petition there was no state
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11 USCS § 522
law in existence prohibiting him from choosing to exempt property pursuant to § 522. In re Burn-
ham (1981, BC ND Ga) 12 BR 286.
Individual debtor may exempt property under 11 USCS § 522(b)(1) or under 11 USCS §
522(b)(2), but not under both sections simultaneously. In re Lawson (1985, BC DC Vt) 45 BR 686,
12 BCD 818.
Unless state enacts legislation foreclosing 11 USCS § 522(d) as alternative list of exemptions,
there exists election between those exemptions listed in 11 USCS § 522 and applicable state exemp-
tions. In re Graham (1986, BC SD Tex) 64 BR 469.
Bankruptcy court found that because debtor had exempted all of equity in debtor's residence,
pursuant to D.C. Code Ann. § 15-501(a)(14), there was not unused amount of exemption available
from which debtor could claim as exempt. In re McDonald (2002, BC DC Dist Col) 279 BR 382.
Internet website bankruptcy petition preparer that advised debtor to let website choose between
exemptions of 11 USCS § 522(b)(1), (b)(2), engaged in unauthorized practice of law and was fined
and ordered to disgorge fees paid by debtor to access website. In re Pillot (2002, BC CD Cal) 286
BR 157.
Chapter 7 Trustee could not preemptively ask that bankruptcy court bar debtor from claiming
homestead exemption under California law after bankruptcy court determined that exemption pur-
suant to 11 USCS § 522(d)(1) did not apply because this request ran afoul of Fed. R. Bankr. P.
1009(a), which granted absolute right to debtor to amend Schedule C. In re Boward (2005, BC DC
Mass) 334 BR 350.
Where bankruptcy debtor claimed exemption expressly under federal statute but added language
invoking full faith and credit for state exemption, debtor properly elected federal exemption under
11 USCS § 522(b) since reference to state law was surplusage and pure argument, and not assertion
of exemption claim under state law. Opel v Daly (In re Daly) (2005, BC MD Pa) 344 BR 304.
Where bankruptcy debtor leased and operated restaurant in hotel and debtor's bank claimed se-
curity interest in post-petition receivables owed to debtor by hotel for room service charges col-
lected by hotel, 11 USCS § 552(b)(2) did not allow bank to claim security interest in post-petition
receivables simply because restaurant was located in hotel, and receivables were for food services
rather than room occupancy. Timothy Dean's, Inc. v White (In re Timothy Dean Rest. & Bar) (2006,
BC DC Dist Col) 342 BR 1.
Undesignated sentence at bottom of 11 USCS § 522(b)(3) provides that if effect of domiciliary
requirement under § 522(b)(3)(A) is to render debtor ineligible for any exemption, debtor may elect
to exempt property that is specified under § 522(d); this sentence modifies entirety of § 522(b)(3);
since § 522(b)(3) relates to exemptions under state law, it makes most sense for undesignated sen-
tence to apply to § 522(b)(3) as whole; thus, it means exactly what it says, if 730-day domiciliary
requirement under § 522(b)(3)(A) renders debtor ineligible for any state exemptions, debtor may
claim federal exemptions. In re Underwood (2006, BC ND Fla) 342 BR 358.
Since debtor could not claim Colorado exemptions because she was not Colorado resident, and
since 730-day domiciliary requirement of 11 USCS § 522(b)(3)(A) rendered her ineligible to claim
exemptions under any state's laws, debtor could claim federal exemptions. In re Underwood (2006,
BC ND Fla) 342 BR 358.
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11 USCS § 522
Debtor was entitled to bankruptcy exemption, despite trustee's objection, where debtor's lien in
certain real property occupied by debtor's dependent child and former spouse could be exempted
from his bankruptcy estate because in Minnesota debtor could elect either federal or state exemp-
tions. Keller v Johnson (In re Johnson) (2003, BAP8) 288 BR 130, CCH Bankr L Rptr P 78798,
revd, remanded (2004, CA8 Minn) 375 F3d 668, CCH Bankr L Rptr P 80127.
Where debtor has elected Minnesota exemptions under 11 USCS § 522(b), then Minnesota law
governs debtor's real property interest and debtor's lien on such real property occupied by another
does not qualify for exemption under Minnesota's homestead exemption statute. Keller v Johnson
(In re Johnson) (2003, BAP8) 288 BR 130, CCH Bankr L Rptr P 78798, revd, remanded (2004,
CA8 Minn) 375 F3d 668, CCH Bankr L Rptr P 80127.
15. Domicile of debtor as determining applicable state law
Pursuant to 11 USCS § 522(b)(2)(A), property exemptions must be determined in regard to law
of debtor's domiciliary state regardless of where property is situated. In re Wilson (1985, ED Tenn)
62 BR 43, 14 BCD 1144.
For purposes of determining where involuntary Chapter 7 debtor was domiciled for 180-day pe-
riod immediately preceding filing of petition in order to determine applicable exemptions under 11
USCS § 522, bankruptcy judge must make factual finding based on evidence of debtor's intent and
overt acts manifesting this intent; debtor's domicile is properly considered to be in Tennessee, even
though he had leased condominium in Florida one year prior to filing of petition, where overt acts
which would normally indicate intent, i.e., registering to vote, filing declaration of homestead and
obtaining Florida driver's license, all occurred shortly before filing. In re Wilson (1985, ED Tenn)
62 BR 43, 14 BCD 1144.
Alabama Act providing that in cases instituted under provisions of Title 11 of Bankruptcy Code
there shall be exempt from property of estate of individual debtor only that property and income
which is exempt under laws of Alabama and under federal laws other than 11 USCS § 522 applies
only to residents of Alabama and therefore non-resident who has instituted bankruptcy case in Ala-
bama is entitled to exemptions allowed under 11 USCS § 522(d). In re Walley (1981, BC SD Ala) 9
BR 55.
Location of debtors' domicile during longer portion of 180 day period immediately preceding
filing of petition governs determination of applicable state exemptions; where evidence is clear
debtors were domiciliaries of South Dakota for greater portion of 180 days prior to filing of petition,
South Dakota law will provide applicable exemptions. In re Volk (1983, BC DC SD) 26 BR 457, 9
BCD 1382, 7 CBC2d 1096.
Exemptions available to debtor in state which has "opted out" of federal bankruptcy exemptions
provided in 11 USCS § 522(b)(2) are those of state of domicile; thus, law of Florida, where debtor
lives, governs whether debtor's workers' compensation settlement is exempt property, rather than
law of North Carolina, which is state where injury occurred and under laws of which benefits were
paid. In re Green (1995, BC MD Fla) 178 BR 533.
If debtors have not resided for 730 days in state where they file, in order for them to be permit-
ted to elect exemptions under state or local law of their former residence, that state or local law
must still be "applicable" to them; in event that exemption law of that former residence requires that
debtors actually reside within state at time of filing in order to claim exemptions, as is case with
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11 USCS § 522
Colorado law, that law is not "applicable" under 11 USCS § 522(b)(3)(A) and debtors cannot claim
exemption of state of their former residence. In re Jewell (2006, BC WD NY) 347 BR 120, CCH
Debtors who had moved from Iowa to Arkansas but had not resided in latter state for 730 days
required under 11 USCS § 522(b)(3)(A), were allowed to claim their Iowa homestead exemption
and apply it to their Arkansas residence, as opt-out statute, Iowa Code § 627.10 (1998) did not spec-
ify that debtor reside in Iowa. In re Williams (2007, BC WD Ark) 369 BR 470.
For purposes of calculating "the 730 days immediately preceding date of filing of petition" un-
der 11 USCS § 522(b)(3)(A), U.S. Bankruptcy Court for Western District of Missouri adopts view
of counting backward from petition date. In re Dufva (2008, BC WD Mo) 388 BR 911, CCH Bankr
L Rptr P 81274.
16.--Under particular circumstances
Finding debtor was domiciled in Nevada was not clearly erroneous and bankruptcy court cor-
rectly determined that Nevada law applied to determine whether debtor's beneficial interest in pen-
sion plan was exempt from bankruptcy estate under 11 USCS § 522(b) where debtor was physically
present in Nevada for majority of 180-day period leading up to petition date, debtor admitted being
at Nevada residence for four months prior to petition date, debtor admitted being Nevada resident
for over ninety days of 180-day period preceding petition date, debtor stated that he no longer had
residence in Pennsylvania and intended to reside in Nevada for indefinite future, debtor transferred
out of Pennsylvania all assets of pension plan, debtor admitted decision to leave Pennsylvania was
influenced by outstanding bench and contempt warrants issued against him, and debtor testified he
left Pennsylvania to get new start and get on with life. Lowenschuss v Selnick (In re Lowenschuss)
(1999, CA9 Nev) 171 F3d 673, 41 CBC2d 1049, CCH Bankr L Rptr P 77919.
Where debtor's residence and domicile up to and including April 5, 1980 was in Texas, where
she resided in Florida but maintained domicile in Texas from April 6, 1980 to May 25, 1980, and
where debtor's residence and domicile was in Florida from May 25, 1980 to date of filing of peti-
tion, pursuant to 28 USCS § 1472, venue of this matter is properly in Bankruptcy Court for Southern
District of Florida and pursuant to 11 USCS § 522, debtor is entitled to exemptions under local law
of Texas. In re Lockwood (1980, BC SD Fla) 6 BR 623.
Serviceman stationed in Virginia who was previously domiciled in Minnesota, pays Minnesota
taxes, has Minnesota driver's license, and voted in Minnesota by absentee ballot in previous election
may claim federal exemptions as allowed by Minnesota law despite fact that Virginia does not per-
mit use of federal exemptions. In re Wellberg (1981, BC ED Va) 12 BR 48, 7 BCD 1030, 4 CBC2d
Debtor is entitled to claim federal exemptions under 11 USCS § 522(b) where, although debtor
resided in District of Columbia at time of filing petition for voluntary relief, she was required to file
in Virginia since she had resided there for most of 180 days preceding filing date of petition, but
debtor is not entitled to claim Virginia exemptions as she was no longer resident of Virginia. In re
Hawkins (1981, BC ED Va) 15 BR 618, CCH Bankr L Rptr P 68461.
Debtors were domiciliaries of Virginia during the 180 days immediately preceding the filing of
their petition in bankruptcy; thus, under § 522(b)(2)(A), their claim of homestead exemption for
Kansas property will be governed by Virginia's homestead deed filing laws, although whether Kan-
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11 USCS § 522
sas property bought on installment sales contract is realty or personalty is governed by Kansas law.
In re Calhoun (1985, BC ED Va) 47 BR 119.
Fact that Florida has opted out of federal exemptions is irrelevant where debtors were California
residents on date of filing; thus Chapter 7 debtors' exemptions are governed by California law,
which allows federal exemptions under 11 USCS § 522, despite fact that debtor's case is heard in
Florida. In re Dondey (1985, BC SD Fla) 50 BR 12.
Where Chapter 7 debtor has been domiciled in Tennessee for 180 days prior to filing of involun-
tary petition, Tennessee law governs his rights to homestead exemption and debtor is not entitled to
homestead exemption under Florida law; debtor's wife may not assert, on debtor's behalf, home-
stead exemption in Florida property. In re Butcher (1986, BC ED Tenn) 63 BR 30.
Chapter 7 debtor who currently resides in Wisconsin but who was required to file his petition in
Florida, where he previously resided, pursuant to 28 USCS § 1408(1), cannot claim Florida exemp-
tions because he is not Florida resident as required by Florida exemption statutes; debtor may, how-
ever, avail himself of federal exemptions under 11 USCS § 522, because Florida opt-out statute only
applies to Florida residents and does not apply to prevent nonresidents who, because of venue pro-
visions of 28 USCS § 1408, are required to file in Florida, from claiming federal exemptions. In re
Schulz (1989, BC ND Fla) 101 BR 301, CCH Bankr L Rptr P 72951.
Chapter 7 debtor wife was not domiciliary of Florida for requisite period of time under 11 USCS
§ 522(b)(2)(A) when she did not set foot in state until 2 days after 91st day preceding her petition;
court will not apply principle that woman's domicile follows that of her husband, but rather
woman's domicile must be established by her physical presence and intent to remain indefinitely. In
re Ring (1992, BC ED Mo) 144 BR 446.
Chapter 7 debtors' tax refund, which was in possession of IRS on date of bankruptcy filing, is
not exempt under Missouri opt-out statute which exempts property that is exempt from attachment
and execution because statute allows debtor to exempt from property of estate only property that is
exempt from attachment and execution under state or federal nonbankruptcy law but debtors' tax
refund could have been levied upon by certain creditors, namely, state and federal agencies under
26 USCS § 6402; fact that debtors did not owe obligations to creditors who could levy on refunds
does not change result. Davis v Robinson (1993, BC ED Mo) 152 BR 956.
Finding that debtor was not domiciled in Florida as of commencement of bankruptcy case does
not in itself defeat debtor's right to assert under 11 USCS § 522(b)(2)(B) Florida's law protecting
property held in tenancy by entirety from claims of at least certain of owners' creditors, since phrase
"applicable nonbankruptcy law" is not limited to that of debtor's state of domicile. In re Cochrane
(1995, BC DC Minn) 178 BR 1011.
Chapter 7 debtors did not possess requisite intent to be domiciled in Florida on 91st day prior to
filing their petition, and thus did not meet 11 USCS § 522(b)(2)(A) requirement that they be domi-
ciled in Florida for greater part of 180-day period preceding their bankruptcy filing, with result that
they could not claim Florida exemptions where, inter alia, most of their real property transfers prior
to petition date reflected New Jersey address for debtors as did banking and other financial records
and debtors rarely stayed at Florida apartment which they had rented. Furr v Lordy (In re Lordy)
(1997, BC SD Fla) 214 BR 650, 11 FLW Fed B 75.
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11 USCS § 522
Debtor was domiciled in Florida and entitled to take advantage of Florida exemption statute
which included exempting all IRS funds, where prior to 1989 he was Florida resident, maintained
residence in Florida for 15 years even though he was also present in Virginia, held Florida driver's
license, left majority of personal belongings in Florida even when he was living in Virginia, re-
turned to Florida whenever he had opportunity, and at no time asserted Virginia residence. In re
Koons (1998, BC ED Va) 225 BR 121, 10 Fourth Cir & Dist Col Bankr Ct Rep 821.
Chapter 7 debtor/husband who lived apart from wife in Washington state but chose to file peti-
tion jointly with his wife in Idaho where she lived and marital community's principal assets were
located was limited to use of exemptions provided by law of Idaho which is opt-out state. In re An-
drews (1998, BC DC Idaho) 225 BR 485.
Debtors who had bought condominium, obtained drivers licenses, and registered to vote in Flor-
ida, but who had continued to reside and work in Missouri, were not entitled to claim, pursuant to
11 USCS § 522(b)(2)(A), benefits of Florida exemptions in their Chapter 7 bankruptcy. In re Young
Bankruptcy court held that period for determining domicile related to claimed state exemptions
was debtors' bankruptcy petition date, and filing of bankruptcy petition, either voluntary or involun-
tary, determined applicable state exemption law. In re Tanzi (2002, BC WD Wash) 287 BR 557,
affd, request den (2003, BAP9) 297 BR 607, 2003 CDOS 7643, 41 BCD 212.
Where debtor's testimony under oath was inherently contradictory and self-serving,in transpar-
ent effort to establish residency in Florida after fact, denial of discharge pursuant to 11 USCS §
727(a)(2), (3), and (4) was warranted. Peninsula Bank v French (In re French) (2005, BC DC Md)
2005 Bankr LEXIS 3194, affd (2006, DC Md) 338 BR 668, vacated, remanded (2007, CA4 Md)
Chapter 7 debtor who did not reside in Indiana on date of commencement of his case, as Ind.
Code § 34-55-10-2(c) required, and who had not resided in Florida for 730 days preceding filing of
bankruptcy petition was not eligible for Florida or Indiana exemptions; thus, trustee's objection to
debtor's claimed federal exemption under 11 USCS § 522(d) was overruled. In re West (2006, BC
MD Fla) 352 BR 905, 20 FLW Fed B 19.
Per capita distributions to debtor from revenue of tribal casino were not exempt under Potawa-
tomi Tribal Code § 4-10-16 because debtors' domicile was not within boundaries of reservation;
therefore, pursuant to 11 USCS § 522(b) and Kan. Stat. Ann. § 60-2312, their exemptions were lim-
ited to those allowed under state law, which did not allow them to claim exemption in Tribal Code.
In re McDonald (2006, BC DC Kan) 353 BR 287.
Chapter 7 debtor, former Georgia domiciliary who was domiciliary of West Virginia for more
than 180 days, but less than 730 days preceding her bankruptcy petition, could use federal home-
stead exemption, instead of Georgia exemption, O.C.G.A. § 44-13-100(b), because Georgia had not
opted-out of federal exemptions for non-residents such as debtor. In re Chandler (2007, BC ND W
Va) 362 BR 723.
Florida's homestead exemption did not apply under 11 USCS § 522(b)(3)(A) to bankruptcy
debtors' property located in another state, even though debtors resided in Florida for greater part of
180-day period immediately preceding 730-day period before filing for bankruptcy; § 522(b)(3)(A)
only allowed application of Florida exemption law and Florida law precluded claiming Florida
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11 USCS § 522
homestead exemption for property that was not located in Florida. In re Adams (2007, BC WD Mo)
375 BR 532.
Chapter 7 debtor was precluded from using Kansas homestead and personal property exemp-
tions, even though Kansas was her domicile state under 11 USCS § 522(b), because debtor was no
longer physically present in state and exemptions set forth in Kan. Stat. Ann. §§ 60-2301, 60-2304
did not have any extra-territorial force; because debtor was precluded from applying state law ex-
emptions, debtor could claim exemptions pursuant to 11 USCS § 522(d). In re Nickerson (2007, BC
WD Mo) 375 BR 869.
Debtors lived in New Hampshire for entire 180 day period preceding 2 year period before peti-
tion date of this case; accordingly, pursuant to 11 USCS § 522(b)(3)(A), debtors had to look to New
Hampshire law or federal law for purpose of determining exemptions and, therefore, debtors prop-
erly claimed exemptions under New Hampshire law. In re Varanasi (2008, BC SD Ohio) 59 CBC2d
935.
Chapter 7 debtors who had resided in Rhode Island for 12 years before moving to Florida and
who did not qualify for Florida homestead exemption because they had not lived in Florida for 730
days before filing for bankruptcy, as required for exemption under 11 USCS § 522(b)(3)(A), could
take Rhode Island homestead exemption on their Florida residence because there was nothing in
R.I. Gen. Laws § 9-26-4.1 that appeared to preclude its extra-territorial application. In re Jevne
For purposes of calculating "the 730 days immediately preceding date of filing of petition" un-
der 11 USCS § 522(b)(3)(A), natural, ordinary reading of "days" meant calendar days; the U.S.
Bankruptcy Court for Western District of Missouri rejected approach taken in calculating time pe-
riod for obtaining prepetition credit counseling required under 11 USCS § 109(h) where courts also
took into account time of day, which in instant case, would have meant that debtors had not been
domiciled in Missouri for full 730-day period and would have allowed them to use Nevada's exemp-
tion laws. In re Dufva (2008, BC WD Mo) 388 BR 911, CCH Bankr L Rptr P 81274.
Although debtor argued that he intended Florida to be his domicile beginning in 1997, his self-
serving statements of intent were not controlling, and events and circumstances during relevant time
period were inconsistent with his statement of intent; objector introduced sufficient evidence to re-
fute his self-serving assertion that he changed his domicile from Massachusetts to Florida in May
1997, and bankruptcy court did not err in weighing evidence, including his credibility (or lack
thereof), in determining whether he intended to be domiciled in Florida during 180-day period prior
to bankruptcy filing. Morad v Xifaras (In re Morad) (2005, BAP1) 323 BR 818.
Unpublished: Chapter 7 debtor was entitled to use federal exemptions of 11 USCS § 522(d) be-
cause, although Kansas exemption statutes applied pursuant to § 522(b)(3)(A), trustee had not
proven that debtor, who was not living in Kansas on date of filing, could benefit from Kansas per-
sonal property exemptions under Kan. Stat. Ann. § 60-2304 and § 60-2313. In re Fabert (2008, BC
DC Kan) 2008 Bankr LEXIS 58.
17. State court jurisdiction of claims against exempt property
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11 USCS § 522
Under former law, as soon as Bankruptcy Court decided that bankrupt's interest in employees'
pension system was exempt and set it apart, it disposed of all questions of ownership with which it
could deal; and disputes over ownership of exempt fund were for state courts. Negin v Salomon
(1945, CA2 NY) 151 F2d 112, 161 ALR 1005.
Under former law, creditors who were creditors prior to new exemption statute and had claims
to property as to which increased exemption was allowed had to go to state court to enforce such
claims. In re Wilcoxson (1977, BC ND Ga) 3 BCD 1220, 15 CBC 279.
Debtors' claim of $ 10,000 state homestead exemption can be dealt with in state foreclosure ac-
tion when Bankruptcy Court lifts automatic stay for debtor's lack of equity and failure to provide
adequate protection. In re Merrick (1984, BC SD Ohio) 44 BR 967.
Proper procedure for creditor to enforce obligation of individual debtor spouse against entirety
property is to move for relief from stay, whereupon court will stay discharge and allow creditor to
proceed to judgment in state court and enforce such judgment against entirety property; where court
has granted discharge prior to ruling on motion for relief from stay, court may nevertheless grant
motion, and modify discharge to protect rights of joint creditor pursuant to its equity power. In re
Bonner (1986, BC ED Mo) 3 BAMSL 1825.
Once Bankruptcy Court has determined that certain property is subject to exemption, any claims
against that property must be decided by state court under 11 USCS § 522. In re Albrecht (1988,
BC DC Mont) 89 BR 859, 19 CBC2d 982.
18. Miscellaneous
Chapter 13 debtor appeal of Bankruptcy Court order granting IRS motions to dismiss and for
summary judgment on portion of debtor's complaint, is denied, court finding debtor's right to set
aside sale of land pursuant to 11 USCS § 548(a)(2) is conditioned upon debtor meeting elements set
forth in 11 USCS § 522(h), and, since North Carolina has opted out of Bankruptcy Code exemption
scheme, as permitted by 11 USCS § 522(b), state law governs determination of extent of debtor's
exemptions. Hollar v United States (1995, MD NC) 188 BR 539, 76 AFTR 2d 6580, 95 TNT 192-
34, affd without op (1996, CA4 NC) 92 F3d 1179, reported in full (1996, CA4 NC) 1996 US App
LEXIS 19834.
District court affirmed bankruptcy court's denial of banks' objections to debtor's claimed exemp-
tion to life insurance proceeds because state prohibited, pursuant to 735 Ill. Comp. Stat. 5/12-1201,
residents of Illinois from using federal exemptions provided in 11 USCS § 522(d); therefore, all
proceeds from life insurance policy that insured life of debtor's spouse were entirely exempt pursu-
ant to 735 Ill. Comp. Stat. 5/12-1001(f). Tuscola Nat'l Bank v Stilwell (In re Stilwell) (2005, CD Ill)
321 BR 471, CCH Bankr L Rptr P 80250.
Because debtor's right to claim homestead exemption is generally fixed upon date Chapter 7
bankruptcy petition is filed, debtor's post-petition death does not affect his right to claim declared
homestead exemption under state law. Indeed, U.S. District Court for Eastern District of California
has held that claimed exemption (if valid under 11 USCS § 522(b) at time of filing) survives death
of debtor, noting that statutory language, legislative history, and case law mandate conclusion that
debtor who dies post-petition is entitled to claims of exemption as well as discharge. Ohanian v Ir-
win (In re Irwin) (2006, ED Cal) 338 BR 839.
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11 USCS § 522
Debtor may claim exemptions, despite objection by creditor with personal injury judgment
against debtor, even though Alabama statutes and case law interpreting those statutes deny debtor's
exemptions from debts resulting from tort liability, because federal exemptions, although measured
by state law under opt-out provision of 11 USCS § 522(b)(1), are exemptions of debtor from prop-
erty of estate, as distinguished from exemptions from seizure under state law. In re Cooley (1986,
BC ND Ala) 67 BR 229, affd (1987, ND Ala) 72 BR 54.
Pursuant 11 USCS § 522(b)(2)(A), exempt property in opt-out state is defined by state law ap-
plicable on date of filing bankruptcy petition rather than on date of conversion. In re Weed (1998,
BC DC Nev) 221 BR 256, 40 CBC2d 254.
State's ability to define its exemptions must yield to conflicting policies in Bankruptcy Code. In
re Cross (2000, BC ND Ind) 255 BR 25.
Where bankruptcy court found that language of D.C. Code Ann. § 15-501(a)(11)(D) did not cre-
ate any cognizable exemption, debtor could not be permitted to take language from federal statute
and append it to District of Columbia statute in order to create favorable exemption and obtain "the
best of both worlds." In re Lewis (2004, BC DC Dist Col) 305 BR 610.
Debtor who was Georgia resident and who had homestead in Georgia could not claim home-
stead exemption under Fla. Const. art. 10, § 4; because debtor had already waived her ability to
claim exemption under Georgia law, through earlier proceedings, debtor did not have valid home-
stead exemption, pursuant to 11 USCS § 522(b)(2)(a), and trustee could proceed with sale of prop-
erty. In re Dicks (2006, BC MD Fla) 341 BR 327.
State law governed scope of debtor's interest in homestead property located in state. In re Alex-
ander (2006, BC MD Fla) 346 BR 546, 19 FLW Fed B 356.
Because annuity proceeds would have been exempt from scope of estate property in Chapter 7
liquidation (debtor's annuity met all of statutory qualifications set forth in Tex. Ins. Code Ann. §
1108.051), trustee's objection to confirmation of debtor's amended chapter 13 plan as result of
debtor's purported failure to meet best interests test of 11 USCS § 1325(a)(4), had to be overruled.
In re Foster (2006, BC ED Tex) 360 BR 210.
Pursuant to 11 USCS § 522(b), debtors who owned home in state could claim nonbankruptcy
homestead exemption pursuant to Homestead Statute, Mass. Gen. Laws Ann. ch. 188, § 1. In re Me-
lito (2007, BC DC Mass) 357 BR 684.
B.Constitutionality of State Exemption Laws 19. Generally
States retain power to enact bankruptcy laws so long as they do not conflict with federal bank-
ruptcy legislation; there is no conflict between Illinois exemption provisions and 11 USCS § 522(d)
because express language of 11 USCS § 522(b)(1) allows state to opt-out of federal scheme; where
state is thus exercising its own power, no unconstitutional delegation of Congressional power can be
found. In re Sullivan (1982, CA7 Ill) 680 F2d 1131, 9 BCD 140, 6 CBC2d 972, CCH Bankr L Rptr
P 68700, cert den (1982) 459 US 992, 74 L Ed 2d 388, 103 S Ct 349.
Congress has power to permit states to set their own exemption levels; to say that state exemp-
tion provisions providing less solace to debtors than federal exemptions of 11 USCS § 522(d) are in
"conflict" with either language of bankruptcy code or expressions of Congressional intent underly-
ing it, is simply inaccurate; Illinois exemption provisions are constitutional. In re Sullivan (1982,
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11 USCS § 522
CA7 Ill) 680 F2d 1131, 9 BCD 140, 6 CBC2d 972, CCH Bankr L Rptr P 68700, cert den (1982) 459
US 992, 74 L Ed 2d 388, 103 S Ct 349.
There being no dispute that Colorado debtor's claimed exemptions of United States Savings
Bond, federal tax refund, and state tax refund fall under provision in 11 USCS § 522(d)(5), from
which exemptions states may opt out according to 11 USCS § 522(b), as Colorado has, debtor does
not have standing to challenge other portions of Colorado law which allegedly go beyond permissi-
ble opt out and are therefore allegedly unconstitutional. Hinkson v Pfleiderer (1984, CA10 Colo)
729 F2d 697, 11 BCD 1034, CCH Bankr L Rptr P 69767.
California statute limiting married debtors filing joint bankruptcy petition to single set of ex-
emptions but allowing similarly situated unmarried debtors to claim two sets of exemptions has ra-
tional basis, and thus does not violate equal protection. In re Talmadge (1987, CA9 Cal) 832 F2d
Oklahoma statute exempting Individual Retirement Accounts and Keogh plans is not unconsti-
tutional on ground that it impairs creditors' ability to collect on their contracts, all of which were
entered before effective date of statute, because any such impairment is justifiable exercise of Okla-
homa's inherent police power. In re Walker (1992, CA10 Okla) 959 F2d 894, 22 BCD 1284, CCH
Bankr L Rptr P 74528, 133 ALR Fed 577.
Oklahoma statute exempting retirement plans does not exceed scope of authority delegated to
states under 11 USCS § 522 as statute is not inconsistent with alternate federal list in § 522. In re
Walker (1992, CA10 Okla) 959 F2d 894, 22 BCD 1284, CCH Bankr L Rptr P 74528, 133 ALR Fed
577.
Even assuming that ERISA portion of Oklahoma annuity exemption statute is unconstitutional,
non-ERISA portion of statute is severable. In re Walker (1992, CA10 Okla) 959 F2d 894, 22 BCD
1284, CCH Bankr L Rptr P 74528, 133 ALR Fed 577.
11 USCS § 522(b)(1) which authorizes states to opt-out of federal exemption scheme does not
violate Fifth Amendment by denying citizens of Ohio due process of law and equal protection of
laws. Storer v French (In re Storer) (1995, CA6 Ohio) 58 F3d 1125, CCH Bankr L Rptr P 76552,
1995 FED App 206P, cert den (1995) 516 US 990, 133 L Ed 2d 428, 116 S Ct 520.
Colorado opt out exemptions, pursuant to 11 USCS § 522(b)(1), providing total exemption of
any claim for damages for personal injuries is constitutional and is not invalid for conflict with 11
USCS § 522(d)(11)(D) even though it is more generous than federal exemption. In re Keyworth
(1985, DC Colo) 47 BR 966, 12 BCD 1137, CCH Bankr L Rptr P 70314.
Provisions of Ohio exemption statute, enacted under state right under 11 USCS § 522 to opt out
of federal exemption scheme, which provide that certain exemptions are available to bankrupt debt-
ors only, and not to nonbankrupt debtors, are reasonable and rationally related to state's legitimate
purpose in providing bankrupt debtors with necessary fresh start, and are therefore both constitu-
tional and in conformity with Bankruptcy Code. In re Bloom (1980, BC ND Ohio) 5 BR 451, 6
BCD 831, 2 CBC2d 838.
Illinois law which pursuant to 11 USCS § 522(b)(1) prohibits Illinois residents from using fed-
eral exemptions provided for in 11 USCS § 522(d) does not deprive Illinois debtors of "fresh start"
since it is for legislature rather than judiciary to determine what constitutes "fresh start" and Con-
gress has power to fashion compromise between rigidly federal or rigidly state exemption law. In
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11 USCS § 522
re Sullivan (1981, BC CD Ill) 11 BR 432, 4 CBC2d 577, affd (1982, CA7 Ill) 680 F2d 1131, 9 BCD
140, 6 CBC2d 972, CCH Bankr L Rptr P 68700, cert den (1982) 459 US 992, 74 L Ed 2d 388, 103 S
Ct 349.
Virginia statute which prohibits debtor from claiming federal exemptions under USCS § 522(d)
is constitutional and specifically allowed by 11 USCS § 522(b)(1). In re White (1981, BC ED Va)
11 BR 775.
State statute which provides that any person who files voluntary petition in bankruptcy may set
apart property before or on same day that he files his petition but not thereafter does not conflict
with 11 USCS § 522 and is constitutional to extent that section affects rights of debtors in bank-
ruptcy proceeding. In re Collins (1982, BC ED Va) 24 BR 485, 9 BCD 999.
Colorado opt out statute is constitutional even though it does not provide exemption for alimony
and support, and statute does not deny federal nonbankruptcy exemptions to Colorado debtors. In
re Ranes (1983, BC DC Colo) 31 BR 70.
Utah Exemptions Act does not violate supremacy clause by disallowing exemptions for various
items of household furniture which would have been exempt under 11 USCS § 522(d) if Utah had
not opted out; states may pre-empt § 522(d), and states are not required to conform their exemption
laws to § 522(d); states need not provide exemptions comparable to, concomitant with, or corre-
sponding to exemptions found in § 522(d) either in category or amount; states may set exemptions
at levels lower or higher than those fixed by Congress. In re Neiheisel (1983, BC DC Utah) 32 BR
146, 11 BCD 32, CCH Bankr L Rptr P 69440.
To extent that state statute fails to adhere to standard of 11 USCS § 522(d)(5), which provides
that homeowners and nonhomeowners be offered exemptions equal in amount, state statute is void
under supremacy clause; section of New York's opt out statute is not in conflict with § 522(d)(5). In
re Bartley (1983, BC ED NY) 33 BR 768.
Kentucky statute denying exemptions in property subject to consensual lien pursuant to "opt-
out" clause of 11 USCS § 522(b)(1) is constitutional. In re Bennett (1984, BC WD Ky) 36 BR 893.
Where California statute, enacted pursuant to 11 USCS § 522, goes beyond simply opting out of
federal bankruptcy exemptions to eliminate exemption stacking contrary to provisions in 11 USCS §
522(b) by providing (1) husband and wife who are joint debtors may choose either "unauthorized"
federal bankruptcy exemptions or state exemptions, so long as they choose in common, (2) husband
and wife who file individual petitions may claim federal bankruptcy exemption so long as other
spouse waives in writing right to claim state exemptions, and (3) notwithstanding nonauthorization
of federal bankruptcy exemptions in state, individual can choose federal or state exemptions so long
as individual does not choose both, such statute is unconstitutional because of its violation of Su-
premacy Clause; statute's severability clause does not save unobjectionable portions of statute since
legislative history does not support conclusion that opt-out provision was to survive state attempt to
prohibit exemption stacking. In re Garrido (1984, BC SD Cal) 43 BR 289, 11 CBC2d 506, CCH
Supremacy clause prevents state from enacting bankruptcy legislation that conflicts with area
acted upon by Congress and since Congress has exercised its authority in area of property exemp-
tions and lien avoidance under 11 USCS § 522, all state legislation in these areas is suspended ex-
cept for limited Congressional delegation of authority to states allowing them to specify property
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11 USCS § 522
that may be exempt in each state because where both Congress and state assert power in same area,
state legislation is suspended to extent it frustrates or burdens federal purpose; such delegation does
not violate constitutional mandate for uniformity contained in bankruptcy clause. In re Pelter
(1986, BC WD Okla) 64 BR 492, 14 BCD 1087, 16 CBC2d 306.
Montana exemption statute denying debtor exemption for workers' compensation benefits that
debtor would be entitled to under federal exemption statute, 11 USCS § 522, is not unconstitutional;
it is within Congress's power to concurrently allow states to determine what exemption provisions
are allowable in bankruptcy case. In re Conzelman (1987, BC DC Mont) 68 BR 986.
California exemption statutes which do not allow debtors to choose federal bankruptcy exemp-
tions and which are applicable only to debtors in bankruptcy, which are worded exactly the same as
pre-amendment federal exemptions, exceed authority delegated to states by Congress and violate
geographic uniformity requirement of U.S. Constitution; statutory wording of 11 USCS §
522(b)(2)(A) that debtor may claim property as exempt under applicable state or local law should
not, in view of constitutional considerations, be interpreted so liberally as to authorize state exemp-
tion scheme which is applicable only in federal bankruptcy court; due to invalidity of this portion of
exemption scheme, portion of scheme opting out of federal exemptions must also be invalidated,
and thus federal exemptions are available to debtors, although stacking with state exemptions is
prohibited. In re Lennen (1987, BC ND Cal) 71 BR 80, 15 BCD 842, 16 CBC2d 1111.
Minnesota opt-out provision exempting family musical instruments without limitation of value
violates state constitutional requirement that exemptions be of reasonable amount, so exemption is
invalid and debtor cannot rely on it to avoid nonpossessory, nonpurchase money lien on Cremona
violin held for personal pleasure and professional teaching. In re Hilary (1987, BC DC Minn) 76
BR 683.
Arkansas opt-out exemption provisions promulgated under 11 USCS § 522 do not violate uni-
formity requirements of Bankruptcy Clause of United States Constitution, (USCS Const Art 1, § 8,
cl 4) where all Arkansas debtors may take advantage of exemptions. In re Holt (1988, BC WD Ark)
84 BR 991, affd (1988, WD Ark) 97 BR 997, affd (1990, CA8 Ark) 894 F2d 1005, 22 CBC2d 337,
In order to challenge constitutionality of Arkansas opt-out exemptions, creditor must show that:
(1) enactment of statute has some actual or potential detrimental impact upon it in debtor's bank-
ruptcy proceeding; and (2) it has personal stake in outcome of litigation. In re Holt (1988, BC WD
Ark) 84 BR 991, affd (1988, WD Ark) 97 BR 997, affd (1990, CA8 Ark) 894 F2d 1005, 22 CBC2d
Under authority of 11 USCS § 552(b)(2), Chapter 7 debtor cannot claim Arkansas state exemp-
tion where state statute providing claimed exemption violates state constitution by exempting all
insurance proceeds without limitation, contrary to state constitution which places $ 500 limit on
personal property exemptions, therefore, any exemption provided under such statute is unavailable
to debtors because unconstitutional statute is inoperative and treated as if it had never been passed.
In re Williams (1988, BC ED Ark) 93 BR 181.
Minnesota statute exempting rights of action for injuries to person of debtor or of relative
whether or not resulting in death, and which imposes no monetary limit on amount of recovery, is
unconstitutional because it is contrary to Minnesota constitution which provides that reasonable
amount of property shall be exempt and that amount of such exemption shall be "determined by
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11 USCS § 522
law," which requires that amount of exemption must be made on face of statute. In re Medill (1990,
BC DC Minn) 119 BR 685.
Arkansas statute exempting various personal property, such as vehicles, wedding band, and
tools of trade is unconstitutional to extend it exceeds $ 500 personal property exemption in Arkan-
sas constitution, and because court cannot rewrite statute to make it constitutional, exemptions pro-
vided therein are unavailable to debtors. In re Giller (1990, BC WD Ark) 127 BR 215.
Retirement plans, including individual retirement accounts and annuities are exempt under
Oklahoma law because these vehicles for retirement savings are not subject to ERISA statute and
therefore are not preempted; Oklahoma statute is not unconstitutional as being in violation of Con-
tracts Clause of Constitution. In re Pryor (1991, BC ED Okla) 134 BR 28.
Chapter 7 debtors' claimed exemption, made pursuant to Nevada statute, of 2 Individual Retire-
ment Accounts with combined value of $ 128,300 does not violate contracts clause of Constitution,
despite fact that statute's retroactive application presents impairment to contractual relationship be-
tween debtors and their creditors not contemplated at time of contracting, where trustee failed to
prove statute is unreasonable or unnecessary; statute was enacted to deal with broad, generalized
economic or social problems and represents valid state interest. In re Seltzer (1993, BC DC Nev)
159 BR 329.
Indiana exemption statute exempting life insurance policies and proceeds or avails of life insur-
ance policies violates article 1, § 22 of Indiana Constitution by failing to impose any limitation on
dollar value or amount of property which may be exempted; Indiana statute exempting retirement
plans does not violate constitution since it exempts contributions that were made to retirement plan
by or on behalf of debtor that were not subject to federal income taxation at time of contribution, as
statute provides reasonable cap on allowable exemption. In re Foster (1994, BC SD Ind) 168 BR
183.
Illinois amendment to available personal property exemptions so that debtors are no longer enti-
tled to exempt wages withheld in wage deduction proceedings did not constitute a limitation on lien
avoidance power granted under 11 USCS § 522(f) and did not violate Bankruptcy Clause of the
Constitution since pursuant to authority granted to it by 11 USCS § 522(b), Illinois opted out of fed-
eral schedule of exemptions and was free to determine what property was exempt under state law.
In re Patterson (1998, BC CD Ill) 216 BR 413, 39 CBC2d 339.
Bankruptcy Court determined that Mich. Comp. Laws Ann. § 600.5451(1)(o) must be declared
unconstitutional under Supremacy Clause because it conflicts with 11 USCS § 522(c) given that
522(c) clearly provides that property claimed as exempt under § 522(b), which would include Mich.
Comp. Laws Ann. § 600. 5451(1)(o) exemption, is not liable for any pre-petition debt. In re Ray-
nard (2005, BC WD Mich) 327 BR 623.
State's attempt to create its own set of bankruptcy-specific exemptions under Mich. Comp. Laws
§ 600.5451 is constitutionally unenforceable because 11 USCS § 522(b)(2) recognizes only those
exemptions that state generally extends to debtors under its debt enforcement laws. In re Wallace
(2006, BC WD Mich) 347 BR 626, CCH Bankr L Rptr P 80703.
Bankruptcy court sustained trustee's objection to Chapter 7 debtor's claim that she was entitled
to exempt all her rights in disability insurance policy from her bankruptcy estate, pursuant to Minn.
Stat. § 550.39. Minn. Stat. § 550.39 violated Minn. Const. art. I, § 12 because it did not contain ex-
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press language which limited exemption to reasonable amount or provide method for calculating
reasonable exemption, and because statute was invalid, debtor could not use it to claim exemption
under 11 USCS § 522(b). In re Reiland (2007, BC DC Minn) 377 BR 232.
Lack of any external cap on aggregate value of received periodic benefits left Minn. Stat. §
550.39 fatally deficient under Minn. Const. art. I, § 12; law of "insurable interest" did not provide
limitation because it was not objective as actual value of any individual insured's income that was
lost by reason of personal disability, was specific to situation of each insured, determined against
completely individualized factor (for example, multi-billionaire with large current earned income
who had contracted for disability insurance could keep as exempt current benefits of policy paying
hundreds of thousands, or millions, of dollars per year). In re Reiland (2008, BC DC Minn) 382 BR
770.
20. Homestead statutes
Supremacy Clause does not require District Court to vitiate Colorado homestead statute as vio-
lative of USCS § 522(m) in that debtor joint tenant is allowed only half of full homestead exemp-
tion under state law, because Colorado exercised "opt out" provision of § 522(b)(1); thus, state
homestead exemption scheme is consistent with federal law. In re Robinson (1984, DC Colo) 44
BR 292.
Chapter 7 debtor may not avoid judgment lien under 11 USCS § 522(f) where lien was created
prior to debtor's purchase of residence and lien was executed upon property prepetition and thus,
under Kentucky exemption scheme, debtor may not exempt residence under homestead exemption;
Kentucky homestead statute giving priority to purchase money mortgages and not to pre-existing
debts or those arising from home improvements is not at odds with Bankruptcy Code. In re Brooks
(1986, WD Ky) 71 BR 6, affd without op (1987, CA6 Ky) 817 F2d 104 and affd without op (1987,
CA6 Ky) 817 F2d 104.
Indiana Code § 34-2-28-1(a)(5), which allows debtor in individual bankruptcy proceeding
unlimited exemption of property held by entirety but withholds exemption where husband's and
wife's individual bankruptcy petitions are subsequently consolidated, does not conflict with Bank-
ruptcy Code's exemptions scheme, even though Indiana's exemptions scheme may exempt less of
debtor's property than does federal scheme, and thus does not violate Supremacy Clause of Article
VI of United States Constitution. Meyer v Hammes (In re Meyer) (1995, SD Ind) 187 BR 281, 35
CBC2d 124.
Although state's increase in homestead exemption does not per se impair obligation of contracts
in violation of USCS Constitution, Article 1, § 10, if it is reasonable and in furtherance of valid so-
cial, economic, or protective functions of state, amendment made by state legislature increasing
value of exemption from $ 10,000 to $ 25,000, if applied retroactively, is violation of Constitution.
In re Echavarren (1980, BC DC Idaho) 2 BR 215, 5 BCD 1229.
Enactment of state statute causing head of family status, and not merely deceased spouse's
homestead exemption rights, to inure to surviving spouse, is constitutional, and may be applied ret-
roactively to debts incurred before date of enactment of statute. In re Hinebaugh (1980, BC MD
Fla) 5 BR 66.
Alabama homestead exemption provision is not violative of Fourteenth Amendment of Federal
Constitution, on ground it discriminates against nonhomeowners, by virtue of policy in 11 USCS §
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11 USCS § 522
522(d)(5) to provide nonhomeowners with equivalent exemption granted to homeowners, § 522 not
constituting binding determination of intent and meaning of United States Constitution, since, while
§ 522(d)(5) embodies permissible policy determination of Congress, same Congress gave states,
under § 522(b), right to avoid such policy determination by substituting their own policy determina-
tions. In re Quinlan (1981, BC MD Ala) 12 BR 824.
State statute establishing precondition on homestead exemption conflicts with Bankruptcy Code,
exceeds scope of 11 USCS § 522(b), and is unconstitutional. In re Davis (1981, BC DC Md) 16 BR
Arizona homestead exemption is not preempted by Equal Credit Opportunity Act, 15 USCS §§
1601 et seq., because lender, whether lending to single or married person, can expect to reach all
single or married borrower's equity except $ 50,000 and policy of 11 USCS § 522 is to give states
control of bankruptcy exemption scheme. In re Unkefer (1984, BC DC Ariz) 44 BR 55, 11 CBC2d
949.
Arizona homestead exemption scheme does not offend due process by treating married and sin-
gle persons differently, because legislature had rational basis in judgment that married persons
would share homestead; thus, smaller exemption resulting to individual members of married couple
is function of purpose of homestead exemption, to maintain residence, and actual cash value of ex-
emption to individual spouses is secondary consideration. In re Unkefer (1984, BC DC Ariz) 44 BR
55, 11 CBC2d 949.
Tennessee statute limiting state homestead exemption for leaseholds to leasehold estates of
more than 2 years does not constitute denial of Chapter 7 debtors' right to equal protection because
distinction drawn between leaseholds is reasonable and not arbitrary and bears rational relationship
to legitimate state objective, as leasehold estate of less than 2 years in duration does not advance
policies underlying homestead exemption statutes to sufficient degree to warrant their protection.
In re Phillips (1986, BC ED Tenn) 60 BR 166, 14 BCD 437.
Retroactive application of § 41.002(a) of Texas Property Code with respect to homestead ex-
emptions does not impermissibly impair existing contractual rights and/or constitute taking of prop-
erty without due process of law in violation of United States Constitution. Hughes v Team Bank (In
re Hughes) (1993, BC ND Tex) 159 BR 197.
Although ability of states which have opted out of federal exemptions to selectively opt-back to
federal exemptions is not without doubt and need not be determined in instant case, court has no
difficulty in accepting proposition that there is no constitutional or Bankruptcy Code obstacle for
Florida to opt-back selectively into federal bankruptcy exemptions; legislative history of Code does
not indicate intention by Congress to establish "all or nothing" policy by providing for opt-out and
indirectly prohibiting opting-back. In re Harris (1995, BC MD Fla) 188 BR 444, CCH Bankr L Rptr
P 76851, 9 FLW Fed B 176, affd (1997, CA11 Fla) 116 F3d 1492, cert den (1997) 522 US 950, 139
L Ed 2d 288, 118 S Ct 370.
From basic Bankruptcy Code provisions 11 USCS § 522(b) and 11 USCS § 541(a)(1), it follows
that bankruptcy debtor may not exempt from property of estate property interest of any person other
than bankruptcy debtor; however, Mich. Comp. Laws Ann. § 600.5451(1)(n), which explicitly states
that debtor in bankruptcy may, under § 522(b)(2), exempt property interests of persons other than
debtor, that is, codebtor, if any, and debtor's dependents, from "property of estate," conflicts with
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11 USCS § 522
Bankruptcy Code, and thus is unconstitutional under Supremacy Clause of U.S. Constitution. In re
Vinson (2006, BC ED Mich) 337 BR 147.
In order to avoid any constitutional question, bankruptcy court encouraged debtor to amend his
entireties exemption to list general exemption, Mich. Comp. Laws Ann. § 600.6023a, in lieu of en-
tireties exemption under Mich. Comp. Laws Ann. § 600.5451(1)(o), noting that bankruptcy specific
entireties exemption in § 600.5451(1)(o) could be subject to constitutional challenge. In re Basch
(2006, BC WD Mich) 341 BR 615.
Chapter 7 trustee's objection to debtor's claimed exemption of interest in real property based
upon Mich. Comp. Laws § 600.5451(1)(n) was sustained because § 600.5451 was state's attempt to
create its own set of bankruptcy-specific exemptions, and, as such, violated Supremacy Clause, U.S.
Const. art. VI, cl. 2. In re Wallace (2006, BC WD Mich) 347 BR 626, CCH Bankr L Rptr P 80703.
Bankruptcy appellate panel found no error in bankruptcy court's application of state law where
debtors were entitled to claim one-quarter acre of their land as exempt homestead, pursuant to Ark.
Const. art. 9, § 5; Ark. Code Ann. § 16-66-218(b)(4), and it was within debtors' discretion to desig-
nate one-quarter acre as long as that designation was neither arbitrary, capricious, nor unreasonable;
panel affirmed bankruptcy court's order that overruled trustee's objection. Williams v Bradley (In re
Bradley) (2003, BAP8) 294 BR 64, 50 CBC2d 318, CCH Bankr L Rptr P 78867.
In 11 USCS § 522 exemption matter, fact that Utah Constitution provides for exemption only in
land and things affixed to land had no significance in determining what type of property is exempt
under Utah's current homestead exemption statute. Carlson v Diaz (In re Carlson) (2004, BAP10)
303 BR 478.
Debtor's claim to exemption in proceeds of pre-petition sale of their residence was held to be
limited to 18 month period following sale, under Ariz. Rev. Stat. § 33-1101(C) (2006); thereafter,
proceeds not used to establish new homestead became property of estate. Ford v Konnoff (In re
Konnoff) (2006, BAP9) 356 BR 201.
21. Statutes restricting lien avoidance
Supremacy Clause requires that 11 USCS § 522(f)(1), allowing remarried debtor to avoid ex-
wife's judicial lien on his half interest in condominium as homestead property, overrides Florida law
giving judicial lien priority over homestead exemption, despite Florida's choice to opt out of federal
exemptions. In re Hershey (1985, SD Fla) 50 BR 329.
To extent that Ohio statute not only reduces availability of exemptions, but also purports to pre-
vent operation of provisions of 11 USCS § 522 permitting avoidance of lien because statute purports
to disallow any exemption that would affect or invalidate any existing security interest or lien, such
statute exceeds authority granted by 11 USCS § 522 to individual states to limit available exemp-
tions; avoidance of liens on exempt property is valid exercise of bankruptcy powers conferred upon
Congress and, without specific authority, state law cannot be read to deprive debtor of remedy pro-
vided by 11 USCS § 522(f). In re Cox (1980, BC SD Ohio) 4 BR 240, 6 BCD 434, 2 CBC2d 255,
Ohio statute providing that Ohio exemptions do not invalidate any security interest is in direct
conflict with provisions of 11 USCS § 522 permitting debtor to avoid judicial lien or nonpossessory,
nonpurchase-money security interests, and fact that state has opted out of federal exemption under
11 USCS § 522 does not affect debtor's power to avoid such security interests; pursuant to suprem-
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11 USCS § 522
acy clause of United States Constitution (USCS Constitution, Article VI, cl 2) such state legislation,
which frustrates full effectiveness of federal bankruptcy law, is invalid. In re Hill (1980, BC ND
Ohio) 4 BR 310, 6 BCD 307, 2 CBC2d 123, CCH Bankr L Rptr P 67666.
Although state may enact own bankruptcy exemption laws, there is no specific authority for
states to enact laws beyond selecting debtor exemption entitlements so that if state opts out of fed-
eral exemption, it does not affect debtor's power under 11 USCS § 522(f); thus, state exemption law
which provides that liens are not affected by exemption legislation denies debtors domiciled in state
availability of § 522 to avoid fixing of certain liens, in contravention of Congressional intent to pro-
tect debtors, and is invalid. In re Fisher (1980, BC ND Ohio) 6 BR 206, 2 CBC2d 1335, CCH
Bankr L Rptr P 67800, affd (1981, ND Ohio) 11 BR 716, 7 BCD 968, revd on other grounds (1983,
CA6 Ohio) 698 F2d 298, CCH Bankr L Rptr P 69154 and revd without op, vacated without op
(1983, CA6 Ohio) 722 F2d 740 and revd without op, vacated without op (1983, CA6 Ohio) 722
F2d 742.
Idaho statute denying debtors in federal bankruptcy proceeding right to avoid liens under 11
USCS § 522(f) is of no affect in light of clear congressional power to make uniforms laws concern-
ing bankruptcy and congressional intent in enacting § 522(f) is so clear that direct conflict with fed-
eral law exist. In re Strain (1982, BC DC Idaho) 16 BR 797, 5 CBC2d 1317.
While state may opt out of federal exemptions, there is no similar option under 11 USCS §
522(f); Oklahoma statute which attempts to limit Bankruptcy Court's power to avoid liens on agri-
cultural equipment by placing value limit on amount of exemption for lien avoidance purposes only,
is unconstitutional and will be suspended; retroactive application is inappropriate, however, because
large number of creditors have relied on statute and inequities would result among them if holding
were applied retroactively. In re Pelter (1986, BC WD Okla) 64 BR 492, 14 BCD 1087, 16 CBC2d
306.
Missouri lien preservation statute inserted in general child support statute enacted for purpose of
preserving liens on consumer goods violates provision of Missouri Constitution barring inclusion of
otherwise unrelated act in general statute and consequently cannot be relied upon by creditor as ba-
sis for avoidance of liens upon household and other personal goods pursuant to 11 USCS §
522(f)(2)(A). In re Bowen (1988, BC ED Mo) 82 BR 102, 4 BAMSL 4051.
C.Opt-Out by States
1.In General 22. Generally
Secured debts, including judgment liens, generally survive bankruptcy; however, in accordance
with policy objective of providing fresh start, bankruptcy law allows debtor to invoke certain ex-
emptions to avoid debts that otherwise survive bankruptcy; Bankruptcy Code allows each state to
opt out of federal exemptions and substitute its own exemptions for ones specified in 11 USCS §
522. David Dorsey Distrib. v Sanders (In re Sanders) (1994, CA10 Utah) 39 F3d 258, 32 CBC2d
582, CCH Bankr L Rptr P 76187 (superseded by statute as stated in Pepper v Public Serv. Emples.
Credit Union (In re Pepper) (1997, BC DC Colo) 210 BR 480, 14 Colo Bankr Ct Rep 205, 38
CBC2d 596) and (superseded by statute as stated in In re Richardson (1998, BC ND Okla) 224 BR
804, 40 CBC2d 980, CCH Bankr L Rptr P 77815) and (superseded by statute as stated in Parsons v
Investment Co. (In re Parsons) (1999, BAP10 NM) 16 Colo Bankr Ct Rep 55).
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11 USCS § 522
Purpose of Congress in Bankruptcy Code was to give debtors "fresh start" and since Congress
was concerned with inadequacy of existing state exemption laws, it formulated federal exemptions;
however, states are allowed to "opt out" under 11 USCS § 522(b)(1) and so long as there is confor-
mity with federal legislature intent to provide "fresh start", state statute will control all determina-
tions as to exemptions. In re Parrish (1982, BC DC Colo) 19 BR 331, 6 CBC2d 757.
When state opts out of federal exemptions under 11 USCS § 522, all exemptions claimed by
debtors must come from state law; as to consensual liens, however, only those against property
listed in 11 USCS § 522(f)(2)(A), (B), and (C) which is exempt under that state's law may be
avoided. In re Villa (1987, BC DC Mont) 74 BR 497.
Bankruptcy Code and Rules, particularly 11 USCS § 522, prescribe method to be employed in
claiming exemptions in bankruptcy cases, though state may choose by opt-out provisions to provide
their own exemptions. In re Caruthers (1988, BC ND Ga) 87 BR 723, CCH Bankr L Rptr P 72335.
State may opt out of exemptions provided for in 11 USCS § 522(b) but allow exemptions pro-
vided for in 11 USCS § 522(d). In re Green (1995, BC MD Fla) 178 BR 533.
State that opted out of federal exemptions prior to passage of Bankruptcy Reform Act of 1994
does not have to re-opt out, despite fact that Reform Act made substantial changes to 11 USCS §
522(d), because<5>22(b) contains language permitting state to opt out of federal exemptions, and
Reform Act made no changes to it. In re Lee (1995, BC ED Mo) 179 BR 643.
Bankruptcy Code's provisions permitting debtors to elect state exemptions, and permitting states
to op out of federal scheme entirely, do not permit state to enact procedural (as opposed to substan-
tive) mechanism that defeats long-standing bankruptcy principle that property of estate and exemp-
tions are determined as of petition date. In re Konnoff (2006, BC DC Ariz) 341 BR 28.
Though 11 USCS § 522(c)(1) does not preempt state exemption laws, that does not mean that §
522(c)(1) is rendered meaningless in case where debtor has elected to use state exemption laws.
Rupp v Elmasri (In re Elmasri) (2007, BC ED NY) 369 BR 96.
Language of 11 USCS § 522(b) is product of two sets of competing policies: First, it seeks to
strike balance between debtor's need for fresh start and creditor's need for payment; second, it seeks
to balance federal and state relations appropriately by establishing federal exemption scheme aimed
at supporting fresh start/creditor payment balance, but, at same time, it allows states to opt out of
that scheme and substitute each state's own exemption laws so that competing fresh start and credi-
tor payment policies can be tailored to needs of each state. In re Morrell (2008, BC ND W Va) 394
BR 405.
Bankruptcy Code provides that when state opts out of federal exemptions in 11 USCS § 522(d),
exemptions available to debtor are for property that is exempt under federal law, other than 11
USCS § 522(d) or state or local law that is applicable on date of filing of petition; thus, by its plain
language, 11 USCS § 522(b)(3) implicitly permits state's bankruptcy law to be "state or local law"
by which exemption can be claimed. In re Morrell (2008, BC ND W Va) 394 BR 405.
Even though state had opted out of federal exemptions as matter of state law and under 11 USCS
§ 522(b)(2)(A), state's garnishment protection statutes were applicable to bankruptcy proceedings
and debtor could exempt from property of estate her accrued, unpaid wages of $ 3,300 by utilizing
both $ 1,000 exemption for wages and tax refunds of Iowa Code § 627.6(9)(c) in addition to any
Page 75
11 USCS § 522
amount debtor could protect from creditors under garnishment protections statutes of Iowa Code §§
642.21 and 527.5105. Forker v Irish (In re Irish) (2004, BAP8) 311 BR 63.
23. Claim of "other federal exemptions"
Where state has "opted out" of opportunity to allow its debtors to use federal laundry list of ex-
emptions contained in 11 USCS § 522(d), only property debtor is entitled to exempt from bank-
ruptcy estate is property exempt under federal law other than laundry list and property exempt under
state law. In re McManus (1982, CA5 La) 681 F2d 353, 9 BCD 561, 6 CBC2d 1194, CCH Bankr L
Rptr P 68925, reh den (1982, CA5 La) 689 F2d 190 and reh den (1982, CA5 La) 689 F2d 190 and
(ovrld as stated in In re Durban (2004, BC ND Tex) 2004 Bankr LEXIS 2032).
ERISA anti-alienation provision is not "other federal law" which would support exemption of
retirement plans under 11 USCS § 522(b)(2)(A). In re Dyke (1991, CA5 Tex) 943 F2d 1435, 22
BCD 223, 25 CBC2d 986, 14 EBC 2376, CCH Bankr L Rptr P 74305.
Although 11 USCS § 522 exempts property held by debtor with non-debtor spouse as tenants by
entirety, it does not create additional federal exemptions with regard to such property, but merely
recognizes immunity if there is one under local law. In re Koehler (1980, BC MD Fla) 6 BR 203, 6
BCD 1126, CCH Bankr L Rptr P 67877.
Chapter 7 debtors' interests in employer's profit sharing retirement plan are not exempt assets of
bankruptcy estates under federal nonbankruptcy law under 11 USCS § 522(b)(2)(A). In re Bowen
(1987, BC DC SD) 80 BR 1012, 16 BCD 1315.
Debtor must have valid state-law exemption before such exemption can be asserted in bank-
ruptcy; filing of bankruptcy petition did not revive Chapter 13 debtor's right to claim exemption un-
der Maryland law where debtor had failed to comply with state-law requirements and had therefore
waived any right to claim such exemption prior to filing. In re Gordon (1996, BC DC Md) 199 BR
7, 8 Fourth Cir & Dist Col Bankr Ct Rep 683.
As opt-out state defining its own exemptions, Georgia exempts local public assistance benefits;
however, federal crop loss disaster relief payments are not "local" and therefore are not exempt. In
re Boyett (2000, BC SD Ga) 250 BR 822.
Bankruptcy court found that trustee met burden under Fed. R. Bankr. P. 4003 and court sus-
tained trustee's objection to debtor's claim of exemption of life insurance policy, pursuant to Ohio
Rev. Code Ann. § 2329.66(A)(17) (2001) rather than 11 USCS § 522, where debtor provided no
support for policy's beneficiaries and trustee met his burden of proof required to show that exemp-
tion was not properly claimed; court found that under Ohio law debtor failed to rebut prima facie
case made by trustee that debtor's mother and aunt did not qualify as "dependents" under Ohio Rev.
Code Ann. § 3911.10 (2001). In re Peacock (2002, BC SD Ohio) 292 BR 593.
24. Preemption of state statutes exempting ERISA plans
Although Texas statute exempting rights in stock bonus, pension, profit-sharing, or similar plans
"relates to" employee benefit plans, ERISA savings clause, 29 USCS § 1144(d), saves Texas statute
from preemption. In re Volpe (1991, CA5 Tex) 943 F2d 1451, 25 CBC2d 1006, CCH Bankr L Rptr
P 74319.
Florida exemption statute for "employee benefit plans" is not preempted by ERISA, and thus is
available to Chapter 7 debtors. Schlein v Mills (In re Schlein) (1993, CA11 Fla) 8 F3d 745, 17 EBC
Page 76
11 USCS § 522
2020, CCH Bankr L Rptr P 75629, 7 FLW Fed C 1033 (superseded by statute as stated in In re
Zamora (1995, BC SD Fla) 187 BR 783, 9 FLW Fed B 174) and (superseded by statute as stated in
In re Pettit (1998, BC MD Fla) 224 BR 834, 12 FLW Fed B 19).
Arizona statute exempting interests in qualified retirement plans under Internal Revenue Code
and ERISA (29 USCS § 1001) "relates to" ERISA plan by its reference to such qualified plans and
its effect on them and is therefore preempted by ERISA; further, statute is not incorporated into
Bankruptcy Code by 11 USCS § 522 and is not otherwise incorporated into body of federal law so
as to be saved by federal law savings clause of ERISA (29 USCS § 1144(d)). In re Siegel (1989,
DC Ariz) 105 BR 556.
Texas statute exempting pension and similar employee benefit plans qualified under IRC is not
preempted by ERISA because statute does not purport to regulate any term or condition of em-
ployee benefit plans; furthermore, even if ERISA's preemptive reach invalidates statute, it is saved
by 11 USCS § 522(a)(2)(B) which incorporates state exemption statutes, because ERISA does not
alter, amend, modify, invalidate, impair, or supercede any federal law. In re Dyke (1990, SD Tex)
119 BR 536, affd (1991, CA5 Tex) 943 F2d 1435, 22 BCD 223, 25 CBC2d 986, 14 EBC 2376, CCH
State law which purports to allow exemption for ERISA-qualified pension plans is preempted
by ERISA and thus debtors are not entitled to exemption for subject pension plans; mere fact that 11
USCS § 522 authorizes debtor to rely on state exemption laws rather than federal exemption laws
set forth in 11 USCS § 522(d) does not override underlying preemptive nature of ERISA as to all
state laws which relate to ERISA benefit plan. In re Hirsch (1988, BC DC Ariz) 98 BR 1, 18 BCD
1500, affd (1989, DC Ariz) 105 BR 556.
Texas statute exempting pensions, profit-sharing pensions, similar plans, and plans qualified
under Employee Retirement Income Security Act (ERISA) (29 USCS § 1001) is not preempted by
ERISA where it does not purport to regulate terms and conditions of employee benefit plans and
does not affect relationship between principal ERISA entities. In re Volpe (1989, BC WD Tex) 100
BR 840, affd (1990, WD Tex) 120 BR 843, affd (1991, CA5 Tex) 943 F2d 1451, 25 CBC2d 1006,
Texas' exemption statute for ERISA-qualified employee pension benefit plans "relates to" ER-
ISA and is thereby preempted. In re Komet (1989, BC WD Tex) 104 BR 799.
Montana exemption statute that exempts from bankruptcy estate retirement or pension benefits
which are tax exempt under IRC § 401 makes reference to, and therefore relates to ERISA, and by
reason thereof, is preempted by ERISA. In re Conroy (1990, BC DC Mont) 110 BR 492.
Attempts by states to create statutory exemption of ERISA-qualified plans are invalid as being
preempted by ERISA (29 USCS § 11441(a)). In re Majul (1990, BC WD Tex) 119 BR 118.
Illinois statute providing that all ERISA-qualified plans are conclusively presumed to be spend-
thrift trusts, which would exclude them from bankruptcy estates pursuant to 11 USCS § 541(c)(2), is
invalid under Supremacy Clause. In re Wimmer (1990, BC CD Ill) 121 BR 539, affd (1991, CD Ill)
129 BR 563.
Illinois statute exempting ERISA-qualified employee benefit plans is preempted by ERISA, and
therefore debtor's interest in such plan is not exempt. In re Wimmer (1990, BC CD Ill) 121 BR 539,
affd (1991, CD Ill) 129 BR 563.
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11 USCS § 522
Indiana statute exempting debtor's interest in pension fund, retirement fun, annuity plan, indi-
vidual retirement account, or similar plan is not preempted by ERISA because it makes no reference
to ERISA and has no connection with ERISA plan; statute is unconstitutional as applied under fed-
eral and state constitutions because exemption works substantial impairment upon those who con-
tracted with debtor prior to passage of exemption, and it is per se unconstitutional because it does
not exempt reasonable amount of property as required by Indiana Constitution. In re Garvin (1991,
BC SD Ind) 129 BR 598, 21 BCD 1539.
Retirement plans, including individual retirement accounts and annuities are exempt under
Oklahoma law because these vehicles for retirement savings are not subject to ERISA statute and
therefore are not preempted; Oklahoma statute is not unconstitutional as being in violation of Con-
tracts Clause of Constitution. In re Pryor (1991, BC ED Okla) 134 BR 28.
Employee Retirement Income Security Act of 1974 (ERISA) could not be read to preempt ex-
emption in Mich. Comp. Laws § 600.6023(1)(k) in bankruptcy proceeding wherein debtor claimed
exemption for individual retirement account; ERISA savings clause, 29 USCS § 1144(d), expressly
prevented preemption of other federal statutory schemes, including bankruptcy laws, and state ex-
emption was part of bankruptcy scheme by virtue of states' power under federal law to provide ex-
emptions which were enforceable in bankruptcy. In re Tomlin (2004, BC ED Mich) 315 BR 439.
25. Opt-out of particular states
11 USCS § 522 does not limit states' ability to fashion own exemption scheme; Indiana statute
exempting debtor's property from claims of contract debtors, but not from claims of tort creditors, is
acceptable under Bankruptcy Code. In re Ondras (1988, CA7 Ind) 846 F2d 33, CCH Bankr L Rptr
P 72284.
Utah has opted out of federal exemptions and substituted its own exemptions, adopting set of
exemptions based on Uniform Exemptions Act. David Dorsey Distrib. v Sanders (In re Sanders)
(1994, CA10 Utah) 39 F3d 258, 32 CBC2d 582, CCH Bankr L Rptr P 76187 (superseded by statute
as stated in Pepper v Public Serv. Emples. Credit Union (In re Pepper) (1997, BC DC Colo) 210 BR
480, 14 Colo Bankr Ct Rep 205, 38 CBC2d 596) and (superseded by statute as stated in In re
Richardson (1998, BC ND Okla) 224 BR 804, 40 CBC2d 980, CCH Bankr L Rptr P 77815) and
(superseded by statute as stated in Parsons v Investment Co. (In re Parsons) (1999, BAP10 NM) 16
Colo Bankr Ct Rep 55).
Long-term disability payments that were part of bankruptcy estate were not entitled to 100 per-
cent exemption where, pursuant to 11 USCS § 522, state had opted-out of federal exemption scheme
through Ind. Code § 34-55-10-1, and state exemption statute in question, Ind. Code § 27-8-23(b),
had been interpreted in light of Ind. Const. art. I, § 22 to permit exemptions only to extent that they
were required to afford necessities of life; thus, where debtor was receiving $ 10,300 in disability
payments from particular insurer for his depression, he was allowed to exempt $ 6000. Stinnett v
LaPlante (In re Stinnett) (2006, CA7 Ind) 465 F3d 309, 38 EBC 2770, CCH Bankr L Rptr P 80724.
Because Virginia has decided to opt out pursuant to 11 USCS § 522 and set up its own exemp-
tions and requirements for claiming exemptions, if Virginia debtor does not abide by Virginia pre-
requisites for filing homestead deed, then debtor is not entitled to claim homestead property as ex-
empt. Crossroads of Hillsville v Payne (1995, WD Va) 179 BR 486, 7 Fourth Cir & Dist Col Bankr
Ct Rep 519 (criticized in Hoekstra v Oak Cluster Community Council (In re Hoekstra) (2000, BC
ED Va) 268 BR 904, 86 AFTR 2d 5763).
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11 USCS § 522
Debtor's claimed exemption of two causes of action under 11 USCS § 522 was inappropriate in-
asmuch as debtor is resident of Maine and exemptions set forth in that section are not available to
Maine residents, as Maine has opted out of such exemptions. Petit v Fessenden (1995, DC Me) 182
BR 59 (criticized in In re Friedlander (2002, BC DC Mass) 284 BR 525, 40 BCD 96).
In appeal by Chapter 7 debtors from Bankruptcy Court decision limiting exemption for disabil-
ity payments arising from insurance settlement for prepetition car accident, Iowa state law "vetoes"
debtors' option to choose federal exemptions listed in 11 USCS § 522(d). In re Wiley (1995, ND
Iowa) 184 BR 759.
Where debtors were Iowa residents, Iowa law determined what was exempt in their bankruptcy
case because, pursuant to Iowa Code § 627.10, Iowa had "opted out" of exemption scheme and ex-
pressly limited debtors to state law exemptions pursuant to 11 USCS § 522(b) LaSalle Bank, N.A. v
Takes (In re Takes) (2005, ND Iowa) 334 BR 642.
Louisiana debtor filing petition in bankruptcy court has no choice of exemptions and is limited
to those allowed under state law and federal law other than 11 USCS § 522(d), since state, by La. R.
S. 13:3881, has specifically not authorized exemptions under 11 USCS § 522(d); under Louisiana
law, use of homestead exemption by lessees is disallowed. In re Kimball (1980, BC WD La) 2 BR
560, 5 BCD 1374, 1 CBC2d 520, CCH Bankr L Rptr P 67343.
Examination of "opt-out" statute passed by Arizona Legislature makes it clear that only thing
legislature did when it passed provision was to deny Arizona debtors the benefits of the "laundry
list" of exemptions and substitute its own, and no other provision of the Code was abrogated by
A.R.S. § 33-133. In re McKelvey (1982, BC DC Ariz) 20 BR 405, CCH Bankr L Rptr P 68768.
Individual debtor in North Carolina may, pursuant to 11 USCS § 522(b)(2)(A), claim as exempt
property in North Carolina due to state's opting out of federal bankruptcy exemptions and may, pur-
suant to 11 USCS § 522(b)(2)(B), claim as exempt property under state common law doctrine of
tenancy by entireties. In re Banks (1982, BC WD NC) 22 BR 891.
Objections to debtors' use of federal exemptions are sustained where decision by United States
Court of Appeals held that Tennessee legislature had successfully opted out of federal exemptions,
reversing contrary decision; debtors are to receive exemptions intended by Tennessee legislature.
In re Frye (1983, BC MD Tenn) 33 BR 653, 9 CBC2d 661.
Debtor is entitled to claim applicable Missouri exemptions because debtor filed her bankruptcy
petition after effective date of Missouri statute opting out of federal exemptions. In re Burger
(1983, BC WD Mo) 34 BR 467.
Court of Appeals decision upholding Tennessee's opt out statute applies to all pending bank-
ruptcy cases in which timely objections to claim of federal exemptions were raised. In re Matheney
(1983, BC MD Tenn) 35 BR 62.
South Dakota residents are not entitled to claim federal exemptions provided by 11 USCS §
522(d), since South Dakota has opted out. In re Stephenson (1983, BC DC SD) 35 BR 69.
In reopened Chapter 7 case filed prior to Colorado's opting out of federal exemption scheme, 11
USCS § 522(d)(1) controls, thus debtor may only exempt up to $ 7,500 of her equity in homestead
and may not avoid judicial liens beyond that amount and liens to attach to remaining equity over
amount of exemption. In re Palmquist (1985, BC DC Colo) 54 BR 24.
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11 USCS § 522
Iowa exemption statutes are incorporated into bankruptcy proceeding under 11 USCS § 522(b)
and that section, along with Iowa law, controls allowability of Chapter 7 debtor's exemption claims.
In re Breuer (1985, BC ND Iowa) 68 BR 48.
In view of limited eligibility of life insurance policies issued by Veterans' Administration, lib-
eral construction accorded to veteran's legislation, and benefits policy affords to veteran, Chapter 7
debtor's life insurance policy is "benefit due" as contemplated by 38 USCS § 3101(a) and inclusion
in that section allows debtor to claim exemption in policy under provisions of both 11 USCS §
522(b)(2)(A) and Ohio law, which exempts property which is exempt under federal law; even in ab-
sence of Ohio law allowing exemptions under federal law, Ohio's opting out of federal scheme does
not preclude debtor from asserting exemption which is available under statutes other than § 522. In
re Szabo (1986, BC ND Ohio) 60 BR 144.
South Dakota's opting out of 11 USCS § 522(d) exemptions in favor of its own exemptions does
not preclude Chapter 7 debtor from claiming other federal exemptions; therefore, court may prop-
erly consider debtor's federal homestead exemption claim. In re Corbly (1986, BC DC SD) 61 BR
843; In re Johnson (1986, BC DC SD) 61 BR 858.
Although Ohio has opted out of federal exemptions provided in 11 USCS § 522(d), § 522(g) su-
persedes state law and is applicable to property recovered by trustee pursuant to avoiding powers
enumerated in 11 USCS § 551. In re Snyder (1989, BC ND Ohio) 108 BR 150.
California has "opted out" of federal exemption scheme under 11 USCS § 522, meaning that
debtor in California case can only claim exemptions under California law and any applicable non-
bankruptcy law. In re Yau (1990, BC CD Cal) 115 BR 245.
There was no exemption for prepetition settlement proceeds of personal injury cause of action,
since under Chapter 7, proceeds once paid became simple money, and debtors had already availed
themselves of all exemptions for cash available under state law, where state had opted out of Fed-
eral bankruptcy exemption scheme. In re Searcy (1996, BC WD Mo) 193 BR 895.
In order to prove debtor's entitlement to exemption for personal injury lawsuit based on sexual
harassment under California's statute "copied almost word for word from 11 USCS § 522(d)(11),"
where California had opted out of federal exemptions, she must clearly demonstrate with convinc-
ing certification, such as doctor's declaration or other medical evidence, that she has suffered appre-
ciable physical injury, whether or not injury was accompanied by pain and suffering. In re Ciotta
(1998, BC CD Cal) 222 BR 626, 40 CBC2d 651.
11 USCS § 522 was not applicable to debtor, where Florida had opted out of federal exemptions;
co-debtor whose husband died after their Chapter 7 case was filed was not entitled to exemption for
$ 25,000 life insurance proceeds, although state law would protect proceeds of annuity contract and
she arguably had opportunity to accept proceeds in form of annuity, since trustee obtained from her
right to determine how insurance proceeds would be distributed, and further, she could not make
that decision to avoid reach of creditors post-petition. In re Williams (1998, BC SD Fla) 222 BR
662, 11 FLW Fed B 339.
Kansas has opted out of federal exemption scheme, thereby preventing its residents from claim-
ing federal exemptions and forcing them to elect exemptions set forth in 11 USCS § 522(b). In re
Adcock (1999, BC DC Kan) 234 BR 815 (criticized in In re Doughman (1999, BC DC Kan) 263 BR
905) and revd, remanded on other grounds (2000, DC Kan) 264 BR 708.
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11 USCS § 522
Although Chapter 13 debtor did have right, by virtue of 11 USCS § 522(h) but not by virtue of
11 USCS § 1303, to exercise trustee's avoiding powers under 11 USCS § 544 with respect to her
homestead, relief from stay was denied, where recorded notice of trustee's sale put world on con-
structive notice that sale was pending, so that unrecorded trustee's deed was valid and binding as to
all innocent purchasers, and, therefore, no bona fide purchaser could exist. LR Partners L.L.C. v
Steiner (In re Steiner) (2000, BC DC Ariz) 251 BR 137, 36 BCD 116, CCH Bankr L Rptr P 78235.
Florida's opt-out statute, Fla. Stat. ch 222.20, did not apply to non-immigrant alien debtor that
resided in state of Florida, but was not domiciled in Florida when debtor filed bankruptcy petition,
and did not prevent debtor from utilizing federal exemptions under 11 USCS § 522(b). In re Arispe
It is of no consequence that Florida's opt-out statute, Fla. Stat. ch. 222.20, uses term "resident,"
because bankruptcy court does not look to Florida law under 11 USCS § 522(b) if debtor is not
domiciled in Florida. In re Arispe (2002, BC SD Fla) 289 BR 245, 16 FLW Fed B 28.
Under 11 USCS § 522(b)(1) and Me. Rev. Stat. Ann. tit. 14, § 4426, Maine has "opted out" of
exemptions provided by federal law. Dubois v Fales (In re Dubois) (2004, BC DC Me) 306 BR 423.
In enacting Ala. Code § 6-10-11 (1975), state opted out of federal exemptions for those who file
for relief under Title 11 of U.S. Bankruptcy Code; therefore, state law governed propriety of debtors'
homestead exemption claim. In re Hughes (2004, BC MD Ala) 306 BR 683.
Pursuant to 11 USCS § 522(b) and Ala. Code § 6-10-11, Alabama opted out of federal exemp-
tion scheme and, accordingly, state law governs property of claim for exemption in bankruptcy
cases filed in Alabama. In re Cheatham (2004, BC MD Ala) 309 BR 631.
Ariz. Rev. Stat. § 33-1126(A)(3) exempts child support paid pursuant to court order, and exemp-
tion continues in funds when deposited in bank account, provided they are traceable to exempt
source. In re Palidora (2004, BC DC Ariz) 310 BR 164.
As money paid to Chapter 7 debtor as wages lost its exempt status under state law once it was
deposited in debtors' bank account, court granted trustee's objection to debtors' claim of exemption.
In re Palidora (2004, BC DC Ariz) 310 BR 164.
Pursuant to Tenn. Code Ann. § 26-2-112, Tennessee has "opted out" of federal exemptions. In re
Luttrell (2004, BC ED Tenn) 313 BR 751.
Debtor's rental of two bedrooms to students in his single-family home for extra income did not
change character of real property into principally nonresidential commercial enterprise and thus, full
value of exemption was available under D.C. Code Ann. § 15-501(a)(14) as District had opted out
of 11 USCS § 522(d) exemptions pursuant to 11 USCS § 522(b)(1), which permitted state law that
was applicable to debtor under 11 USCS § 522(b)(2). In re Springmann (2005, BC DC Dist Col)
328 BR 251.
Pursuant to Ohio Rev. Code Ann. § 2329.662 and 11 USCS § 522(b)(1), Ohio has elected to "opt
out" of federal exemptions for bankruptcy case and has specifically enumerated its own exemptions
in Ohio Rev. Code Ann. § 2329.66. In re Sforzo (2005, BC ND Ohio) 332 BR 294.
Louisiana is "opt out" state as its legislature, pursuant to authority of 11 USCS § 522(b), has de-
termined that persons filing for bankruptcy in Louisiana can claim only those exemptions permitted
Page 81
11 USCS § 522
by state law and federal law other than Title 11 of U.S. Code pursuant to La. Rev. Stat. Ann. §
13:3881B(1). In re Braxton (2005, BC WD La) 350 BR 710.
Ohio has elected to opt out of federal exemptions and instead Ohio residents use exemptions set
forth in Ohio Rev. Code Ann. § 2329.66. In re McCashen (2006, BC ND Ohio) 339 BR 907.
As state is "opt out" state, debtors who file for relief under U.S. Bankruptcy Code in state are al-
lowed to claim only those exemptions allowed by state law and non-bankruptcy federal law pursu-
ant to 11 USCS § 522(b) and La. Rev. Stat. Ann. § 13:3881(B)(1); law of opt out state determines
scope of exemption. In re Robinson (2006, BC WD La) 352 BR 436.
Chapter 7 debtor was entitled to exempt from her bankruptcy estate two annuities she had pur-
chased several years earlier, pursuant to pursuant to N.Y. Debt. & Cred. Law § 282 and N.Y. Ins.
Law § 3212. In re Combes (2008, BC ED NY) 382 BR 186.
West Virginia's bankruptcy only exemption statute is not preempted by Bankruptcy Code on
four grounds: (1) West Virginia has inherent power to enact bankruptcy laws; (2) enactment of
bankruptcy only exemption statute is not precluded by 11 USCS § 522(b)'s opt out provision but,
rather, bankruptcy only exemption statute is perhaps best method of harmonizing existing state ex-
emption laws with fresh start objectives of bankruptcy; (3) while states are prohibited from allocat-
ing consequences of bankruptcy between debtor and creditor, exemption laws are unique in that
Congress has specifically recognized non-preemption of state's exemption statutes; and (4) limits of
West Virginia's bankruptcy only exemptions do not frustrate any Congressional policy for allowing
exemptions in bankruptcy. In re Morrell (2008, BC ND W Va) 394 BR 405.
Utah has opted out of federal exemption scheme set forth in 11 USCS § 522(d). Carlson v Diaz
(In re Carlson) (2004, BAP10) 303 BR 478.
Montana has chosen to opt out of exemption plan set forth in federal bankruptcy statute, via
Mont. Code Ann. § 31-2-106, and debtors who live in "opt out" state like Montana may claim ex-
emptions provided under state law, for purposes of 11 USCS § 522(b)(3)(A). In re Maynard (2006)
2006 MT 162, 332 Mont 485, 139 P3d 803.
Unpublished: Chapter 7 debtor could avail himself of exemption in life insurance proceeds un-
der Kan. Stat. Ann. § 40-414(a)(4) and § 60-2313(a)(7), despite enactment of Bankruptcy Abuse
Prevention and Consumer Protection Act, because Kan. Stat. Ann. § 60-2312(a) remained effective
as opt-out provision under 11 USCS § 522(b)(2). In re Foth (2007, BC DC Kan) 2007 Bankr LEXIS
4358.
2.Application of Other Provisions of § 522 26. Generally
11 USCS § 522(b)(1) does not give state power to opt out of § 522 in its entirety, but power is
clearly limited by its language to excluding only federal exemption specified in § 522(d). Eanes v
Shepherd (1983, WD Va) 33 BR 984, 9 CBC2d 1029, revd without op (1984, CA4 Va) 735 F2d
1354 and revd without op (1984, CA4 Va) 735 F2d 1354.
Debtor, who under North Carolina opt-out legislation waived his right to claim exemption in
real estate by failing to file motion claiming exemptions within 20 days, is entitled to relief from
waiver because 11 USCS § 522(1) which provides no specific time limit for filing exemptions, pre-
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11 USCS § 522
empts state statute; 11 USCS § 522(b) pertains only to 11 USCS § 522(d) and other sections of stat-
ute operate independently of it. In re Howell (1985, MD NC) 51 BR 1015, 13 BCD 743.
Because Third Circuit precedent was overruled by U.S. Supreme Court precedent, wife's indi-
vidual retirement account (IRA) was exemptible under 11 USCS § 522(d)(10)(E) and bankruptcy
court did not err when it found that IRA was reasonably necessary for support of wife and husband.
Frank v Wiggins (In re Wiggins) (2006, MD Pa) 341 BR 506, 97 AFTR 2d 2241 (criticized in Krebs
v Skiba (2006, WD Pa) 2006 US Dist LEXIS 28319).
State's exclusion under 11 USCS § 522(b)(2) merely reinstates exemptions available to state's
debtors prior to enactment of § 522 since state's "opting out" statute is limited to excluding only
federal exemptions specified in § 522(d), since authority for "opting out" statute, 11 USCS §
522(b)(1), does not give states power to "opt out" of § 522 in its entirety but allows "opting out"
only with respect to federal exemptions, and since if § 522 does not apply in state then no exemp-
tions are available to debtors in this state because only authority for such exemptions is found in §
522(b)(2). In re Thacker (1980, BC WD Va) 5 BR 592.
Effect of 11 USCS § 522(p) is that value of homestead derived from any money in excess of $
125,000 that is put into relatively recently acquired homestead will not be exempt in debtor's bank-
ruptcy; in Florida context, only exception to $ 125,000 cap is for money derived and rolled over
from sale of prior homestead within state of Florida, 11 USCS § 522(p)(2)(B); thus, homestead
value acquired by debtor from money derived from sale of even exempt assets, other than prior
homestead, is also not exempt; further, 11 USCS § 522(p) applies even where individual has no
right to elect between federal and state exemptions by virtue of Fl. Stat. § 222.20. In re Rasmussen
27. Separate application of exemptions to joint debtors
11 USCS § 522(m) does not preempt any contrary state law which does not allow separate ex-
emptions to husband and wife filing joint petition in bankruptcy where, although § 522(m) would
allow separate federal homestead exemptions to debtor in joint case, exemptions do not apply in
Alabama and, accordingly, § 522(m) does not operate to give separate homestead exemptions to
joint debtors under Alabama Law. First Nat'l Bank v Norris (1983, CA11 Ala) 701 F2d 902, 10
BCD 473, 8 CBC2d 1078 (criticized in In re Betz (2002, BC DC Mass) 273 BR 313).
State which opts out of federal exemption alternative as permitted under 11 USCS § 522(d) need
not provide each of 2 debtor members of household with separate exemption notwithstanding provi-
sion for separate exemption rights in 11 USCS § 522(m). In re Granger (1985, CA9 Or) 754 F2d
1490, 13 BCD 837, 12 CBC2d 194, CCH Bankr L Rptr P 70300 (criticized in In re Betz (2002, BC
DC Mass) 273 BR 313).
11 USCS § 522(m) and other federal exemption provisions relating to homestead are irrelevant
to interpretation of state homestead exemption, which is purely state law question when state opts
out. In re Robinson (1984, DC Colo) 44 BR 292.
In cases of joint filing for relief under Chapter 7, use of North Dakota homestead exemption by
one joint debtor to exempt both debtors' interest in homestead precludes other joint debtor from ex-
empting property "in lieu of homestead"; 11 USCS § 522(m) does not compel different result since,
although that section allows joint debtors to exercise their exemptions independently, it does not
Page 83
11 USCS § 522
apply where state has opted out of federal exemptions and limited its residents to state exemptions.
In re Reisnour (1985, DC ND) 56 BR 225.
Where husband and wife jointly filed voluntary petition pursuant to Chapter 7, and husband was
domiciliary of New York State, which had opted-out of federal bankruptcy exemption scheme, hus-
band was required to elect exemption scheme set forth under New York law, and so was wife, under
11 USCS § 522(b), although she was not domiciliary of New York State; consequently, debtors
were only entitled to claim exemption of $ 7,500 for wife's personal injury action, as that was statu-
tory maximum under New York State scheme. Seung v Silverman (2003, ED NY) 288 BR 174.
Trustee in joint case may not argue that since Virginia has allegedly "opted out" of federal ex-
emptions, under surviving Virginia law, both husband and wife may not claim state exemptions,
since Virginia statute is so worded as to acknowledge that only 11 USCS § 522(d) is affected;
rather, effect of statute is that each and every debtor may separately claim state exemptions, but not
federal exemptions, under 11 USCS § 522(d). In re Thompson (1980, BC ED Va) 2 BR 380, 5 BCD
1302, 1 CBC2d 467.
State's power to "opt out" under 11 USCS § 522(b)(1) in cases of exemption is not limited by 11
USCS § 522(m), allowing each debtor to separately claim exemptions, and close reading of cases
suggests that 11 USCS § 522(m) indicates first reliance on state exemption scheme to justify double
exemption claims, and addition of § 522(m) as make-weight. In re Wilson (1982, BC DC Or) 22
BR 146, CCH Bankr L Rptr P 68877.
All of 11 USCS § 522 is not nullified by opt out; § 522(m) continues to be applicable even after
opt out. In re Brooks (1983, BC SD NY) 31 BR 302, 10 BCD 1051, 8 CBC2d 1082.
There is no conflict between 11 USCS § 522(m), giving separate exemptions to individual debt-
ors in joint case, and Arizona homestead exemption statute allowing only one claim by married
couple, because under Arizona law, married person filing separately is entitled to own exemption of
$ 50,000, or couple is entitled to $ 50,000 together, but, in either case, full $ 50,000 exemption for
homestead is allowed. In re Unkefer (1984, BC DC Ariz) 44 BR 55, 11 CBC2d 949.
11 USCS § 522(m) does not apply to state exemptions of Missouri, an opt-out state, and thus,
spousal debtors are limited to one $ 8,000 homestead allowance. In re Richman (1985, BC ED Mo)
3 BAMSL 1625.
State which opts out and provides its own exemptions is not bound by 11 USCS § 522(m);
rather, states are free to both create and limit exemptions for their residents. In re Nygard (1985,
BC ED Cal) 55 BR 623, 13 CBC2d 1101, affd (1987, BAP9 Cal) 71 BR 779.
State which opts out of 11 USCS § 522(d) and provides its own system of exemptions is not
bound by subsection (m) as to those exemptions and thus state may validly provide that married
couple must share single homestead exemption; Nevada homestead exemption provides that, in case
of married couple, either spouse may declare homestead and thus bind other spouse in that selection
or both spouses may join in selection; however, in either case, there is only one exemption which
may not exceed $ 90,000. In re Lenox (1986, BC DC Nev) 58 BR 104, 14 BCD 194.
States that opt out of federal exemption scheme set forth at 11 USCS § 522(d) are not bound by
11 USCS § 522(m) to provide exemptions separately to joint debtors. In re Garvin (2001, BC DC
Mont) 262 BR 529.
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11 USCS § 522
11 USCS § 522(m) provided that provisions of § 522, which included § 522(p), shall apply sepa-
rately with respect to each debtor in joint case; accordingly, each debtor in joint case could sepa-
rately claim homestead exemption of $ 125,000 for total exemption of $ 250,000. In re Rasmussen
Policies of liberal construction of exemptions and fresh start for joint debtors requires that each
joint debtor be allowed to elect federal or state exemptions independently pursuant to 11 USCS §
522(m); just as personal property exemptions are cumulatively applied to withdraw property from
bankruptcy estate, so too are homestead exemptions applied to residential real property; therefore,
election and stacking of federal and California homestead exemptions are proper. In re Dahdah
(1982, BAP9 Cal) 20 BR 665, 9 BCD 166, CCH Bankr L Rptr P 68704.
State which opts out of federal exemption scheme is not required by Congress to provide sepa-
rate individual exemption to each debtor in joint case; thus, 11 USCS § 522(m) does not preempt
state opt-out provisions. In re Baldwin (1987, BAP9) 70 BR 612, 15 BCD 747, CCH Bankr L Rptr
P 71700.
Since 11 USCS § 522(m) is independent of "opt out" statute, state cannot relieve itself of its ob-
ligation to provide joint debtors with its designated exemptions; thus where existing state exemption
law frustrates purposes of § 522(m), it is necessary conclusion that State Legislative in enacting
"opt out" statute intended to accede to Federal policy and to allow aggregation of exemptions within
bankruptcy content. Manufacturers & Trades Trust Co. v Borst (1984, Sup) 128 Misc 2d 691, 490
NYS2d 665.
28. Lien avoidance
State is not permitted to opt out of lien avoidance provisions of 11 USCS § 522(f); although
Georgia opted out of exemptions provided in § 522(d), it did not opt out of lien avoidance provi-
sions. In re Maddox (1983, CA11 Ga) 713 F2d 1526, 9 CBC2d 568, CCH Bankr L Rptr P 69770.
11 USCS § 522(b)(1) does not grant state authority to alter operation of 11 USCS § 522(f) since
although § 522(b)(1) enables states to establish their own items of exempt property, and place limits
thereon, § 522(b)(1) does not sanction state interference with availability of lien avoidance. In re
Miller (1983, MD Tenn) 30 BR 819, CCH Bankr L Rptr P 69230.
Debtor's lien avoidance rights under 11 USCS § 522(f) are determined as of date on which bank-
ruptcy petition is filed. Because lien avoidance is part and parcel of exemption scheme, right to
avoid judicial lien must also be determined as of petition date. Ohanian v Irwin (In re Irwin) (2006,
ED Cal) 338 BR 839.
Fact that state has opted out of federal exemption, so that only property allowed exempt under
state law may be claimed, does affect debtor's power to avoid liens on exempt property under 11
USCS § 522, notwithstanding that state statute says state exemption does not invalidate any security
interest or liens; state exemptions which debtor may claim are those applicable on date of filing of
petition, and where state has increased amount of property debtor may claim under state exemp-
tions, such increase will not be unconstitutional impairment of preexisting contract, where it creates
only minimal alteration of contractual relationship between debtor and creditor, and merely adjusts
state exemption to take inflation into account. In re Curry (1980, BC ND Ohio) 5 BR 282, 2 CBC2d
710, affd (1981, ND Ohio) 11 BR 716, 7 BCD 968, revd on other grounds (1983, CA6 Ohio) 698
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11 USCS § 522
F2d 298, CCH Bankr L Rptr P 69154 and revd without op, vacated without op (1983, CA6 Ohio)
722 F2d 740 and revd without op, vacated without op (1983, CA6 Ohio) 722 F2d 742.
State exemption statutes coexist with, but do not displace, lien avoidance provisions of 11 USCS
§ 522, and while such state statutes may specify what property may be claimed exempt, where state
has specifically provided that federal exemptions under 11 USCS § 522 will not be available to per-
sons filing in such state, lien avoidance effect of 11 USCS § 522 cannot be altered by state exemp-
tion provisions. In re Dubrock (1980, BC WD Ky) 5 BR 353, 6 BCD 771, 2 CBC2d 776.
Bankruptcy Code does not authorize state of Ohio to enact law limiting exemption entitlements
to those not affecting or invalidating security interests; state may not deny debtors availability of 11
USCS § 522(f) to avoid fixing of certain liens on non possessory, nonpurchase-money security in-
terests in household furnishings. In re Storer (1980, BC SD Ohio) 13 BR 1, CCH Bankr L Rptr P
67918.
Congress never intended for states to have power to opt out of 11 USCS § 522(f)(2) despite
grant of authority to states to determine amount of exemptions which they could allow. In re
Meadows (1981, BC ND Ga) 9 BR 882.
Fact that state has opted out of federal exemption scheme does not affect debtor's power to
avoid liens pursuant to 11 USCS § 522(f). In re Decker (1983, BC ND Ind) 34 BR 640, CCH Bankr
L Rptr P 69496.
Fact that state has opted out of federal exemption plan does not mean that debtor in such state
would not be empowered, pursuant to 11 USCS § 522(f), to avoid judicial liens and nonpossessory,
nonpurchase money security interests in certain goods to extent of exemptions allowed under state
law; power to avoid liens against those interests specifically enumerated in § 522(f) operates inde-
pendently of state's choice regarding its exemption scheme. In re Lillard (1984, BC WD Ark) 38 BR
433.
Despite state's opt out election, debtor may seek protection of 11 USCS § 522(f) to avoid secu-
rity interest on livestock. In re Thompson (1984, BC SD Iowa) 46 BR 1, affd (1984, CA8 Iowa) 750
F2d 628, 11 CBC2d 1024, CCH Bankr L Rptr P 70155.
Bankruptcy court overruled creditor's objection to debtor's claimed exemption under Tennessee
statute where it found that creditor's case law was no longer good law and garnishment lien im-
paired exemption that debtor was entitled to under Bankruptcy Code; creditor's judicial lien could
be avoided. In re Lafoon (2002, BC ED Tenn) 278 BR 767, affd (2002, ED Tenn) 2002 US Dist
LEXIS 27405.
Debtor's motion to "step into shoes of Chapter 13 trustee" and avoid, as preference under 11
USCS §§ 522(h) and 547(b), state court judgment lien filed against her real estate was denied; al-
though debtor proved that all five elements of avoidable preference were present and that secured
creditor would receive more in present proceedings than he would have received had debtor's estate
been administered under Chapter 7 and he had not obtained lien, debtor's failure to show that she
was entitled to exempt that portion of equity to which lien attached was fatal to her efforts to avoid
lien. In re Dyson (2006, BC ED Va) 348 BR 314.
Lienholders are not precluded from challenging debtor's claimed homestead exemption as de-
fense to lien avoidance motion; as holders of secured claims on property, lienholders have option of
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11 USCS § 522
ignoring bankruptcy proceedings until they are forced to defend debtor's attempts to avoid their
liens. In re Tinker (2006, BC DC Mass) 355 BR 380.
State may not defeat lien avoidance provisions of 11 USCS § 522(f) by defining exemption to
exclude property subject to consensual liens. In re Taylor (1987, BAP9 Mont) 73 BR 149, 15 BCD
1261, CCH Bankr L Rptr P 71844, affd (1988, CA9 Mont) 861 F2d 550, 18 BCD 836, CCH Bankr
L Rptr P 72526 (superseded by statute as stated in In re Neutgens (1989, BC DC Mont) 126 BR 91).
29.--Dependence on entitlement to exemption under state law
Debtors in Louisiana are not entitled to exempt household goods and furnishings subject to chat-
tel mortgage from bankruptcy estate because of Louisiana "opt-out"; Louisiana debtor may not util-
ize 11 USCS § 522(f) to avoid chattel mortgage in such property. In re McManus (1982, CA5 La)
681 F2d 353, 9 BCD 561, 6 CBC2d 1194, CCH Bankr L Rptr P 68925, reh den (1982, CA5 La) 689
F2d 190 and reh den (1982, CA5 La) 689 F2d 190 and (ovrld as stated in In re Durban (2004, BC
ND Tex) 2004 Bankr LEXIS 2032).
Chapter 7 debtors may not avoid nonjudicial, nonpossessory, nonpurchase-money lien under 11
USCS § 522(f) on farm equipment exempted under Texas opt-out provisions where Texas exemp-
tion statute does not allow exemption of property subject to secured lien. In re Bessent (1987, CA5
Tex) 831 F2d 82, 17 CBC2d 1073, CCH Bankr L Rptr P 72031 (ovrld as stated in In re Durban
(2004, BC ND Tex) 2004 Bankr LEXIS 2032).
States may not opt out of provisions of 11 USCS § 522(f) by limiting state law exemptions to
unencumbered property. In re Leonard (1989, CA10 Colo) 866 F2d 335, 6 Colo Bankr Ct Rep 143,
19 BCD 32, CCH Bankr L Rptr P 72656.
State which opts out of federal exemption system pursuant to 11 USCS § 522(b) may condition
granting of property exemptions to debtors on absence of any valid outstanding liens at time debtor
petitions for bankruptcy, and if state does impose such condition, it does not conflict with either 11
USCS § 522(f) or U.S. Constitution's Supremacy clause. Foster v City & Loan Sav. Co. (1981, ND
Ohio) 16 BR 467, 8 BCD 360.
Debtor may avoid judicial lien against property exempted under North Carolina's homestead ex-
emption; however, lien is not cancelled because under North Carolina law, debtor would not be en-
titled to homestead exemption if she discontinues using property as residence or conveys ownership
to another party. In re Love (1985, ED NC) 54 BR 947.
In state prohibiting use of federal exemptions, provision of 11 USCS § 522 permitting debtor to
avoid fixing of lien in debtor's exempt property applies only where debtors meet state requirements
as to what property may be claimed as exempt, and debtors may not avoid security interest in
household goods and furnishings where state has granted exemption in such goods only if goods are
not already subject to security interests, pledge, or lien created thereby, since, if debtors are not enti-
tled to claim exemption, there is no exemption for lien to impair. In re Panesky (1980, BC ND
Ohio) 5 BR 201, 2 CBC2d 835.
Where debtor grants security interest in household goods to creditor and subsequently files
homestead deed in household goods in accordance with state law, although state has opted out of
federal exemptions of 11 USCS § 522(d) by enacting its own exemption legislation, exemptions
claimed by debtor under state homestead laws are still protected by debtor's ability under § 522(f) to
avoid judgment liens and nonpossessory, nonpurchase money security interests in certain household
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11 USCS § 522
and personal goods to extent of exemptions allowable under state law since avoidance of such liens
is valid exercise of Congress' bankruptcy powers to enact uniform system of bankruptcy. In re
Rodgers (1980, BC WD Va) 5 BR 761, 2 CBC2d 1294, CCH Bankr L Rptr P 67690.
Ohio law purporting to limit debtor's exemptions in household goods to $ 200.00 in any particu-
lar item does not invalidate debtor's lien avoidance power under 11 USCS § 522(f); no specific pro-
vision of Bankruptcy Code grants states authority to pre-empt any subsection of 11 USCS § 522
other than subsection (b) concerning exemptions and thus even if state opts out of federal exemp-
tions, debtor's lien avoidance power is not affected; further while Ohio must comply with Article I §
10 of Constitution prohibiting states from enacting laws impairing obligation of contract Congress
is not so forbidden and may exercise such power in enacting uniform laws on bankruptcy. In re
Marinski (1981, BC ND Ohio) 9 BR 579.
Debtor's application for lien avoidance will be denied since Ohio has effectively opted out of
lien avoidance provisions of 11 USCS § 522(f) by drafting their exemption statutes very narrowly
and denying their resident debtors opportunity to use more generous federal exemptions set out in §
522(d); pursuant to Ohio law, Ohio debtors are denied exemptions in property that would otherwise
be exempt if they had allowed properly perfected security interest to attach to property before filing
their bankruptcy petition. In re Law (1984, BC SD Ohio) 37 BR 501.
Valid exemption under state law is prerequisite to receiving relief through lien avoidance under
11 USCS § 522(f) in states where uniform federal exemptions do not apply. In re Myers (1985, BC
SD Iowa) 56 BR 423.
Assuming that Chapter 7 debtors' fully encumbered Mercedes is tool of trade in their catering
business, debtor's may not exempt it under 11 USCS § 522(b) because Texas law does not exempt
property which is subject to secured lien; further, debtors may not avoid lien on vehicle because 11
USCS § 522(f) is dependent upon entitlement to exemption under 11 USCS § 522(b). In re Graham
(1986, BC SD Tex) 64 BR 469.
Chapter 7 debtor may avoid judicial lien which impairs homestead exemption despite fact
debtor lacks equity in property where applicable state exemption statute contains no language limit-
ing right to claim only unencumbered portion of property as exempt and debtor is therefore entitled
under state law to claim his homestead as exempt to extent of its value. In re Ganakes (1988, BC
SD Iowa) 81 BR 518, 16 BCD 1293, CCH Bankr L Rptr P 72144.
While noting that issue is not free from doubt, Bankruptcy Court has adopted broad reading of
language in 11 USCS § 522(h) that debtor may step into trustee's shoes and avoid transfer only up to
dollar amount that debtor could have claimed as exempt had trustee avoided transfer because it be-
lieves that broader reading is more consistent with purpose of statute, which is to put debtor in same
position, if trustee fails to act, as he or she would have enjoyed had trustee avoided transfer. In re
Dyson (2006, BC ED Va) 348 BR 314.
30.--Particular applications
North Carolina statute limiting homestead exemption to duration of debtor's actual residence in
that place does not affect power of 11 USCS § 522(f) to avoid liens which impair debtor's exemp-
tion, either actual exemption under state statute or hypothetical federal exemption where state has
opted out of federal scheme--judicial liens can be avoided under § 522(f) even though state has de-
fined exempt property in such a way as specifically to exclude property encumbered by liens; how-
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11 USCS § 522
ever, lien larger in amount than exemption available to debtor does not impair that exemption, and
thus only that part of lien which actually interferes with debtor's homestead exemption may be
avoided. In re Opperman (1991, CA4 NC) 943 F2d 441, 3 Fourth Cir & Dist Col Bankr Ct Rep
709, 22 BCD 15, 25 CBC2d 601, CCH Bankr L Rptr P 74239 (criticized in Butler v Southern O
Corp. (In re Butler) (1996, BC WD Va) 196 BR 329, 8 Fourth Cir & Dist Col Bankr Ct Rep 780, 35
CBC2d 1479).
Ohio exemptions statute sets minimum level of protection for Ohio debtors facing execution of
judgments in state court and proceedings in federal bankruptcy court and fact that law provides that
exemptions will not impair liens on personal property in state court does not mean that Ohio debtor
is not entitled to avoid liens in proceedings in federal bankruptcy court; states are permitted not to
authorize federal exemptions but instead to make state exemptions available; however Congress did
not permit states to exercise any discretion over lien avoidance which was congressional response to
nationwide problem whereby dragnet security interests in household goods and personal property
seriously threatened rehabilitation of bankrupt and therefore one of overriding goals of federal
bankruptcy law. Curry v Associates Financial Services (1981, ND Ohio) 11 BR 716, 7 BCD 968,
revd on other grounds (1983, CA6 Ohio) 698 F2d 298, CCH Bankr L Rptr P 69154 and revd with-
out op, vacated without op (1983, CA6 Ohio) 722 F2d 740 and revd without op, vacated without op
(1983, CA6 Ohio) 722 F2d 742.
Debtor claiming exemptions under Tennessee law may use 11 USCS § 522(f) to avoid creditor's
nonpossessory, nonpurchase money security interest; § 522(f) continues to be operative despite en-
actment of state opt out legislation and separate state exemption provisions; § 522(b)(1) does not
sanction state interference with availability of lien avoidance. In re Miller (1983, MD Tenn) 30 BR
Tennessee opt-out statute, which declares that only exemptions specified in 11 USCS § 522(d)
are superseded, does not attempt to deny Tennessee residents benefits of 11 USCS § 522(f) lien
avoidance since intent of legislation is to supersede only specific monetary limits provided in §
522(d). In re Miller (1983, MD Tenn) 30 BR 819, CCH Bankr L Rptr P 69230.
Creditor may not argue that lien avoidance provision of 11 USCS § 522 should not be applied in
Virginia because Virginia legislature elected to opt out of federal exemption scheme, inasmuch as
supremacy of bankruptcy laws of United States would invalidate conflicting state law or policy, and
inasmuch as provision of Virginia law opting out of federal exemption scheme explicitly states Vir-
ginia has opted out of exemption scheme only, and does not refer to lien avoidance provisions of 11
USCS § 522. In re Barto (1981, BC ED Va) 8 BR 145, affd (1983, CA4 Va) 704 F2d 142.
Fact that Indiana has opted out of federal exemption scheme does not affect Chapter 7 debtor's
power to avoid liens under 11 USCS § 522(f). In re Owen (1987, BC ND Ind) 70 BR 366.
11 USCS § 522(f) lien avoidance provision is available to debtors claiming under Georgia ex-
emption statute. In re Caruthers (1988, BC ND Ga) 87 BR 723, CCH Bankr L Rptr P 72335.
Section 522(f) operates in opt-out states such as California. In re Mayer (1993, BC SD Cal) 156
BR 54, CCH Bankr L Rptr P 75343, affd in part and vacated in part, remanded on other grounds
(1994, BAP9 Cal) 167 BR 186, 94 CDOS 4165, 94 Daily Journal DAR 7510.
Motion brought by Chapter 7 debtors to avoid judicial liens on homestead pursuant to 11 USCS
522(f)(1) was granted despite fact that California has opted out of federal bankruptcy exemptions
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11 USCS § 522
set forth in 11 USCS § 522(d); lien avoidance under 11 USCS § 522(f)(1) involves more than deter-
mination of exemption rights under state law, permitting debtor to avoid fixing of judicial lien that
impairs debtor's exemption. In re Mulch (1995, BC ND Cal) 182 BR 569, 33 CBC2d 948.
Debtors were entitled to avoid entire judicial lien of creditors under 11 USCS § 522(f) due to
homestead exemption entitlement under Mo. Rev. Stat. § 513.475, even though they waited until
two years after Chapter 7 discharge and property had appreciated during that period, because proper
date for valuing property was date that bankruptcy petition was filed and creditors failed to show
prejudice or equitable justification for denying avoidance of lien. In re Hall (2005, BC WD Mo) 327
BR 424.
Bankruptcy court did not err in allowing debtor to make new claim of exemption for her vehicle
in bankruptcy court, based on specific California statute applicable only to those debtors who file
bankruptcy petition, even where municipal court had previously denied her general exemption,
since filing bankruptcy gave her new and specific opportunity to claim exemption under different
state statute, as allowed by 11 USCS § 522. Little v Reaves (In re Reaves) (2000, BAP9) 256 BR
306, 2000 CDOS 10109, 2000 Daily Journal DAR 13621, affd (2002, CA9) 285 F3d 1152, 2002
CDOS 3019, 2002 Daily Journal DAR 3679, CCH Bankr L Rptr P 78632.
Unpublished: Where bankruptcy court concluded that Internal Revenue Service tax lien, which
was junior to creditor's judicial lien on debtor's home, should be included in calculation under 11
USCS § 522(f)(2)(A), and sum of liens and state exemption under O.C.G.A. § 44-13-100 greatly ex-
ceeded debtor's interest in property, bankruptcy court correctly concluded that creditor's judicial lien
could be avoided in its entirety. Cadle Co. v Taras (In re Taras) (2005, CA11 Ga) 131 Fed Appx
167, reported at (2005, CA11 Ga) 143 Fed Appx 308.
Unpublished: Creditor was entitled to enforce consensual security interest secured by property
lien, which parties reached after creditor sued for title, possession, and foreclosure in state court,
against Chapter 7 bankruptcy debtor who sought to avoid lien under 11 USCS § 522(f)(1)(A); be-
cause creditor had paid taxes owing on property, for which he held warranty deed, he was equitably
subrogated to rights of lien holder. Franks v Wynne (In re Wynne) (2006, CA5 Tex) 2006 US App
LEXIS 29582.
III.ENTITLEMENT TO EXEMPTIONS
Right of exemption under 11 USCS § 522 is personal privilege and court will therefore carefully
see that exemption laws are not construed so as to make them instruments of fraud; for example,
where property sought to be exempted is determined to be fruit or instrumentality of crime or where
property to be exempted was fraudulently concealed by debtor both before and after filing, exemp-
tion will not be allowed. In re Hanson (1984, BC DC ND) 41 BR 775.
Under 11 USCS § 522(b)(2), only debtor may exempt property that is exempt under state law
applicable on date of filing; therefore, wife who filed jointly with husband about one month prior to
his decease is not entitled to North Carolina's widow's allowance on car included within husband's
estate because husband did not and could not claim exemption in car. In re Estate of Barefoot
(1984, BC ED NC) 43 BR 608.
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11 USCS § 522
Assertion of exemption is personal right of Chapter 7 debtor and may not be asserted by others,
including trustee of debtor's retirement plan fund, on behalf of debtor. In re Cates (1987, BC DC
Or) 73 BR 874.
Once attorney fees were paid out of settlement amount that arose from personal injury lawsuit in
which debtors were plaintiffs, debtors were entitled to protect sums from their creditors to fullest
extent allowed by applicable exemption. In re Harrington (2003, BC ED Tex) 306 BR 172.
32. Head of household or family
Husband and wife who are living together in same residence may both be deemed householders
under Virginia law permitting each in joint bankruptcy action to file homestead exemption, any
other construction conflicting with 11 USCS § 522(m). Cheeseman v Nachman (1981, CA4 Va) 656
F2d 60, 7 BCD 1385, 4 CBC2d 1218, CCH Bankr L Rptr P 68245.
Divorced mother was entitled to same exemption as male in her circumstances where, under
Missouri law, there was no requirement that parent be residing with children nor any requirement
that bankrupt prove "primary" source of economic or moral support in order to claim homestead
exemption based on contribution to support of children in custody of other parent. In re Murrell
(1978, ED Mo) 467 F Supp 756, 20 CBC 65.
Chapter 7 debtor widow who lives alone and has no dependents is "family" for purposes of
Texas exemptions, where debtor could claim her husband's exemptions at time of his death and, as
such, debtor's ability to claim family exemption survives with debtor until such time as she dies.
United States ex rel. Farmers Home Admin. v Coffman (In re Coffman) (1994, ND Tex) 163 BR 766,
Wife filing for individual bankruptcy cannot claim Florida exemption as head of family, not-
withstanding that she earns more than husband, where, under Florida law, husband is deemed head
of family unless unable to discharge duties due to permanent illness, incarceration, or mental in-
competence. In re Barnes (1980, BC MD Fla) 4 BR 600, CCH Bankr L Rptr P 67676.
Single man cohabiting with woman in violation of state law, who therefore is not head of any
cognizable family unit in law or in fact as of date of filing bankruptcy petition, is not entitled to
state exemption as head of family, based either on cohabitation with unmarried woman, or on exis-
tence of unborn child of couple, born after date of debtor's filing petition. In re Rivera (1980, BC
MD Fla) 5 BR 313.
Debtor is not entitled to state exemption as head of household notwithstanding that she has legal
custody of children, where she is unemployed, has no savings, and no significant assets, and support
of children is being provided by ex-husband. In re Estridge (1980, BC MD Fla) 7 BR 873, CCH
Debtor will not be regarded as head of family for purposes of bankruptcy exemption pursuant to
state statute based primarily on economic considerations where debtor's family's sole source of sup-
port is income generated by her present husband, all household expenses including food and cloth-
ing for debtor's children by prior marriage are paid by present husband, and only small amount of
money has been received from children's father during preceding year. In re Crippen (1983, BC ED
Mo) 36 BR 7, 2 BAMSL 577.
Under opt-out state's statute limiting homestead exemption to head of family, person claiming
head of family must show either (1) legal duty to support arising out of family relationship or (2)
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11 USCS § 522
continuing communal living by at least 2 persons with one person recognized as being in charge;
where monthly child support and alimony payments fully supported debtor, neither debtor nor for-
mer spouse is solely in charge of raising child, and debtor's former spouse claimed legal responsibil-
ity for child in separate bankruptcy case and on federal income tax returns, debtor is not head of
household and thus is not entitled to homestead exemption. In re Jacobson (1985, BC SD Fla) 46
BR 617.
Missouri head of family exemption is sexually, maritally, and anatomically neutral, giving no
preference to either spouse, and is not restricted in any way by any prohibited classification, and
thus statute is not in violation of equal protection clause; because statute allows only one individual
per family to claim exemption, husband and wife Chapter 7 debtors cannot both claim exemption.
In re Sartain (1986, BC WD Mo) 61 BR 1007.
Debtor is not head of family under 11 USCS § 522 even though her husband did not continu-
ously reside with her where: (1) husband furnished funds to purchase home and for living expenses;
(2) debtor has not earned income for 20 years; and (3) even after debtor obtained real-estate license,
primary source of income was from husband's investments. In re Butcher (1986, BC ED Tenn) 62
BR 162, affd (1987, ED Tenn) 75 BR 441, affd without op (1988, CA6 Tenn) 848 F2d 189 and affd
without op (1988, CA6 Tenn) 848 F2d 189.
Chapter 7 debtor is entitled to claim homestead exemption, even though debtor is divorced indi-
vidual without minor children, where property was at one time occupied by debtor as "head of fam-
ily," his spouse and children, and homestead character of land did not change when debtor was di-
vorced or when his children moved out of household, and from time homestead was established
debtor continuously occupied land and it was never sold or abandoned; at time homestead exemp-
tion is claimed, it is not necessary for debtor to be "head of family"; fact that home is located on
leased property is irrelevant; debtor may not assert homestead against claims of his dependents for
support. In re Bartlett (1993, BC DC Neb) 153 BR 881.
Debtor was entitled to claim homestead exemption under 11 USCS § 522(b)(2)(A) because she
met elements of head of household under Ark. Const. art. 9, § 3, and Ark. Code Ann. § 16-66-210
(Supp. 2003) where, although she might not have been legally obligated to support her mother, she
undertook obligation; her mother was partially dependent upon debtor for basic financial needs; and
because of mother's medical condition, debtor had assumed decision-making role with regards to
household affairs. In re Warnock (2005, BC WD Ark) 323 BR 249.
33. Partner
Under former law, in bankruptcy of individual partners and of partnership, partners were not en-
titled to claim exemption out of partnership property. Schefman v Degroot (1929, CA6 Mich) 35
F2d 950, cert den (1929) 280 US 562, 74 L Ed 616, 50 S Ct 19.
Under former law, individual partner was entitled to exemption in property conveyed to him by
firm by way of division. In re David (1931, DC Fla) 54 F2d 140.
Only individual debtor is entitled to exempt property of estate, and where husband and wife who
filed joint petition in bankrupt claimed as exemption inventory of business which creditor claims is
asset of partnership, determination of whether husband and wife are acting as partnership is left to
facts of case and applicable state law; in community property state such as Arizona, in order to find
partnership, where spouses operate business and where rights of third party are not involved, there
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11 USCS § 522
must be evidence that spouses had subjective intent to create legal partnership and debtors will be
entitled to exclude property as exempt where there is no evidence to sustain finding debtors in-
tended to act as partnership. In re Cramer (1980, BC DC Ariz) 3 BR 428, 6 BCD 17, 1 CBC2d 607.
Individual partners cannot exempt partnership property in partnership's bankruptcy proceedings;
however, whether creditor's lien is non-exemptible partnership property hinges on existence of part-
nership as determined by state law. In re Johnson (1982, BC DC Kan) 19 BR 371.
Where farming partnership was dissolved and property owned by partnership split between in-
dividual partners, property is no longer partnership property but rather is individual property, even
though in some cases property was jointly owned and property is exemptible by each partner as
debtor under 11 USCS § 522 and state law. In re Schmitt (1986, BC ND Iowa) 56 BR 708.
Burden of proof is on objecting creditors, pursuant to Bankruptcy Rule 4003(c), to show that
items initially claimed exempt by Chapter 7 debtors are partnership property. In re Indvik (1990,
BC ND Iowa) 118 BR 993, 23 CBC2d 948.
Chapter 7 debtor brothers were partners in farming operation and therefore equipment used in
that operation is partnership property not exemptible by individual debtors where brothers agreed to
share profits and losses equally, they executed "partnership" documents in connection with loan
transactions and partnership name was used as borrowing entity, and they listed certain debts as
"partnership" debts on bankruptcy schedules; even if partnership did not exist, debtors would be es-
topped from denying existence of partnership where loan documents indicated existence of partner-
ship. In re Indvik (1990, BC ND Iowa) 118 BR 993, 23 CBC2d 948.
Individual debtors may not claim as exempt their partner's rights in specific partnership prop-
erty. In re Indvik (1990, BC ND Iowa) 118 BR 993, 23 CBC2d 948.
34. Miscellaneous
Under former law right of exemption was personal to debtor and could not be asserted by credi-
tor holding lien against property which may be set aside as preferential or fraudulent. In re
Mattingly (1941, DC Ky) 42 F Supp 83.
Under 11 USCS § 522, retirement systems may not exercise exemption on behalf of debtor,
since such exemption is personal to debtor. In re Ross (1982, ND NY) 18 BR 364, 6 CBC2d 1277.
Under 11 USCS § 522(b), creditor bank did not have standing to assert debtor's defense of ex-
empt status of funds transferred and under 11 USCS § 541, transfer of debtor's exempt retirement
benefits from bankruptcy estate within preference period constituted avoidable preference. In re
Everhart (1981, BC ND Ohio) 11 BR 770.
Applying Virginia law, Chapter 7 trustee's objection to claim of homestead exemption by debtor
is sustained where debtor failed to file homestead deed within time limits required by state law; fur-
thermore, Rule 9006(a) does not exclude Saturday, Sunday, and holidays from computation periods
where state has opted out of federal statutory exemption scheme under 11 USCS § 522(b). In re
Bernstein (1995, BC WD Va) 189 BR 113.
Restrictions to homestead exemption under Fla. Stat. § 222.20 did not apply when debtor
claimed exemption under 11 USCS § 522(b)(3)(B) for debtor's interest in property located in Florida
that debtor owned in tenancy by entirety. In re Cauley (2007, BC MD Fla) 374 BR 311, 20 FLW
Fed B 535.
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11 USCS § 522
Where debtor was ordered removed from home by court order, divorce decree divested his own-
ership, and property was ordered sold, debtor could not claim homestead exemption pursuant to
Wash. Rev. Code. § 6.13.040(3) by declaring his intent to reside there because, under circum-
stances, his return to home was impossible. Wilson v Arkison (In re Wilson) (2006, BAP9) 341 BR
21.
B.Spouses 35. Generally
California statute providing that husband and wife are entitled only to one set of exemptions be-
tween them even if both spouses are judgment debtors, modifies all California exemption statutes
that do not express contrary intent; such law does not violate Bankruptcy Code provisions providing
for double exemptions for spouses where state has chosen to opt out of federal scheme. In re Tal-
madge (1987, CA9 Cal) 832 F2d 1120, 17 CBC2d 1140, CCH Bankr L Rptr P 72106.
Absent husband's intent to make gift to wife when wife and husband signed application for title
to truck that husband purchased and for which husband alone signed financing note, wife has no
interest at all in truck at least for purposes of debtor-creditor relationship and wife therefore can
claim no exemption in truck. General Motors Acceptance Corp. v Lefevre (1983, DC Vt) 38 BR
980, 38 UCCRS 602.
Bankrupt wife who has indicated in her statement of affairs that her occupation was that of
housewife, and has offered no proof she earned any of income from which income taxes apparently
were withheld, has no right to any of proceeds of refund checks issued jointly by IRS to her and her
husband, and consequently no right to have same set apart as her exempt property. In re Griffin
(1979, BC MD Tenn) 1 BR 653.
Congress, in allowing debtors to choose between federal and state exemptions, did not intend to
grant less to joint petitioners than to individual petitioners, but intended that in joint case each
debtor shall be entitled to exemptions; election by one joint debtor to choose state set of exemp-
tions, which includes "head of family" exemption exempting homestead for joint benefit of both
spouses but does not require both spouses to join in claiming homestead exemption, neither requires
election of state exemptions by spouse nor precludes spouse's selection of federal bankruptcy ex-
emptions. In re Brosius (1980, BC CD Cal) 7 BR 811.
Husband and wife, filing as joint debtors, are entitled under 11 USCS § 522(m) and state law to
claim his or her own exemptions separately in statutory amount and are not limited to claiming ex-
emption per family unit. In re Ferguson (1981, BC DC Colo) 15 BR 439.
Debtor, full-time housewife, is entitled to file homestead deed to exempt property under state
law consistent with 11 USCS § 522(m), even if she could not show contribution to maintenance of
household. In re Gustinis (1981, BC ED Va) 16 BR 108, 5 CBC2d 1120, CCH Bankr L Rptr P
68570.
Joint Chapter 13 debtor may not exempt as part of her separate exemptions under 11 USCS §
522(d)(5) portion of her spouse's bequest received from estate of spouse's mother remaining after
spouse exempted portion of bequest, where joint debtor is not heir of estate; joint petitioners have
separate bankruptcy estates, and separate bankruptcy estate of joint petitioner consists only of prop-
erty in which that debtor has legal or equitable interest; and pursuant to § 522(b) each joint peti-
tioner may exempt certain property from their individual bankruptcy estates, but exemption is per-
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11 USCS § 522
sonal in nature and can only be asserted by or on behalf of debtor. In re Freund (1983, BC WD
Wis) 32 BR 622, 9 CBC2d 277, CCH Bankr L Rptr P 69362.
While it is right of debtor to choose exemptions, exemptions must be claimed in good faith and
not for purpose of circumventing debtor's obligation to support his spouse, and when debtor who
has not met obligations to support spouse has claimed inadequate exemptions, spouse should be
permitted under 11 USCS § 522(l) to claim additional exemptions as long as additional exemptions
do not unduly prejudice debtor. In re Crouch (1983, BC ED NC) 33 BR 271, 9 CBC2d 443, CCH
Pursuant to 11 USCS § 522(b)(2)(B) and Bankruptcy Rule 1016, right to claim exemption on
behalf of debtor husband vested at time of husband and wife debtors filed joint Chapter 7 petition,
and debtor-husband's subsequent death did not alter said claim of exemption with result that debtor-
wife can claim, in addition to her own federal "homestead" exemption of $ 7,500, federal homestead
exemption of debtor-husband though husband had died subsequent to filing. In re Friedman (1984,
BC ED Pa) 38 BR 275, CCH Bankr L Rptr P 69812.
Under 11 USCS § 522(b)(2), only debtor may exempt property that is exempt under state law
applicable on date of filing; therefore, wife who filed jointly with husband about one month prior to
his decease is not entitled to North Carolina's widow's allowance on car included within husband's
estate because husband did not and could not claim exemption in car. In re Estate of Barefoot
(1984, BC ED NC) 43 BR 608.
Two individuals are not required to share common exemption simply because they were once
married if on date of filing bankruptcy petition parties are divorced, each has separate residence,
and each meets statutory "use" requirements for exemption. In re Hendrick (1985, BC MD La) 45
BR 965.
Debtor may not exempt, pursuant to Ohio law, one-half interest acquired in former wife's re-
tirement and pension plan by virtue of divorce decree because exemption is personal to individual
whose work gave rise to right to receive pension. In re Mabrey (1985, BC SD Ohio) 51 BR 383.
Chapter 7 debtor husband and wife may use unused individual $ 7,500 homestead exemptions to
exempt under 11 USCS § 522(d)(5) aggregate of $ 15,000 in pension monies paid postpetition, re-
gardless of fact that debtor wife has died during pendency of bankruptcy petition. In re Magnus
(1988, BC ED Pa) 84 BR 976, 17 BCD 632.
Debtors who filed for divorce during pendency of their Chapter 7 case were not entitled to ap-
portion value of property they claimed as exempt between their respective bankruptcy estates based
on principles of equitable distribution of marital property prior to date of dissolution of marriage. In
re Johnson (1997, BC DC Minn) 210 BR 153.
For exemption purposes, individual ownership interest of each debtor spouse will be presumed
to be one-half interest although debtors will always be afforded opportunity to present proof that
their ownership interest in joint asset is other than one-half; in case of residence owned by husband
and wife as tenants by entirety, each individual spouse can only claim homestead exemption in one-
half interest in equity which represents their individual ownership interest. In re Nye (2000, BC WD
NY) 250 BR 46.
In joint cases, each of joint estates is separate entity and exemptions available to each co-debtor
may only be claimed from his or her separate estate. In re Cohen (2001, BC DC NJ) 263 BR 724.
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11 USCS § 522
11 USCS § 522(l) applies when debtor does not file list of property that debtor claims as exempt
and, if debtor does not file such list, dependent may do so on behalf of debtor; therefore, where hus-
band in Chapter 7 case attempted to exempt portion of his custodial account IRA, wife was not enti-
tled to claim exemption in remaining IRA funds under § 522(l) because husband did not fail to
claim exemption. Walsh v Galloway (In re Galloway) (2001, BC WD Pa) 308 BR 709.
Bankruptcy court applied 11 USCS § 522(j) and Wash. Rev. Code § 6.13.080, and held that
creditor's judgment lien, which resulted from termination of same-sex long-term relationship and
property dispute, could be avoided under 11 USCS § 522(f); bankruptcy court agreed with debtor
that creditor was not "spouse" under federal bankruptcy law or 1 USCS § 7, and creditor did not
qualify for exception in Bankruptcy Code. In re Goodale (2003, BC WD Wash) 298 BR 886, 51
CBC2d 35.
Non-debtor spouse was not entitled to assert homestead exemption on debtor's behalf where
debtor unsuccessfully appealed to U.S. Court of Appeals for Eighth Circuit three times on issue of
his entitlement to homestead exemption; court of appeals held that debtor was not entitled to home-
stead exemption, and decision applied also to debtor's spouse in her attempt to assert exemption.
Stephens v Jensen-Carter (In re Alexander) (2003, BAP8) 288 BR 127, 40 BCD 211, CCH Bankr L
Rptr P 78792.
Rights of dependent of debtor under 11 USCS § 522(1) are derivative of rights of debtor and are
limited to asserting exemptions that are available to debtor; 11 USCS § 522(1) and Fed. R. Bankr. P.
4003(a) only allow dependent of debtor to assert derivative right, not independent right. Stephens v
Jensen-Carter (In re Alexander) (2003, BAP8) 288 BR 127, 40 BCD 211, CCH Bankr L Rptr P
78792.
36. Stacking of exemptions
Under Arkansas state homestead exemption adopted pursuant to 11 USCS § 522(b), husband
and wife as joint debtors were entitled to only one homestead exemption, and provision of 11 USCS
§ 522(m) providing each joint debtor with exemptions under federal scheme does not compel differ-
ent result. Stevens v Pike County Bank (1987, CA8 Ark) 829 F2d 693, CCH Bankr L Rptr P 71985.
When disabled homeowner's spouse filed homestead exemption regarding their residence, it had
effect, under Mass. Gen. Laws ch. 188, § 2, of terminating homestead exemption homeowner had
previously filed under Mass. Gen. Laws ch. 188, § 1A, as disabled person, so homeowner could not
apply both exemptions to his residence in bankruptcy proceeding, in effort to avoid creditor's judi-
cial lien. Garran v SMS Fin. V, LLC (In re Garran) (2003, CA1 Mass) 338 F3d 1, CCH Bankr L
Rptr P 78887.
One joint debtor may not take advantage of federal exemption under 11 USCS § 522 while
spouse claims full head of household homestead exemption since law requires union of both
spouses in claiming benefits of exemption. In re Skipwith (1981, BC SD Cal) 9 BR 730, 3 CBC2d
Where California statute, enacted pursuant to 11 USCS § 522, goes beyond simply opting out of
federal bankruptcy exemptions to eliminate exemption stacking contrary to provisions in 11 USCS §
522(b) by providing (1) husband and wife who are joint debtors may choose either "unauthorized"
federal bankruptcy exemptions or state exemptions, so long as they choose in common, (2) husband
and wife who file individual petitions may claim federal bankruptcy exemption so long as other
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11 USCS § 522
spouse waives in writing right to claim state exemptions, and (3) notwithstanding nonauthorization
of federal bankruptcy exemptions in state, individual can choose federal or state exemptions so long
as individual does not choose both, such statute is unconstitutional because of its violation of Su-
premacy Clause; statute's severability clause does not save unobjectionable portions of statute since
legislative history does not support conclusion that opt-out provision was to survive state attempt to
prohibit exemption stacking. In re Garrido (1984, BC SD Cal) 43 BR 289, 11 CBC2d 506, CCH
11 USCS § 522(m) provides that each debtor in joint case is entitled to claim exemptions; there-
fore, California statute, which provides that husband and wife in joint petition may not utilize dif-
ferent applicable exemption provisions, is contrary to federal law and is unconstitutional. In re
Ferraro (1986, BC ND Cal) 67 BR 228.
Where two Chapter 13 debtors resided on premises sought to be exempted under 11 USCS § 522
at time of filing, both are entitled to claim homestead exemptions of at least $ 7,500 in premises. In
re Chandler (1987, BC ED Pa) 77 BR 513, CCH Bankr L Rptr P 71970 (criticized in Wood v LA
Bank (In re Wood) (1996, BC MD Pa) 190 BR 788, 28 BCD 570, 35 CBC2d 275).
Where under state law husband no longer has any interest in property acquired by both husband
and wife as tenants in entireties after husband transferred his interest prepetition to his wife, hus-
band has no interest in realty to which homestead exemption under 11 USCS § 522(b) can attach
and therefore husband and wife can not both claim homestead exemption in joint Chapter 11 case
pursuant to 11 USCS § 522(m), notwithstanding fact husband has continuing liability on mortgage
obligation and shares residence with spouse and contributes to its maintenance. In re Gorski (1988,
BC WD Pa) 85 BR 371, CCH Bankr L Rptr P 72291.
Chapter 13 debtor properly claimed as exempt both property that Arizona law would have per-
mitted him to exempt individually and property that Arizona law would have permitted his spouse
to exempt because debtor was acting for benefit of community. In re Perez (2003, BC DC Ariz) 302
BR 661.
37.--Federal and state exemptions
11 USCS § 522(b) prohibits stacking of Texas and federal exemptions by joint Chapter 7 debtors
even though no formal order of joint administration has been given under Bankruptcy Rule 1015(b)
because practice in this district is to treat filing of joint petition as request for unitary administration
and no formal order is issued; to hold otherwise would do violence to perceived legislative intent in
amending 11 USCS § 522(b); debtors are, however, allowed to stack federal exemptions. In re
Gallo (1985, BC ND Tex) 49 BR 28, 12 BCD 1272, 12 CBC2d 1138.
Exemption authorized by 11 USCS § 522(b)(2)(B), relating to interests as tenancy by entirety or
joint tenant, is cumulative to exemption under state or local law authorized under § 522(b)(2)(A). In
re Gillette (1999, BC MD Fla) 248 BR 845.
38.--State exemptions
Under state law, when both spouses file bankruptcy, each is debtor and there are 2 exemptions
available for each item of jointly-owned property; thus, each spouse had $ 200 exemption in house-
hold goods, creating joint claim which totals $ 400, and each spouse may claim exemption of one-
half interest in different cars, creating joint claim totaling $ 2,400, without violating 11 USCS § 522.
In re Lambert (1980, BC ND Ind) 10 BR 11, 6 BCD 1124, 3 CBC2d 37.
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11 USCS § 522
When one spouse elects California state residential exemption other spouse must also claim that
exemption because splitting exemptions between state and federal is prohibited under 11 USCS §
522(d); however where one spouse claims California residential exemption other spouse may claim
exemption under 11 USCS §§ 522(d)(1) and (5) for property other than residential using any unused
amount of exemption provided in 11 USCS § 522(d)(1) up to $ 7,900; further when one spouse has
claimed California residential exemption to its full extent other spouse's aggregate interest in com-
munity property is undivided one-half and debtor can only exempt his or her one-half interest in
community property with other half remaining in estate. In re Brents-Pickell (1981, BC SD Cal) 12
Husband and wife, separate debtors in joint petition in bankruptcy, can both claim exemption
for household goods under state law as authorized by 11 USCS § 522(b). In re Alvarez (1981, BC
DC Colo) 14 BR 940, 8 BCD 415, 5 CBC2d 485.
It would achieve little good to force married debtors to file separately to achieve "fresh start"
manifested in 11 USCS § 522(n); numerous cases have held that Supremacy Clause of Constitution
and 11 USCS § 522(n) required double exemptions even where state exemption law would prohibit
it; state law permitting $ 10,000 exemption to debtor against his creditors permits joint debtors to
each claim $ 10,000 exemption on their own estate, for an aggregate of $ 20,000 against whole of
their equity combined. In re Rizzo (1982, BC WD NY) 21 BR 913, CCH Bankr L Rptr P 68835.
New York resident joint debtors, who file after effective date of New York's opt out statute, may
aggregate their homestead exemptions since 11 USCS § 522(m) which requires that all allowable
exemptions run to benefit of each debtor spouse who files joint petition is independent of opt-out
statute and state cannot relieve itself of its obligation to provide each joint debtor with its designated
exemption; where existing state exemption law frustrates § 522(m), it is obvious and necessary con-
clusion that it must have been intent of state legislature, in enacting opt out statute, to accede to fed-
eral policy and to allow aggregation of exemptions within bankruptcy context. In re Pearl (1983,
BC ED NY) 28 BR 492, 10 BCD 437, CCH Bankr L Rptr P 69128.
Joint debtors may aggregate their homestead exemptions under New York homestead exemp-
tion. In re Webb (1983, BC ED NY) 29 BR 280, CCH Bankr L Rptr P 69145.
Under California law, as to exemptions having maximum dollar amount, both debtor spouses
together in joint petition are entitled to one exemption, either of § 703.140(b) exemptions or other
state exemptions, and married persons who file individual petitions will be entitled to only one such
exemption between them. In re Nygard (1985, BC ED Cal) 55 BR 623, 13 CBC2d 1101, affd
(1987, BAP9 Cal) 71 BR 779.
Pursuant to 11 USCS § 522(m), Colorado constitution and exemption statute, and case law, wife,
in joint Chapter 7 case, who had ownership interest in medical equipment arising from her daily use
of equipment as well as her contributions to parties' medical practice, is entitled to claim exemption
in tools of trade in addition to exemption claimed by her debtor husband/doctor; this conclusion is
not precluded by Colorado presumption which provides that husband is owner of household goods
when both spouses are living together because this case involves tools of trade and not household
goods and because there is abundant evidence to contrary that wife contributed to medical practice
itself, which rebuts presumption. In re Reeder (1986, BC DC Colo) 60 BR 312.
Joint Chapter 7 debtors may not independently claim exemptions provided by California law,
but rather must share exemptions because states which have "opted out" of federal exemptions are
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11 USCS § 522
not bound by 11 USCS § 522(m). In re Lucas (1986, BC SD Cal) 62 BR 949, 14 BCD 729, affd in
part and revd in part on other grounds (1987, BAP9 Cal) 77 BR 242.
California exemption statutes which do not allow debtors to choose federal bankruptcy exemp-
tions and which are applicable only to debtors in bankruptcy, which are worded exactly the same as
pre-amendment federal exemptions, exceed authority delegated to states by Congress and violate
geographic uniformity requirement of U.S. Constitution; statutory wording of 11 USCS §
522(b)(2)(A) that debtor may claim property as exempt under applicable state or local law should
not, in view of constitutional considerations, be interpreted so liberally as to authorize state exemp-
tion scheme which is applicable only in federal bankruptcy court; due to invalidity of this portion of
exemption scheme, portion of scheme opting out of federal exemptions must also be invalidated,
and thus federal exemptions are available to debtors, although stacking with state exemptions is
prohibited. In re Lennen (1987, BC ND Cal) 71 BR 80, 15 BCD 842, 16 CBC2d 1111.
Chapter 7 debtor husband and wife may each claim $ 1,500 exemption in same vehicle for total
claimed exemption of $ 3,000 under Idaho exemption statute, because each debtor filing joint peti-
tion is entitled to claim exemptions, and while joint debtors may not allocate their individual $
1,500 exemptions among different vehicles, Idaho law does not preclude debtors from applying
each exemption to same motor vehicle, or each individual exemption to separate vehicle. In re
Jackson (1992, BC DC Idaho) 147 BR 49.
Where debtor filed individual Chapter 7 bankruptcy, the community property over which the
debtor had sole, equal, or joint management and control became property of the estate, and debtor
could not claim exemptions on behalf of the non-debtor spouse in that property as though joint peti-
tion for bankruptcy had been filed; the right to assert exemptions vested solely in debtor, and the
statutory limits for exemptions for individual, rather than joint, bankruptcies applied. In re DeHaan
(2002, BC DC Idaho) 275 BR 375 (criticized in In re Perez (2003, BC DC Ariz) 302 BR 661).
Spouses who were living apart before filing joint bankruptcy could each claim as exempt, under
Vermont homestead exemption statute, Vt. Stat. Ann. tit. 27, § 101, real property in which they and
one or more of their children lived where there was no allegation they were attempting to defraud
their creditors by these living arrangements. In re Roberge (2004, BC DC Vt) 307 BR 442, 52
CBC2d 95.
It is possible to have two family units, one consisting of father and child and other consisting of
mother and some children, within marriage; Vermont homestead exemption, Vt. Stat. Ann. tit. 27, §
101, is available to each family unit within joint bankruptcy case and may be used to exempt two
homestead parcels but only if spouses were living apart prior to filing of bankruptcy case, if each
homestead is necessary to preserve family unit, and if there is no evidence of fraud. In re Roberge
(2004, BC DC Vt) 307 BR 442, 52 CBC2d 95.
Bankruptcy court determined whether various items of property awarded to debtor's former
spouse in final divorce decree were subject to competing interests of trustee and bankruptcy estate;
spouse was granted relief from automatic stay to enforce decree with respect to property that was
not property of bankruptcy estate; among items of property that were not subject to competing in-
terests of trustee and bankruptcy estate were items of furniture, jewelry, and stock to which debtor
claimed state law exemption, to extent of claimed exemption, and funds that were escrowed pursu-
ant to family court order from sale of marital property; however, remaining items were part of
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11 USCS § 522
debtor's estate and subject to interests of trustee. In re Skorich (2005, BC DC NH) 2005 BNH 33,
332 BR 77.
Joint Chapter 7 debtors are entitled to claim only one set of exemptions under California law. In
re Baldwin (1987, BAP9) 70 BR 612, 15 BCD 747, CCH Bankr L Rptr P 71700.
California statute which limits married debtors to one set of exemptions is not unconstitutionally
vague because statute clearly limits each married couple to single set of exemptions; further, statute
does not deny married couples equal protection because loss of second set of exemptions does not
inhibit right to marry. In re Baldwin (1987, BAP9) 70 BR 612, 15 BCD 747, CCH Bankr L Rptr P
71700.
Where state statute allows for aggregation of real property exemptions within context of bank-
ruptcy proceeding, spouses who filed joint petition were allowed $ 20,000 exemption, even though
statute provided for homestead exemption not exceeding $ 10,000. Manufacturers & Trades Trust
Co. v Borst (1984, Sup) 128 Misc 2d 691, 490 NYS2d 665.
IV.CLAIM AND ALLOWANCE OF EXEMPTIONS
Chapter 7 trustee should be permitted reasonable time to perform administrative duties with re-
spect to property exempt under 11 USCS § 522, but honest debtors should be afforded fresh start as
soon as possible; trustee will not be ordered to turn over exempt property where: (1) trustee has not
completed administrative duties and is not ready to distribute property of estate; and (2) there is
some reason to suspect that debtors may not be entitled to discharge. Greene v Balaber-Strauss
(1987, SD NY) 76 BR 940, affd without op (1988, CA2 NY) 859 F2d 148.
Determination under 11 USCS § 522(f) that property is ineligible for lien avoidance does not
mean that property is then ineligible for exemption; debtor's entitlement to exemption remains un-
disturbed regardless of outcome of lien avoidance action. In re Montgomery (1987, BC WD Tex) 80
BR 385, 16 BCD 1351.
Debtor's control of claimed exemption is not factor in determining validity or extent of exemp-
tion under 11 USCS § 522; just as claimed exemption for homestead or motor vehicle shall not be
denied because debtor controls his house or car, claimed exemption in Individual Retirement Ac-
count shall not be denied because debtor controls IRA. In re Cilek (1990, BC WD Wis) 115 BR 974,
11 UCCRS2d 937.
Debtors may plan their bankruptcies to take full advantage of exemption laws, and upon dis-
charge debtors may do whatever they wish with their exempt property. In re Cilek (1990, BC WD
Wis) 115 BR 974, 11 UCCRS2d 937.
Chapter 7 debtor may not exempt anything he chooses, but rather may only claim property listed
under 11 USCS § 522(b)(1) or (2) as exempt. In re Staniforth (1990, BC WD Wis) 116 BR 127, 20
BCD 962 (criticized in Hartje Lumber v Brach (In re Brach) (1995, BC WD Wis) 195 BR 897) and
(criticized in Hartje Lumber v Boshardy (In re Boshardy) (1995, BC WD Wis) 1995 Bankr LEXIS
2043).
Chapter 7 debtor's exemptions were filed in bad faith where, except for limited categories,
debtor exempted none of basic resources essential to his or his family's personal and ongoing well
being, such as homestead, household goods and furnishings, significant cash accounts, and transpor-
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11 USCS § 522
tation and debtor, rather than making use of either head-of-family or in-lieu-of-homestead exemp-
tion category under North Dakota law to preserve particular asset in any meaningful way has parsi-
moniously exempted nominal value for nearly every exempted asset leaving it subject to partition
and liquidation by trustee with purpose of frustrating trustee's legal responsibility to marshal and
liquidate assets for benefit of unsecured creditors. In re Larson (1992, BC DC ND) 143 BR 543.
Debtor may not claim as exempt property which he knowingly concealed and failed to disclose
to trustee which normally would be exempt had it been properly scheduled and claimed. In re Park
(2000, BC ED Tex) 246 BR 837, 43 CBC2d 1701.
When 11 USCS § 522(l) declares that property claimed as exempt is exempt, property claimed
cannot be anything other than what statute allows, namely debtor's aggregate interest in any prop-
erty; thus, for purposes of 11 USCS § 522(d)(5) and (l), debtor's aggregate interest in property, not
property claimed as exempt itself, becomes exempt after expiration of thirty-day objection period.
In re Peiman (2000, BC ED Tex) 255 BR 178.
Debtor must have ownership interest in property before exemption may be claimed. In re Cohen
(2001, BC DC NJ) 263 BR 724.
Settlement proceeds from debtor's workers' compensation claim were exempt under N.Y. Debt.
& Cred. Law § 282 (2003) because bankruptcy trustee failed to make timely objection to debtor's
claim of exemption and workers' compensation benefits were disability benefits under N.Y. Work-
ers' Comp. Law § 33 (2003), and as such were exempt. In re Herald (2003, BC WD NY) 294 BR
440.
Exemptions should be construed liberally in favor of debtor. In re Gaudreault (2004, BC DC
Mass) 315 BR 1.
By using essentially same phrase in 11 USCS § 522(o) as is used in 11 USCS §§ 548, 727, cases
construing fraudulent conveyance and discharge provisions also apply to add body to bare words of
new language in 11 USCS § 522(o). In re Maronde (2005, BC DC Minn) 332 BR 593, CCH Bankr
L Rptr P 80394.
11 USCS § 522(c) (1) renders exempt property liable for certain tax debts and domestic support
obligation debts; it does not limit debtor's right to claim all exemptions otherwise available under §
522. In re Quezada (2007, BC SD Fla) CCH Bankr L Rptr P 80856, 20 FLW Fed B 261.
There are several basic premises at work in 11 USCS § 522(c), including that (1) it seeks to in-
sulate exempt property, but only against pre-petition debts, (2) it does not protect against all pre-
petition debts because it expressly excludes certain pre-petition tax debts, family support obliga-
tions, fraudulent student loan debts, and certain obligations owed to banking regulators, (3) exempt
property is generally not insulated from pre-petition debts that are secured by liens, unless liens
have been avoided under one of specified statutes, and (4) there is no exclusion mentioned for debts
that arise under 11 USCS § 523(a)(2). Bank of Cushing v Vaughan (In re Vaughan) (2004, BAP10)
311 BR 573.
40. Necessity of claiming exemptions
Immature cotton crop was property of estate when trustee sold it, since debtor had not yet
claimed part of crop as part of his exempt homestead. Hardage v Herring Nat'l Bank (1988, CA5
Tex) 837 F2d 1319, CCH Bankr L Rptr P 72206.
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11 USCS § 522
Under Mississippi opt-out provisions, Chapter 11 debtor's failure to designate specific 160
acres, sale of which provided proceeds from which he now claims homestead exemption, does not
affect debtor's qualification to declare exemption per se, though that fact may figure into valuation
of exemption. In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH Bankr L Rptr P 72303.
Because debtors did not claim exemption under 11 USCS § 522(l) and Fed. R. Bankr. P.
4003(a), bankruptcy court did not consider question of whether television revenue distributions
were exempt under state law when it resolved trustee's turnover motion; thus, appellate court dis-
agreed with bankruptcy panel's conclusion that bankruptcy court implicitly determined that distribu-
tions were estate property; rather, bankruptcy court treated funds as estate property because debtors
had not properly claimed exemption. Scrivner v Mashburn (In re Scrivner) (2008, CA10) 535 F3d
1258.
Debtors interest in lawsuit could not be considered exempt from bankruptcy estate when debtors
had not listed cause of action as asset that they intended to claim as exempt, unless debtors could
show that trustee had abandoned its interest in lawsuit. Miller v Pac. Shore Funding (2002, DC Md)
287 BR 47, affd (2004, CA4 Md) 92 Fed Appx 933.
Lack of legal training of debtor is not sufficient grounds or cause to dismiss case of debtor who,
in filing voluntary pro se petition, listed all unsecured creditors under Schedule A-1, when they
should have been shown on Schedule A-3, and further failed to claim exemptions, where list of
creditors is sufficient to comply with 11 USCS § 521, inasmuch as there is sufficient information in
order for creditors to be notified of proceedings, and trustee has admitted debtor has scheduled all
assets and that case is capable of being administered as filed, and where debtor did co-operate with
trustee in furnishing oral information as requested; it is matter of choice whether debtor wishes to
claim exemptions or not claim exemptions under 11 USCS § 522. In re Way (1980, BC ND Ohio) 2
BR 372, 5 BCD 1371, 1 CBC2d 423.
Unlike prior law under which exempt property never vested in estate and debtor had no duty to
claim exemption, under 11 USCS § 522, all of debtor's property vests in estate subject to exempt
property being excluded by debtor's claiming exemptions in schedule; thus, debtor must affirma-
tively claim exemption before it can be allowed. In re Thacker (1980, BC WD Va) 5 BR 592.
Although precision and accuracy must be demanded of debtors when claiming their exemptions,
spirit of Bankruptcy Code is to encourage fair interpretation in debtors' best interest; exemption is
allowed even though schedules describe interest in real property rather than legal or equitable inter-
est based upon contract. In re Karns (1981, BC ED Mo) 1 BAMSL 460.
Mistake in description of location of exempt property is not fatal to claim of exemption. In re
Burchard (1983, BC ED Mo) 2 BAMSL 604.
Virginia law rather than Bankruptcy Rule 9006(a) provisions regarding exclusion of weekends
and legal holidays governs how 5-day period for filing homestead exemption provided under Vir-
ginia law should be calculated; because federal law has granted states right to establish exemptions,
state law should also govern how exemptions are to be claimed. In re Haynesworth (1992, BC ED
Va) 145 BR 222, 4 Fourth Cir & Dist Col Bankr Ct Rep 713, 27 CBC2d 1221.
Bankruptcy court denied debtors' motion for homestead exemption under Ky. Rev. Stat. Ann. §
427.060 because homestead exemption was not properly raised by debtors as they simply stated on
schedule that employment of exemptions under 11 USCS § 522(d) was to be determined in bank-
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11 USCS § 522
ruptcy plan, but they never moved to amend schedule to assert exemption; this was simply not suf-
ficient to put creditors on notice of specific exemptions to be raised in case. In re Wilson (2006, BC
WD Ky) 338 BR 315.
It is mandatory under language of statute that debtor file list of property he claims exempt under
11 USCS § 522(l) and list of property connotes selection of specific property; therefore claim to
"other assets of petitioner" does not comply with statute. In re Andermahr (1983, BAP9 Cal) 30 BR
41. Compliance with filing requirements
Debtor who intends to claim as exempt property which would be subject to one of debtor's
avoiding powers under 11 USCS § 522 should communicate such intention to trustee, and, in turn,
trustee should file with Bankruptcy Court in writing, his intention not to pursue such action based
on debtor's intention to claim such property as exempt. In re Taylor (1981, BC DC Dist Col) 8 BR
Debtors who tardily file claims of exemption forfeit benefit of deadline prescribed by Fed. R.
Bankr. P. 4003(b) for objections to claims of exemption but do not forfeit their substantive entitle-
ment to exemptions. In re Montanaro (2004, BC ED Cal) 307 BR 194, 51 CBC2d 1866.
Fact that debtors scheduled contracts under state's Prepaid Affordable College Tuition (PACT)
Program as asset and then claimed exemption did not constitute waiver of their argument that con-
tracts were not part of estate where bankruptcy forms contained no effective means of disclosing
assets that debtors believed were not part of their estate. In re Cheatham (2004, BC MD Ala) 309
BR 631.
42. Combination of federal and state exemptions
Victim's, defendants' telemarketing of wrongful death insurance with unlicensed telemarketers,
failure to disclose account with $ 800 to bankruptcy court did not result in windfall in present case
because even if victim had disclosed account, victim would have kept money as personal property
exemption; therefore, judicial estoppel did not apply. McClain v Coverdell & Co. (2003, ED Mich)
272 F Supp 2d 631.
Individual debtor may exempt property under 11 USCS § 522(b)(1) or under 11 USCS §
522(b)(2), but not under both sections simultaneously. In re Lawson (1985, BC DC Vt) 45 BR 686,
12 BCD 818.
Under 11 USCS § 522(b)(1) and (2), debtor must select either Code exemptions or exemptions
provided by state and nonbankruptcy federal law--he cannot pick and chose between lists. In re
Stone (1990, BC ED Wash) 119 BR 222 (criticized in Huskey v Huskey (In re Huskey) (1995, BC
SD Cal) 183 BR 218).
Statute that purports to permit debtor to choose combination of exemptions in 11 USCS §
522(b)(1) and (b)(2) is in direct contravention to Bankruptcy Code. In re Rosenquist (1990, BC MD
Page 103
11 USCS § 522
Fla) 122 BR 775, revd on other grounds (1992, MD Fla) 1992 US Dist LEXIS 20206, affd in part
and revd in part, remanded on other grounds (1993, CA11 Fla) 8 F3d 745, 17 EBC 2020, CCH
Bankr L Rptr P 75629, 7 FLW Fed C 1033 (superseded by statute as stated in In re Zamora (1995,
BC SD Fla) 187 BR 783, 9 FLW Fed B 174) and (superseded by statute as stated in In re Pettit
(1998, BC MD Fla) 224 BR 834, 12 FLW Fed B 19).
11 USCS § 522(b) clearly requires debtor to choose either state or federal exemptions, not to
choose both or some of both; thus, debtor may exempt property under 11 USCS § 522(d), so long as
resident state has not opted out; in alternative, debtor may choose to exempt property that is exempt
under federal law other than § 522(d); finally, debtor may exempt property under applicable state
law, including rights to exempt joint tenancies or tenancies by entireties. In re Lamb (1994, BC DC
NJ) 179 BR 419, 33 CBC2d 458, CCH Bankr L Rptr P 76435.
Where debtor has selected exemptions under both federal and state law, final determination of
which exemptions will be applied to debtor will turn on what exemptions are best for debtor; 11
USCS § 522(b) clearly requires debtor to choose either state or federal exemptions, not to choose
both or some of both; state exemptions will be selected for Chapter 7 debtor whose Individual Re-
tirement Account (IRA) was most valuable asset, since under applicable New Jersey law IRAs are
exempt, whereas 11 USCS § 522(d)(10)(E) requires that IRA be reasonably necessary for support of
debtor and any dependent in order to qualify as exempt, and debtor's limited earning potential in his
chosen field as choir leader and age of debtor's elderly parents do not clearly establish that his IRA
is exempt under § 522(d)(10)(E). In re Lamb (1994, BC DC NJ) 179 BR 419, 33 CBC2d 458, CCH
43. Effect of claiming exemption
Trustee did not forfeit his right to administer real estate as property of bankruptcy estate for
benefit of either joint or non-joint creditors when he failed to file timely objection under 11 USCS §
522(l) and Rule 4003(b) to debtor's claimed exemption of her interest in real estate, since he was not
required to object to exemption to which debtor was fully entitled. Williams v Peyton (In re Wil-
liams) (1997, CA4 Va) 104 F3d 688, 9 Fourth Cir & Dist Col Bankr Ct Rep 76, 37 CBC2d 548,
Chapter 7 trustee may not sell property regarding which debtors have exempted their interest as
land-contract vendees without objection because once property is exempted from estate under 11
USCS § 522, it revests in debtor and is no longer part of estate, even though value of debtors' inter-
est in exempted property exceeds statutory exemption amount. Seifert v Selby (1989, ED Mich) 125
BR 174 (criticized in In re Gaylor (1991, BC ED Mich) 123 BR 236, 21 BCD 421, CCH Bankr L
Rptr P 73805) and (criticized in In re Bregni (1997, BC ED Mich) 215 BR 850).
Chapter 7 debtor's exemption of $ 15,250 worth of real estate equity embodied in building under
11 USCS § 522 does not mean that building is no longer property of estate, but that property is en-
cumbered by lien in favor of debtor in that amount. In re Reich (1985, BC ED Mich) 54 BR 995, 13
BCD 953, 13 CBC2d 988.
Where debtor's husband, in separate bankruptcy, claimed exemption to property held in tenancy
by entireties with debtor by citing to Ind. Code § 34-55-10-2(b)(1), but husband may have intended-
-but for citation error--to claim 100 percent of value of property under Ind. Code § 34-55-10-
2(b)(5), critical element in exemption claim was statutory provision under which exemption was
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11 USCS § 522
claimed; accordingly, regardless of intent, citation to Ind. Code § 34-55-10-2(b)(1) meant that hus-
band claimed only $ 7,500.00 exemption. In re Kuhn (2005, BC ND Ind) 322 BR 377.
In those instances where bankruptcy debtor's exemption schedules reflect exemption amount
equal to property's listed value amount, debtor claims exemption of 100 percent of debtor's property
interest, regardless of property's ultimate valuation amount. Opel v Daly (In re Daly) (2005, BC MD
Pa) 344 BR 304.
Bankruptcy court rejected debtor's argument that effect of claiming exemption was to remove
property from bankruptcy estate, and thus, post-petition transfer of property under 11 USCS § 549
could not have been avoided because she did not transfer "property of estate"; debtor's reasoning
was flawed because at time of transfer, no Chapter 7 creditors meeting had been held, and time for
objection to exemptions had not expired; therefore, property was not yet exempt and was part of
estate at time of transfer. In re Villegas (2007, BC DC NM) 364 BR 781.
Debtors' interest in stock that was partially exempt under 11 USCS § 522(d)(5) was properly
sold by trustee, under 11 USCS § 363(b), and debtors were paid their claimed exemption amount;
balance of sale proceeds were properly distributable to creditors under 11 USCS § 726. In re
Cormier (2008, BC WD Mich) 382 BR 377.
Under 11 USCS § 553, landlord of Chapter 7 debtors may set off claim for damage to rental
property against debtor's claim for breach of rental contract, even though debtors have exempted
their claim under California opt-out provisions or 11 USCS § 522. In re Pieri (1988, BAP9 Cal) 86
BR 208, 17 BCD 1016, 18 CBC2d 924, CCH Bankr L Rptr P 72554.
44. Title to exempt property
Texas court's sanctions order declaring that debtor had abandoned homestead claim to certain
property was entitled to res judicata treatment for bankruptcy purposes since it constituted valid
judgment under Texas law rather than unconstitutional forced sale. McDaniel v Camp (In re Camp)
(1995, CA5 Tex) 59 F3d 548.
Court agreed with bankruptcy court that debtor could not claim exemption for earnings under 11
USCS § 522 by relying on 15 USCS § 1673, part of Consumer Credit Protection Act, 15 USCS §
1601 et seq., because its limitations were exclusively for purpose of restricting wage garnishment,
and provision was not applicable to bankruptcy. Riendeau v Canney (In re Riendeau) (2002, DC Vt)
293 BR 832, affd (2003, CA2 Vt) 336 F3d 78.
Assets properly exempted by debtor are withdrawn from bankruptcy estate and title to those ex-
empt assets is vested in debtor; bankruptcy estate has no interest whatsoever in exempt assets;
debtor is sole owner of insurance proceeds covering contents that were properly exempted where
title had vested in debtor before fire destroyed them, and debtor is entitled to recover fire insurance
based on replacement costs. In re Snow (1982, BC ED Cal) 21 BR 598.
Even if debtor had listed revolver on schedule of personal property and schedule of exempt
property, fact that revolver was sold prior to filing of petition resulted in debtor having no interest in
weapon for bankruptcy estate to assume with result that debtor has no interest to exempt, and while
debtor could have sought to bring weapon back into estate, had proper grounds existed, he had not
chosen to do so; however, entire analysis is rendered moot by failure to list property as personal
property owned by debtor or as property claimed as exempt. In re May (1983, BC ND Ohio) 33 BR
599.
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11 USCS § 522
Once property is exempted from estate it revests in debtor and is no longer part of estate; once
exemption is claimed in particular property, such property is exempt if no party in interest objects;
thus property claimed by debtor as exempt became property of debtor after 15-day-period for objec-
tions to exemption expired. In re Wiesner (1984, BC WD Wis) 39 BR 963.
Lien avoidance is not allowed as to farm equipment which was scheduled by one debtor but
claimed later as exemption by another debtor where there is no satisfactory explanation for postpeti-
tion transfer of ownership of property, except that such transfer was to bring each of claims of ex-
emption of several debtors within statutory maximum; even without improper motive, exemption
cannot be claimed by transferee debtor because equipment was admittedly not his as of date of fil-
ing. In re Rasmussen (1985, BC WD Mo) 54 BR 965.
Mere fact that property is owned by joint tenants, only one of whom is in bankruptcy, does not
exempt property from claims of creditors in either New Jersey or Florida; debtor's interest in prop-
erty may be partitioned under 11 USCS § 363(h). In re Spatola (1986, BC SD Fla) 65 BR 49.
Operation of 11 USCS § 541 vests title even to properly exempt property in Chapter 7 trustee,
and thus prior law compelling trustee to turn over exempt assets to debtor, who retained title, is in-
applicable, and trustee may retain exempt property in estate, but trustee may not necessarily be enti-
tled to hold distribution of exempt assets to final distribution under 11 USCS § 726; rather, various
subsections of 11 USCS § 704 require only that trustee satisfy himself that exempt assets are not
subject to some unavoidable claim such as tax claim under 11 USCS § 523(a)(1); where, as here,
debtor has been divorced, Chapter 7 trustee is entitled to hold Chapter 7 debtor's homestead exemp-
tion until trustee is satisfied within reasonable time that exempt assets are not subject to superior
rights, including claims for alimony or support under 11 USCS § 522(c)(1). In re Kaufman (1986,
BC SD NY) 68 BR 391, 15 BCD 273.
Constructive trust imposed upon all property of debtors following debtor husband's failure to
pay over 24 percent of his retirement benefits to former spouse as ordered by divorce court is not
unfair manipulation of Bankruptcy Code, but, rather, it represents choate equitable interest imposed
prepetition, after extensive litigation, evidenced by recorded instrument issued by state court which
was imposed due to markedly fraudulent and tortious behavior of both debtors, and, therefore, for-
mer spouse holds not only equitable title to 24 percent interest in retirement benefits but also holds
equitable title to all property of both debtors, and since debtors have no equitable interest in prop-
erty they may not exempt it. In re Naydan (1993, BC WD Ark) 162 BR 204, 17 EBC 2182.
Debtor must have ownership interest in property before exemption may be claimed. In re Cohen
(2001, BC DC NJ) 263 BR 724.
11 USCS § 522(b)(3)(B) recognizes exemptions for interests that debtor has in property "imme-
diately before commencement of case"; thus, § 522(b)(3)(A) and § 522(b)(3)(B) focus on status of
ownership as of moment of bankruptcy filing, and not as of date of any pre-petition event; absent
evidence of fraud, court will allow any recognized exemption for assets that debtors own at com-
mencement of bankruptcy proceeding, even when debtors may have enhanced value of that exemp-
tion by reason of careful planning with advice of counsel. In re Martiny (2007, BC WD NY) 378 BR
52.
Date of conversion of original Chapter 13 case to Chapter 7 case is controlling date on which to
determine debtor's exemptions under 11 USCS § 522. In re Winchester (1984, BAP9 Or) 46 BR
492, 12 CBC2d 293, CCH Bankr L Rptr P 70296 (superseded by statute as stated in In re Weed
Page 106
11 USCS § 522
(1998, BC DC Nev) 221 BR 256, 40 CBC2d 254) and (superseded by statute as stated in In re
Rogers (2002, BC DC Nev) 278 BR 201, 48 CBC2d 374).
Wife who filed joint petition with her husband under Chapter 7 of Bankruptcy Code was not al-
lowed to claim exemption in tax refunds she and her husband received on income husband earned
pre-petition because wife did not have ownership interest in tax refunds under Minnesota law; hus-
band was sole wage-earner during period taxes were paid, and fact that he and his wife filed joint
tax return, and that refunds were placed in joint account, did not transform refunds into joint prop-
erty. Carlson v Moratzka (In re Carlson) (2008, BAP8) 394 BR 491, CCH Bankr L Rptr P 81322.
45. Res judicata
Res judicata did not bar bankruptcy trustee from further seeking to surcharge debtors' wild card
exemption of 11 USCS § 522(d)(5) because factual bases asserted in trustee's surcharge motion
were not fully established when she sought denial of discharge under 11 USCS § 727(a); trustee was
unable to discover existence of debtors' undisclosed bank account until more than one year after fil-
ing of bankruptcy petition. Latman v Burdette (2004, CA9 Wash) 366 F3d 774, 52 CBC2d 639,
CCH Bankr L Rptr P 80087, amd (2004, CA9 Wash) 2004 US App LEXIS 11231 and reprinted as
amd (2004, CA9 Wash) 2004 US App LEXIS 11212.
Debtors' late claim of homestead exemption under 11 USCS § 522 which they failed to make in
timely fashion due to inexcusable negligence of their counsel should not stop sale of homestead to
liquidate equity in house and lot over and above exemption available to debtor where no reason has
been asserted for prohibiting sale of house and lot. In re Johnson (1983, MD Tenn) 30 BR 467.
Chapter 7 debtor's claim of exemption in personal injury settlement monies is denied where
court finds debtor acted in bad faith by repeatedly failing to adequately schedule personal injury
claim as asset, this being clear and convincing evidence of intentional concealment and bad faith
warranting denial of exemption under 11 USCS § 522. In re St. Angelo (1995, BC DC RI) 189 BR
24, CCH Bankr L Rptr P 76820 (criticized in In re Daniels (2001, BC ED Mich) 270 BR 417) and
(criticized in In re Robinson (2003, BC SD Ohio) 292 BR 599).
Where Chapter 7 debtor attempted to claim his automobile and IRA account as exempt under
federal law and his interest in real property as exempt under state entireties law, and court issued
order that became final disallowing debtor's exemption claims under state law, debtor was barred by
res judicata from later amending his exemptions. In re Romano (2007, BC ED Pa) 378 BR 454.
Where debtor had attempted to claim as exempt payments that she received under policy of dis-
ability insurance under Minn. Stat. § 550.39, but bankruptcy court sustained Chapter 7 Trustee's ob-
jection, holding that statute violated Minn. Const. art. I, § 12, debtor's amended claim of exemption
claiming that payments were exempt under different statute, Minn. Stat. § 550.37, subd. 24, was not
barred by res judicata; showings required under two statutes involved different nuclei of operative
fact. In re Reiland (2008, BC DC Minn) 382 BR 779.
Where court entered final binding order disallowing all of debtor's claims of exempt property
under 11 USCS § 522 during pendency of debtor's Chapter 11 case, upon conversion of case to
Chapter 7, doctrine of res judicata bars debtor from claiming any of those property interests barred
in Chapter 11, but does not bar debtor from claiming interests not included in original schedule of
exemptions in Chapter 11 which were not disallowed by judge's order. In re Magallanes (1988,
BAP9 Cal) 96 BR 253.
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11 USCS § 522
Where debtors were denied homestead exemption under 11 USCS § 522, they were barred by
res judicata from 15 months later seeking homestead exemption for same property under state law.
Ladd v Ries (In re Ladd) (2005, BAP8) 319 BR 599.
Chapter 7 debtor's action under 11 USCS § 522(f) seeking to avoid creditor's lien in certain tools
of debtor's trade was not barred by res judicata where although debtor had stipulated to relief from
automatic stay in creditor's favor with respect to tools pursuant to 11 USCS § 362(d) and actions
were based on same underlying facts, lien avoidance rights were not affirmative defenses to motion
for stay relief and pending lien motion would not necessarily have defeated stay relief motion.
Ginter v Alliant Bank (In re Ginter) (2006, BAP8) 349 BR 193.
46. Miscellaneous
Abandonment by trustee under 11 USCS § 554 of contract and tort cause of action against bank
is not prerequisite to debtors' exemption of such cause of action under 11 USCS § 522, nor is it pre-
requisite to debtors' standing to pursue action because unequivocal language of 11 USCS § 522 does
not require abandonment as prerequisite to exemption. Wissman v Pittsburgh Nat'l Bank (1991,
CA4 W Va) 942 F2d 867, 3 Fourth Cir & Dist Col Bankr Ct Rep 712, 21 BCD 1697, 25 CBC2d
605, CCH Bankr L Rptr P 74225 (criticized in In re Forti (1998, BC DC Md) 224 BR 323, 10
Fourth Cir & Dist Col Bankr Ct Rep 593, 40 CBC2d 1025).
Proceeds of sale of exempt property were not property of estate, and bankruptcy and district
courts erred in ruling that trustee could retain funds on behalf of creditors until conclusion of debt-
ors' Chapter 13 plan. Gamble v Brown (In re Gamble) (1999, CA11 Ga) 168 F3d 442, CCH Bankr
L Rptr P 77893, 12 FLW Fed C 550 (criticized in In re Launza (2005, BC ND Tex) 2005 Bankr
LEXIS 1017).
Chapter 11 plan proposed by debtors' creditors cannot be confirmed where it fails to provide for
debtors' exemption rights even though sufficient assets will remain after sale of property under plan
to cover amounts of debtors' claimed exemptions. Buroker v Raybourn (1986, SD Ohio) 61 BR 10,
14 BCD 110, 14 CBC2d 516.
Under 11 USCS § 522(b) creditor is entitled to carry its perfected security interest into post-
Chapter 11 identifiable proceeds or products in accordance with security agreement if authorized by
applicable nonbankruptcy law; where court orders creditor to permit use of cash collateral or where
creditor consents to use he has right under 11 USCS §§ 362(d), 363(e) and 364(c), respectively, to
demand and to receive both lien on property and priority to extent necessary to insure adequate pro-
tection; if creditor fails to obtain substitute collateral, his consent to use of proceeds destroys his
right to trace proceeds into other products and his claim is governed by priorities of 11 USCS § 507;
creditor has no interest in crops sown after filing of bankruptcy petition where stipulated order for
use of cash collateral did not preserve creditor's right to trace proceeds into new crop or otherwise
grant substitute lien. In re Lovelady (1982, BC DC Or) 21 BR 182, 34 UCCRS 713.
Confirmation of debtor's Chapter 13 plan does not violate 11 USCS § 1325(b), despite provi-
sions for plan payments of $ 100 per month for parochial school tuition and $ 120 per month for
tithe, because tithing and religious education, while not priorities for every debtor, are not per se
unreasonable choices for maintenance and support of Chapter 13 debtor's family and do not consti-
tute expenses for luxury goods and services, under parallel analysis of 11 USCS §§ 523(a)(2)(c) and
522(d)(10)(E), since these expenses are incurred purely out of debtor's conviction that they are es-
sential for spiritual well-being of family; as debtor's proposed expenses, as whole, are quite austere
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11 USCS § 522
and evidence shows debtor is committed to paying all disposable income into plan, court is unwill-
ing to substitute its judgment for debtor's belief in value of religious contributions and education. In
re Navarro (1988, BC ED Pa) 83 BR 348, 17 BCD 361, CCH Bankr L Rptr P 72233.
Property cannot be exempted from bankruptcy estate to extent that it is encumbered by security
interest, but rather, maximum allowable exemption under 11 USCS § 522(d) is debtor's equity in
property or applicable statutory ceiling, whichever is less, and debtor's property remains property of
estate to extent that its value exceeds statutory amount which debtor is permitted to exempt. In re
Gaylor (1991, BC ED Mich) 123 BR 236, 21 BCD 421, CCH Bankr L Rptr P 73805.
While proceeds from sale of non-exempt property are subject to claims of creditors, exempt
property retained at confirmation is different; exempt means exempt and therefore unavailable to
either trustee or claimant. In re McCollum (2006, BC ED La) 348 BR 377.
Debtor's right to receive future payment from his former spouse at time of their youngest child's
emancipation was estate asset under 11 USCS § 541(a)(1) because it was clearly property settlement
for release of whatever interest he had in marital home; court refused to allow debtor to amend his
schedules under Fed. R. Bankr. P. 1009(a) to include payment and to exempt it under 11 USCS §
522(d)(5) because his assertion that it was earmarked for education was not supported by language
of separation agreement. In re Orlando (2007, BC DC Mass) 359 BR 395.
Revesting of property under 11 USCS § 522(l) does not immunize it from being brought into es-
tate upon conversion of Chapter 13 case. Campbell v Stewart (In re Campbell) (2004, BAP10) 313
BR 313, 52 CBC2d 1229 (criticized in In re Fonke (2005, BC SD Tex) 321 BR 199).
B.Time Exemptions are Determined 47. Generally
Virginia law, rather than Bankruptcy Rules, controls computation of time allowed Virginia
debtor to claim homestead exemption and, under Virginia law, debtor had "set apart" property
claimed as exempt once he had delivered properly executed homestead deed, with fees paid, to ap-
propriate clerk; since opt-out states are allowed to specify bankruptcy exemptions, those states are
permitted to determine both substance of those exemptions and procedure by which they are
claimed. Mayer v Quy Van Nguyen (In re Quy Van Nguyen) (2000, CA4 Va) 211 F3d 105.
Correct date for determining which property of involuntary Chapter 7 debtor will be subject to
exemptions under 11 USCS § 522 is date on which order for relief is granted. In re Wilson (1985,
ED Tenn) 62 BR 43, 14 BCD 1144.
Exemptions under 11 USCS § 522 are determined by examination of exemption statutes in ef-
fect at time bankruptcy petition is filed, not time debts arose. In re Van Hove (1987, ND Iowa) 78
BR 917.
Date of filing of involuntary Chapter 7 petition against debtor, rather than date of reconversion
from Chapter 11 case in which no plan was confirmed, is applicable date for determining debtor's
exemptions under 11 USCS § 522. In re Butcher (1986, BC ED Tenn) 62 BR 162, affd (1987, ED
Tenn) 75 BR 441, affd without op (1988, CA6 Tenn) 848 F2d 189 and affd without op (1988, CA6
Tenn) 848 F2d 189.
Determination of whether property may be exempted under state opt-out provisions must be
made under statutes in effect at time of bankruptcy where statute more favorable to Chapter 11
debtor has come into effect since filing of petition but is not retroactive. In re Connally (1989, BC
WD Tex) 94 BR 908, 18 BCD 1129.
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11 USCS § 522
Congress delegated to states only power to identify exempt property, not power to determine
when exemptions would be effective. In re Lynch (1995, BC ED Ky) 187 BR 536.
48. Filing of petition
Value and status of exempt property in bankruptcy is determined as of date petition is filed.
Armstrong v Hursman (1988, DC ND) 106 BR 625, 19 BCD 1495.
Critical time for determining debtor's entitlement to exemption is date bankruptcy petition is
filed. In re Grindal (1983, BC DC Me) 30 BR 651.
Personal bankruptcy exemptions are determined and evaluated as of date petition for relief is
filed. In re Bartoszewski (1984, BC ND NY) 36 BR 424 (criticized in In re McNeill (1996, BC ED
NY) 193 BR 654).
Critical time for determining debtor's entitlement to exemption is date that bankruptcy petition is
filed. In re Tardiff (1984, BC DC Me) 38 BR 974.
In Chapter 7 case exemptions are determined and evaluated as of date petition for relief is filed.
In re Wiesner (1984, BC WD Wis) 39 BR 963.
Homestead rights are generally determined as of date of filing of petition in bankruptcy. In re
Avery (1984, BC DC Vt) 41 BR 224, 12 BCD 162.
Exemption rights in bankruptcy are determined as of date of bankruptcy petition. In re Hanson
(1984, BC DC ND) 41 BR 775.
Exemptions are determined under 11 USCS § 522 as of date of filing petition. In re Grosso
(1984, BC DC NM) 51 BR 266.
Filing of bankruptcy petition is line of cleavage at which Chapter 7 debtor's entitlement to ex-
emptions is determined. In re Sajkowski (1985, BC DC RI) 49 BR 37, CCH Bankr L Rptr P 70538.
Debtor's exemptions are determined as of date of filing bankruptcy petition. In re Eckols (1986,
BC DC NH) 63 BR 523.
Bankruptcy Court faced with Chapter 7 debtor's claim of exemptions will apply law in effect on
date bankruptcy petition is filed unless such application would be unconstitutional; parties com-
plaining of unconstitutionality have burden of proof. In re Punke (1987, BC ND Iowa) 68 BR 936,
16 CBC2d 68.
Property of estate under 11 USCS § 541 is determined as of commencement of case, as are ex-
emptions under 11 USCS § 522. In re Sheets (1987, BC WD NY) 69 BR 542.
Date of filing of Chapter 13 bankruptcy petitions is significant time for measurement of all fac-
tors relevant to exemptions under 11 USCS § 522(a). In re Chandler (1987, BC ED Pa) 77 BR 513,
CCH Bankr L Rptr P 71970 (criticized in Wood v LA Bank (In re Wood) (1996, BC MD Pa) 190 BR
788, 28 BCD 570, 35 CBC2d 275).
Exemptions under 11 USCS § 522 are assessed as of date of Chapter 7 bankruptcy filing. In re
Magnus (1988, BC ED Pa) 84 BR 976, 17 BCD 632.
Chapter 7 debtor's exemption rights under 11 USCS § 522 are determined on basis of circum-
stances existing at time of filing. In re Jones (1988, BC MD Ga) 87 BR 738.
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11 USCS § 522
Exemption rights in bankruptcy, pursuant to 11 USCS § 522, are determined as of date petition
is filed. In re Yau (1990, BC CD Cal) 115 BR 245.
Normally, date petition is filed is relevant date for determination of exemption issues. In re
Henry (1995, BC ND Tex) 183 BR 748, 33 CBC2d 1545.
Though debtors were entitled to homestead exemption under Minnesota law, as they resided in
home on date they filed chapter 7 petition, exemption did not extend to creditors' judgment lien on
property that arose before debtors occupied home as their principal residence, and debtors could not
avoid this lien under 11 USCS § 522(f)(1)(A). In re Estad (2003, BC DC Minn) 295 BR 905.
Debtor's exemptions are determined as of date upon which bankruptcy case commenced. In re
Luttrell (2004, BC ED Tenn) 313 BR 751.
While 11 USCS § 522(b)(2)(A) provides that debtor may exempt from property of estate any
property that is exempt under federal law or state law that is applicable on date of filing of petition,
§ 522(b)(2)(A) can be read to fix law controlling exemptions not to fix property subject to these ex-
emptions at time of time filing of petition; because 11 USCS § 303(f) permits bankruptcy court to
stay any business transactions it fears will jeopardize rights of creditors and because that court al-
ways has power to set aside any transactions that defraud creditors, correct date for determining
which property of debtor will be subject to exemptions in involuntary bankruptcy case is date on
which order for relief is filed. In re Gaudreault (2004, BC DC Mass) 315 BR 1.
Where 11 USCS § 522(b)(2)(A), which permits states to opt-out of federal exemption scheme
that otherwise applies in bankruptcy proceeding, is invoked, state or local law that is in force on
date of filing of petition applies in bankruptcy case; U.S. Bankruptcy Court for Eastern District of
New York has rejected suggestion that state laws that are in force on date on which debt was in-
curred, position taken in Perry v. Zarcone, 431 N.Y.S.2d 250 (N.Y. App. Div. 1980), believing that
such position is in direct contradiction of 11 USCS § 522(b)(2)(A). Rupp v Elmasri (In re Elmasri)
(2007, BC ED NY) 369 BR 96.
Bankruptcy court's denial of debtors' motion to amend their exemption schedule after reopening
of their case was reversed where court based its decision on erroneous premise that debtor's ability
to amend for purpose of avoiding lien under 11 USCS § 522(f) terminated once case was closed;
court correctly stated that scheduled property of estate that was not administered by trustee was
automatically abandoned to debtor pursuant to 11 USCS § 554(c) upon closure of case but, because
critical date for determining exemption rights was petition date, court's focus on effect of case clo-
sure was misplaced. Goswami v MTC Distrib. (In re Goswami) (2003, BAP9) 304 BR 386.
49.--Under particular circumstances
Version of state exemption statute which became effective on June 25, 1980 is applicable to
case in which debtor filed bankruptcy petition in November 1981, because date upon which bank-
ruptcy petition is filed is relevant date for determining exemptions. In re Reid (1985, CA10 Okla)
757 F2d 230, 12 CBC2d 727, CCH Bankr L Rptr P 70307.
Debtors are entitled to same exemptions as were in effect when they filed their Chapter 13 peti-
tion even though debtors' amended plan may have been filed and confirmed after state changed al-
lowable exemptions. Hollytex Carpet Mills v Tedford (1982, WD Ark) 24 BR 197, affd (1982, CA8
Ark) 691 F2d 392, 9 BCD 1087, 7 CBC2d 551, CCH Bankr L Rptr P 68881, reported in full (1999,
CA8 Ark) 198 F3d 251.
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11 USCS § 522
Chapter 7 debtors are not entitled to $ 7,500 of proceeds from sale of property back to secured
creditor, on basis of claim to 1988 rent on their schedule of exemptions, despite contention that un-
der North Dakota law debtor is entitled to rents from property during redemption and their claim for
1988 rent was evidence that they had expectancy interest in these redemption period rents, because
petition was filed in 1987, and, as of that date, value of 1988 rent was zero; therefore, no property
existed in estate for debtors to exempt, and 11 USCS § 541(a)(6) applies only to rents to or from
property of estate, not mere expectancy of rents to be collected in future; furthermore, under North
Dakota law, no foreclosure took place, no redemption period therefore arose, and no right to rents
arose; however, debtors may amend their exemption schedules pursuant to Bankruptcy Rule 1009 to
claim exemption in proceeds of sale because, as matter of course, debtor should be allowed to
amend his exemption claims to include newly found property if case has not been closed; debtors
claimed rental income on schedules at time when it was reasonable to assume that no equity existed
in property, but when property was sold back to creditor, surplus was realized which became prop-
erty of estate and qualifies as newly found property. Armstrong v Hursman (1988, DC ND) 106 BR
625, 19 BCD 1495.
Because debtor in involuntary bankruptcy case retains ability to control his or her property,
proper date for determining what property is exempt in such case is date order for relief was en-
tered. Jenkins v Hodes (In re Hodes) (2002, DC Kan) 287 BR 561, affd (2005, CA10 Kan) 402 F3d
Exemption rights in bankruptcy are determined as of time of bankruptcy filing; however, debtor
is entitled to state farmer's exemption although not engaged in occupation of farming at time of fil-
ing, where he habitually had made living at occupation, and testified that farming was his life's
work and that he had no intention to abandon occupation. In re Hahn (1980, BC SD Iowa) 5 BR
242, 2 CBC2d 761.
Exemptions which debtors may claim under state exemption statute are those applicable on date
of filing of petition, and where state has recently increased amount of such exemptions, lien against
exempt property may be avoided to full amount of new exemption, notwithstanding that lien pre-
dates increase in exemption amount. In re Curry (1980, BC ND Ohio) 5 BR 282, 2 CBC2d 710,
affd (1981, ND Ohio) 11 BR 716, 7 BCD 968, revd on other grounds (1983, CA6 Ohio) 698 F2d
298, CCH Bankr L Rptr P 69154 and revd without op, vacated without op (1983, CA6 Ohio) 722
F2d 740 and revd without op, vacated without op (1983, CA6 Ohio) 722 F2d 742.
Debtor's right to claim exemptions is governed by facts and governing circumstances which ex-
isted on date petition was filed, and not by any changes which may have occurred thereafter; debtor
is not entitled to state exemption as head of household, which requires that there must be at least
two persons living together as one family with one of two recognized and acting as head of family,
and with either legal or moral obligation to discharge duties of head of family permanently and con-
tinually where, on date of filing petition, debtor cohabitated with unmarried woman in relationship
which conferred no legal or moral duty, and was illegal under state law; debtor's ineligibility for ex-
emption as head of household is not affected by birth of child subsequent to filing of petition where
he had no legal or moral obligation to unborn child, either by legally enforceable admission of fa-
therhood or by judicial fiat, as of date of his filing petition. In re Rivera (1980, BC MD Fla) 5 BR
313.
Chapter 7 debtor's homestead exemption should be determined at time of filing of bankruptcy
petition and not at time of original homestead sale; therefore proceeds of contract for deed yet to be
Page 112
11 USCS § 522
paid at time petition was filed are properly includable as part of homestead exemption under state
opt-out legislation pursuant to 11 USCS § 522. In re Pierce (1985, BC DC SD) 50 BR 718.
Value of exempt property under 11 USCS § 522 must be determined upon filing date or date
such property becomes property of estate; therefore, debtor wife may exempt value of her survivor-
ship interest in entireties property as of date of filing joint petition and fact that her survivorship in-
terest has ripened into fee interest after filing by death of her husband should not affect valuation.
In re Crowell (1985, BC MD Tenn) 53 BR 555, 13 CBC2d 878.
Chapter 7 debtors may claim exemption in farm equipment and animal feed and may avoid liens
on same where: (1) at time of filing, debtors were in possession of animal feed and machinery, even
though 17 days later at voluntary auction, machinery and feed were sold; and (2) debtor husband,
who had been forced to take on another type of employment due to financial difficulties, testified
that he had been farming his whole life and desired to farm again as soon as possible; exemption
rights are determined by circumstances present at time of filing and changes occurring after filing
are not relevant. In re Brzezinski (1985, BC WD Wis) 65 BR 336.
Chapter 7 debtors' homestead rights are to be determined as of date of filing petition; thus, they
are entitled to $ 15,000 joint exemption in mobile home pursuant to Illinois homestead statute in
effect on date of filing rather than $ 10,000 which would have been allowed under statute in effect
on date of agreement to purchase home; applying statute in effect at time of petition neither substan-
tially impairs parties' contractual relationship nor is unreasonable or unnecessary for accomplish-
ment of important public purpose and thus is not violation of contract clause of constitution. In re
Hockinson (1986, BC ND Ill) 60 BR 250.
Chapter 11 debtor's clear intent to sell her homestead in future cannot establish present aban-
donment of homestead where, at time of filing, debtor still resided at homestead. In re Bernstein
(1986, BC DC Vt) 62 BR 545.
Chapter 7 debtors may exempt proceeds from sale of tools of trade exempt under Wisconsin
opt-out provisions where sale occurred 2 days after filing of petition, but debtors were entitled to
exemption on date of petition. In re Werner (1986, BC WD Wis) 79 BR 819.
Debtor may not exempt mobile home in which he resides under Louisiana homestead statute,
not because he does not own land on which it sits, but because he did not move into home and oc-
cupy it until after he had filed for bankruptcy. In re Baker (1987, BC WD La) 71 BR 312.
Chapter 7 debtors can avoid liens on personal property that was subject to claim of exemption
pursuant to 11 USCS § 522(f)(2)(A) at time debtors filed bankruptcy, despite fact that such property
was destroyed by fire prior to debtors' motion to avoid lien, because operative date for determining
property of estate, debtors' exemption and whether debtor may avoid lien, is filing date of bank-
ruptcy petition; as such, debtors are entitled to return of insurance proceeds withheld by creditor
because insurance proceeds are simply another form of such exempt personal property. In re Sher-
wood (1988, BC ED Cal) 94 BR 679, CCH Bankr L Rptr P 72603.
Where Chapter 7 debtors resided on property entitled to homestead exemption under state law at
time they filed bankruptcy petition, such exemption is not lost by debtors' subsequent departure
from property because appropriate date for determining exemptions is date of filing. In re Lindsey
(1988, BC SD Ala) 94 BR 723.
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11 USCS § 522
Value of any interest in property which debtor wishes to exempt under 11 USCS § 522 must be
ascertained as of date bankruptcy petition was filed; value of Chapter 7 debtor's employment dis-
crimination cause of action was $ 110,000 on date of bankruptcy filing, rather than $ 10,000 as-
serted by debtor, where decision had already been rendered in debtor's favor and, although damages
had not yet been determined, debtor and her attorneys anticipated recovery of $ 90,000 and case
was actually settled for $ 110,000. Taylor v Freeland & Kronz (1989, BC WD Pa) 105 BR 288, affd
(1990, WD Pa) 118 BR 272, revd on other grounds (1991, CA3 Pa) 938 F2d 420, 22 BCD 633, 25
CBC2d 167, CCH Bankr L Rptr P 74067, affd (1992) 503 US 638, 118 L Ed 2d 280, 112 S Ct 1644,
92 CDOS 3363, 92 Daily Journal DAR 5260, 22 BCD 1396, 26 CBC2d 487, CCH Bankr L Rptr P
74513A, 6 FLW Fed S 194 (criticized in In re Thompson (2001, BC WD Okla) 263 BR 134) and
(criticized in In re Patterson (2002, BC DC Colo) 275 BR 578) and (criticized in In re Lang (2002,
BC SD Fla) 276 BR 716, 48 CBC2d 1291, 15 FLW Fed B 143) and (criticized in Novak v Woodin
(In re Woodin) (2003, BC DC Conn) 294 BR 436, 50 CBC2d 1109) and (criticized in In re Sacred
Heart Hosp. (1995, BC ED Pa) 186 BR 891).
Estate of Chapter 7 debtor, who died shortly after filing petition, is entitled to claim of home-
stead exemption under California law, despite trustee's contention that it is inequitable to permit de-
ceased debtor, who is no longer in need of fresh start, to discharge his debts and pass on his exempt
assets free from those debts to his beneficiaries, where debtor's right to claim homestead exemption
is generally fixed upon petition date. In re Combs (1994, BC ND Cal) 166 BR 417.
Parties' contentions as to whether or not Chapter 7 debtor resided at condominium on date
homeowners association's judgment lien attached are irrelevant in determining whether debtor is
entitled to claimed homestead exemption, where nature and extent of debtor's exemption rights are
determined as of date of petition. In re Bruton (1994, BC SD Cal) 167 BR 923, 25 BCD 1201.
Property must be characterized for purposes of determining and obtaining bankruptcy exemp-
tions as of date of bankruptcy petition, and not on eventual exemption filing date; accordingly,
Chapter 7 debtors were not entitled to exempt Nebraska property as homestead under Virginia opt-
out provisions where their first filing of homestead deed was in wrong county and thus of no legal
effect and their second filing of homestead deed was made after postpetition foreclosure sale of
homestead. In re Heater (1995, BC ED Va) 189 BR 629.
Where involuntary Chapter 7 petition was filed against debtor, debtor was entitled to claim
homestead exemption under Mass. Gen. Laws ch. 188, § 1 after date of involuntary petition because
exemption was claimed before order of relief was entered. In re Gaudreault (2004, BC DC Mass)
315 BR 1.
Debtors were not entitled to homestead exemption for their cabin in Idaho because, while they
intended to make cabin their permanent home, at time they filed for bankruptcy their domicile was
in Utah; thus, under 11 USCS § 522(b)(2)(A), because debtors were domiciled in Utah, they could
not claim Idaho homestead exemption. In re Kline (2005, BC DC Idaho) 350 BR 497.
Chapter 7 debtors could not claim exemption to federal tax refund that was applied prepetition,
pursuant to 31 USCS § 3720A, to mortgage obligation that debtors owed to U.S. Department of Ag-
riculture because setoff was authorized and complete before petition was filed. Harrison v United
States Dep't of Agric. Rural Dev. (In re Harrison) (2008, BC WD Ky) 383 BR 398.
50. Converted cases
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11 USCS § 522
Debtors' farmland became property of estate upon their filing of Chapter 11 petition and land
remained property of estate after conversion of case to Chapter 7 without confirmation of reorgani-
zation plan; redemption rights that attached to farmland postpetition are property of estate pursuant
to 11 USCS § 541(a)(6) as are rental proceeds stemming from those redemption rights; however, 11
USCS § 522(b)(2)(A) does not permit debtors to withdraw postpetition, postconversion farmland
rental proceeds from property of estate as exempt property because debtors had no right to rental
proceeds under state redemption law at either date of Chapter 11 filing or date of conversion to
Chapter 7, regardless of which date controls exemption eligibility, where foreclosure sale took place
after Chapter 11 filing and conversion to Chapter 7 and redemption right did not arise until that
time; although debtors could properly amend their schedule of exemption, that does not require that
newly claimed exemption in rental proceeds be allowed. In re Harris (1989, CA8 ND) 886 F2d
Law in effect on original filing date, rather than law in effect as of date of conversion from
Chapter 13 to Chapter 7 determines whether exemption will be available where law, rather than
facts, has changed between filing and conversion. In re Marcus (1993, CA10 Colo) 1 F3d 1050,
Pursuant to 11 USCS § 522, Chapter 7 debtor is entitled to exempt real property acquired subse-
quent to Chapter 13 filing and prior to conversion to Chapter 7, where property qualified as home-
stead property as of date of conversion of case and there has been no objection that property does
not qualify as debtor's homestead. In re Bartlett (1992, BC WD Tex) 149 BR 446 (superseded by
statute as stated in In re Zamora (2002, BC WD Tex) 274 BR 268).
Where debtor converted his Chapter 13 case to case under Chapter 7 after his plan had been
confirmed, his home was not entitled to protection afforded by 11 USCS § 522(c) because it had not
been exempted from bankruptcy estate by operation of § 522(l), but rather had been removed
through confirmation process. In re Brown (2007, BC WD Mich) 375 BR 362.
C.Amendment of Claimed Exemptions 51. Generally
Debtors cannot amend list of claimed exemptions under 11 USCS § 522(b)(1) where debtors'
original claim was minimal in attempt to conceal assets, because to allow amendment upon discov-
ery would inflict no punishment on dishonest debtors. Payne v Wood (1985, CA7 Ill) 775 F2d 202,
13 BCD 991, 13 CBC2d 1047, CCH Bankr L Rptr P 70808, cert den (1986) 475 US 1085, 89 L Ed
2d 722, 106 S Ct 1466.
Bankruptcy Court did not err in denying creditor's objection to admission of homestead evi-
dence at time of bankruptcy hearing and in motion to strike, or trustee's similar motion asserting that
debtor neglected to plead entitlement to 200-acre homestead properly where Bankruptcy Court took
judicial notice of fact that debtor claimed 200-acre rural homestead exemption, and even assuming
that debtor's pleadings were deficient, court was empowered to allow amendment of pleadings in-
stanter as long as creditor was not prejudiced by amendment under FRCP 15(b), made applicable to
bankruptcy proceedings by Bankruptcy Rule 7015. In re Hill (1992, CA5 Tex) 972 F2d 116.
Chapter 11 debtor may be denied privilege of amending list of exempt assets under 11 USCS §
522 where debtor has acted in bad faith, where party in interest may be prejudiced, and where ex-
ceptional circumstances so warrant; amendment will not be denied where there was mere misunder-
standing as to number of cattle debtor represented he owned at time of filing of petition. In re Fal-
coner (1987, WD Mich) 79 BR 283.
Page 115
11 USCS § 522
As matter of course debtor should be allowed to amend his exemption claims under 11 USCS §
522 and Bankruptcy Rule 1019 to include newly found property if case has not been closed; then
any interested party can object to exemption amendment within 15 days from date amendment is
filed; if someone does object, court is to hold hearing on notice to all interested parties in order to
resolve issues raised on objections; if no one objects, amended exemption is allowed. Armstrong v
Hursman (1988, DC ND) 106 BR 625, 19 BCD 1495.
Permission to amend schedule of exemptions, though matter of discretion which, generally,
ought to be exercised liberally in favor of debtor, should be granted only when administration of
estate would not be prejudiced; it is not in interests of orderly administration to permit amendment
to schedule to increase claimed exemption for real estate where trustee has sold real estate and
where increase in exemption would decrease trustee's compensation. In re Keenum (1980, BC ED
Mo) 1 BAMSL 133.
Although legislative history of Bankruptcy Code mandates that there be some leeway to amend
exemption claims, final election should be made by or before time that others can be hurt in relation
to their reliance upon position taken by debtor and, when proper claim of exemption under either
state or federal law becomes final by not being amended or objected to for 15 days, or, if there is
objection, when order eventually becomes final, there can be no change; debtors who originally
claim exemption under state law and who seek to amend claim of exemption pursuant to federal
statutes after original claim has become final may not amend claim; debtors whose amendment to
claim exemption under federal law is timely will be allowed amendment unless trustee's objections
to amended claim of exemption are meritorious and timely; debtors whose exemptions were errone-
ously claimed under both state and federal law will be permitted to amend, since claims cannot be-
come final, and amendment not only can be made, but must be made, to correctly make election. In
re Cobb (1980, BC ND Cal) 3 BR 150, 6 BCD 9, 1 CBC2d 540.
Bankruptcy Court should exercise equitable powers and allow amendment to debtor's claim of
exemptions when exemption was not claimed by reason of excusable neglect, such as failure due to
negligence, mistake, or lack of knowledge of bankruptcy procedures by debtor's attorney; however
allowance should be conditioned upon paying from sources other than exempt property to trustee
for any out of pocket costs to him by reason of late claim of exemption. In re Boyer (1981, BC DC
Idaho) 7 BR 930, 7 BCD 88.
Under 11 USCS § 522(b)(2)(B), debtor may amend his election of exemptions to that under state
law, in order to exempt property held as tenants by entirety where no party in interest has alleged
change in position or that it has been harmed because of reliance on debtor's original election of
federal exemptions. In re Buck (1982, BC DC Hawaii) 17 BR 168, 5 CBC2d 1349.
Standards for allowance of amendments to exemption schedules have been clearly articulated as
4-part test: (1) will adverse party's rights be prejudiced if amendment is allowed, (2) will not allow-
ing amendment cause undue hardship to debtor who has acted in good faith, (3) is there reasonable
excuse for not claiming exemption on original schedule, and (4) is there reasonable excuse for any
delay in seeking amendment. In re Kochell (1982, BC WD Wis) 23 BR 191, 7 CBC2d 613.
Amendments to debtors' list of property claimed as exempt which are filed for purpose of claim-
ing exemption in property known to exist at time of debtor's petition filing is barred by granting of
debtor's discharge. In re Elliott (1983, BC SD Ohio) 31 BR 33, CCH Bankr L Rptr P 69255.
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11 USCS § 522
Upon objection by trustee in bankruptcy, allowance of amended exemption depends on whether

there is showing of bad faith by debtor or prejudice to creditors; absent showing of bad faith or
prejudice, and provided case is still open, allowable exemption should be allowed no matter when it
is claimed. In re Sheridan (1983, BC DC Vt) 38 BR 52.
Debtors may not amend schedules to claim homestead exemption under 11 USCS § 522 when
no declaration of homestead was filed as of petition date because debtors did not have valid home-
stead exemption under state law on petition date. Martinson v Michael (In re Michael) (1995, BC
DC Mont) 183 BR 230.
Where: trustee objected to debtor's claimed federal exemption in Roth IRA under 11 USCS §
522(d)(10)(E), debtors defended and in alternative requested leave to amend Schedule C to claim
state exemption, and bankruptcy court sustained objection on its merits but granted leave to amend
without prejudice, all in same proceeding, debtors were already precluded by res judicata from as-
serting theory of state exemption by their failure to actually assert it in earlier proceeding; debtors
did not need leave to amend under Rule 1009(a). In re Walls (2000, BC DC Minn) 249 BR 506.
Exemption should be allowed under 11 USCS § 522 no matter when it is claimed absent show-
ing of bad faith by debtor or prejudice to creditors and turnover should not be denied on grounds of
delay where there is no evidence of bad faith, and at most negligent act, or prejudice to creditors. In
re Andermahr (1983, BAP9 Cal) 30 BR 532, 10 BCD 917, 8 CBC2d 1316, CCH Bankr L Rptr P
69267.
Where bankruptcy debtors listed their home as having $ 80,000 value, yet, among other things,
they rejected offer to purchase it "as is" for $ 150,000, bankruptcy court did not err in finding that
debtors acted in bad faith, and debtors were not entitled to amend their exemptions due to their bad
faith. Bauer v Iannacone (In re Bauer) (2003, BAP8) 298 BR 353, 41 BCD 255, CCH Bankr L Rptr
P 78918.
52. Timeliness
Debtor is allowed to amend his exemption claims to include newly found property, before case
is closed. Redmond v Tuttle (1983, CA10 Kan) 698 F2d 414, 10 BCD 116, 8 CBC2d 1183, CCH
Debtor may amend schedules to add exempt property under Bankruptcy Rule 1009 as matter of
course at any time before bankruptcy case is closed; Bankruptcy Rule 1009 is not inconsistent with
11 USCS § 522(d) and proposal exemptions are still subject to objection by party in interest. Lucius
v McLemore (1984, CA6 Tenn) 741 F2d 125, 12 BCD 847, 11 CBC2d 296, CCH Bankr L Rptr P
69974.
Debtor may amend his filed schedules to add to list of property exempted from bankruptcy pro-
ceedings, as matter of course at any time prior to close of case; courts may refuse to allow amend-
ment if debtor has acted in bad faith or where property has been concealed. Lucius v McLemore
(1984, CA6 Tenn) 741 F2d 125, 12 BCD 847, 11 CBC2d 296, CCH Bankr L Rptr P 69974.
After passage of substantial amount of time and action by trustee in bankruptcy settling rights of
creditors, it is to late for bankrupt to amend his schedules to assert exemptions under federal law as
distinguished from exemptions under state law. In re Brewer (1982, MD Tenn) 22 BR 983.
Debtor's choice of exemptions between those provided by state of debtor's domicile and those
provided under federal exemptions is mutually exclusive, and Bankruptcy Court will not permit
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11 USCS § 522
debtor to amend exemption schedules in order to claim federal exemptions once period fixed by
Rule 4004 for amendment or objection to exemptions has passed, and party has sought affirmative
relief based upon determination of exemptions based upon debtor's election. In re Lyon (1980, BC
DC Kan) 6 BCD 343, 2 CBC2d 561.
Schedules may be amended as matter of course at any time before case is closed. In re
McQueen (1982, BC DC Vt) 21 BR 736.
Debtor's motion to amend her exemption claim is granted even though motion was made outside
15 days after meeting of creditors where debtor promptly filed second motion to amend her exemp-
tion schedule and to reallocate her disallowed exemption, where no interested party has demon-
strated detrimental reliance on debtor's original exemption schedule, where trustee has not objected,
and where debtor's misperception concerning legitimacy of original exemption was reasonable. In
re Rhoten (1983, BC MD Tenn) 27 BR 494.
Debtor has right to amend schedule of exempt property after time for claiming exemptions un-
der former Bankruptcy Rules 403(a) and 108(b) has expired; debtors should be allowed to amend
their schedules at any time prior to closing of case, subject to objections by any party which is ad-
versely affected by amendment; where no party in interest has objected, debtors' exemption sched-
ule as amended should be allowed. In re McDonald (1983, BC DC SC) 34 BR 842.
Although debtor may choose only one of exemption options offered by 11 USCS § 522(b),
debtor may amend schedule of claimed exempt property to reflect different exemption election un-
der § 522(b); amendment may be made on notice at any time prior to closing of case. In re Van
Nostrand (1995, BC DC NJ) 183 BR 82, 33 CBC2d 1673.
Chapter 7 debtors could not amend their exemptions under 11 USCS § 522(b) to add new ex-
emption of previously scheduled property, after their case was closed, and then move to avoid
prepetition judgment lien against that property pursuant to § 522(f)(1) on grounds that judgment
lien impairs new exemption. In re Oster (2003, BC ED Cal) 293 BR 242, 50 CBC2d 785 (criticized
in Goswami v MTC Distrib. (In re Goswami) (2003, BAP9) 304 BR 386).
Fed. R. Bankr. P. 1009 prevented debtors from reopening their bankruptcy case under 11 USCS
§ 350 in order to amend their claimed exemptions to avoid judicial lien because amendment was
limited until case was closed, equity in property was not required to claim exemptions and could not
be used to circumvent limitations of Fed. R. Bankr. P. 1009, and once case was closed there was no
estate on which exemptions could be claimed under 11 USCS 522(f). In re Barlett (2005, BC ND
Ind) 326 BR 436.
Chapter 7 Trustee suffered prejudice and exemption was disallowed where debtor did not amend
her schedule to claim exemption in real property held by entireties until 18 months after she filed
her case and Trustee moved for summary judgment in adversary proceeding seeking to avoid mort-
gage on real property as preferential transfer; because debtor initially chose 11 USCS § 522(d)(1)
exemption, only $ 11,000 of equity in property was exempt, property came into estate for benefit of
all creditors, and mortgage was avoided as preference. Shapiro v First Franklin Fin. Corp. (In re
Rechis) (2006, BC ED Mich) 339 BR 643.
53. Payment of fees
Where debtors failed to assert homestead exemption due to gross negligence and carelessness on
counsel's part, debtors will be allowed to amend claim to assert exemption only on condition debt-
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11 USCS § 522
ors' counsel remits from personal funds moneys to trustee as payment of fees, costs and expenses
including attorney's fees occasioned by negligence of debtors' counsel and debtors' counsel shall
further remit from personal funds moneys to trustee to make payment on mortgage, which payment
would have been made from proceeds of trustee's sale but for actions of debtors' counsel and finally,
debtors' counsel shall also refund to debtors a portion of fee he has received from them. In re John-
son (1983, MD Tenn) 30 BR 467.
Debtor will be required to pay $ 50 toward cost of administration, as condition to being allowed
to amend exemption schedules to claim exemptions under federal, rather than state law, so that trus-
tee will be reimbursed for cost of objecting to exemptions which were improper as originally
claimed under state law. In re Mertsching (1980, BC DC Idaho) 4 BR 519, 6 BCD 445, 2 CBC2d
301.
Debtor is entitled to amend exemption claim where there is no showing any third party will be
prejudiced by amendment; since 11 USCS § 522 provides trustee can receive no fee out of exempt
property, trustee would suffer financial loss in case where there are no other assets available for liq-
uidation, if debtor were permitted to amend exemption claims, and such amendment will be allowed
only upon payment from sources other than exempt property to trustee for any out of pocket costs to
him by reason of late claim of exemption. In re Boyer (1981, BC DC Idaho) 7 BR 930, 7 BCD 88.
54. Particular amendments
Debtors' list of Illinois exemptions under 11 USCS § 522(b)(1) does not contain enough infor-
mation to put trustee on notice that further investigation is warranted; where original list showed
only a few old appliances and one new TV, debtors will not be allowed to amend list to add newly
discovered assets to exempt categories; rather, debtors are limited to values in categories originally
claimed, except for clothing category, which, under state law, has no ceiling on exemption value.
Payne v Wood (1985, CA7 Ill) 775 F2d 202, 13 BCD 991, 13 CBC2d 1047, CCH Bankr L Rptr P
70808, cert den (1986) 475 US 1085, 89 L Ed 2d 722, 106 S Ct 1466.
Unlike Chapter 13 case, where case is converted from Chapter 11 to Chapter 7, exemptions are
determined from date of Chapter 11 filing, under 11 USCS § 348(a) and 11 USCS § 522(b)(2)(A);
thus debtor is entitled to make post-conversion claim of homestead exemption in full amount on
date of Chapter 11 filing, not just on remaining 2 acres held as of Chapter 7 filing. In re Williamson
(1986, CA5 Miss) 804 F2d 1355, 15 CBC2d 1225, CCH Bankr L Rptr P 71523.
Debtors should be permitted to amend their exemption schedules under 11 USCS § 522 to claim
exemption in homestead on grounds of excusable neglect, even though carelessness or negligence
of debtors' counsel is not normally itself excusable neglect, balance of factors leading to this con-
clusion where gross negligence and carelessness on counsel's part in failing to assert homestead ex-
emption will force debtors to suffer loss of home absent an amendment. In re Johnson (1983, MD
Tenn) 30 BR 467.
Bankruptcy Court will deny debtor's motion requesting that trustee be directed to pay debtor
sum of debtor's 1979 income tax refund where, prior to debtor filing amended schedule of exemp-
tions claiming refund as exempt, debtor had received discharge and trustee had filed final report of
administration and was no longer administering property of debtor's estate, while creditors who
filed proof of claim in response to notice that there would be assets in estate available for distribu-
tion to general creditors would be adversely effected. In re Duncan (1980, BC ND Ohio) 7 BR 484.
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11 USCS § 522
Debtor is not permitted to amend exemption schedules to include silverware where such silver-
ware is only asset of estate, where trustee has performed substantial administration upon asset, and
where debtor's reason for not originally claiming exemption is shallow. In re Polk (1981, BC ED
Mo) 1 BAMSL 417.
Unexplained delay of debtor in not giving trustee any notice of debtor's intention to claim as ex-
empt funds which trustee has recovered as preferential transfer until estate is ready for closing, re-
sults in obvious prejudice to creditors of estate, and amounts to laches which is sufficient to bar
debtor from amending schedules to claim such recovered funds as exempt. In re Taylor (1981, BC
DC Dist Col) 8 BR 251, CCH Bankr L Rptr P 67790.
Where debtors did not attempt to amend their claim for exemptions so as to include 4 United
States Savings Bonds valued at $ 100 until almost 3 months after they had relinquished possession
to trustee they are not entitled to amend schedule and compel trustee to return bonds to them; al-
though every claim for exemptions is not necessarily final and binding unless amended or objected
to within 15 days of its filing as provided for under Rule 403(c) there is some point in time when
trustee is justified in relying upon debtor's claim for exemption and may act accordingly, otherwise
diligent performance of trustee and vested rights of unsecured creditors would be prejudiced. In re
Houck (1981, BC ED Mich) 9 BR 460, 7 BCD 486, 3 CBC2d 956.
Debtor may amend schedule listing exempt property to include television and videotape re-
cording unit, where there was no showing of any adverse effect from allowing debtor to do so, and
no party acted in detrimental reliance on original schedule. In re Vest (1982, BC DC NM) 18 BR
241.
Debtor's application to amend 11 USCS § 522(d) schedule of exemptions will be denied where
trustee has acted in reliance on exemptions claimed under original schedule, hardship on debtor if
amendment is not allowed is not so great as to favor amendment, no excuse for not originally claim-
ing exemptions under state law is offered, and requesting amendment 127 days after original sched-
ules were filed and 23 days prior to trial on claim for original exemptions is so late in proceeding as
to be subject to no reasonable excuse. In re Kochell (1982, BC WD Wis) 23 BR 191, 7 CBC2d 613.
Debtor may amend exemption schedule to add to their exemptions proceeds of lawsuit settle-
ment received by debtors after their bankruptcy case was closed where debtors have demonstrated
excusable neglect; court found that the trustee had not abandoned interest in settlement proceeds
because debtor failed to schedule lawsuit as asset and abandonment occurred only with respect to
property listed in debtor's schedule of assets. In re King (1983, BC MD Tenn) 27 BR 754, CCH
Debtors are permitted to amend their exemption schedule to claim exemption in garnished funds
recoverable as voidable preference even though debtors had already received discharge; exemption
laws are generally afforded liberal construction in conjunction with absence of prejudice to any
party in interest. In re Button (1983, BC ED Tenn) 29 BR 118, 10 BCD 563, 8 CBC2d 475, CCH
Where there is no evidence of bad faith on part of debtor or prejudice to creditors, debtor's claim
to exemption of checking account balance will be allowed, even though debtor had originally listed
balance of checking account as asset and later sought amendment to include it in schedule of ex-
empt property. In re Sheridan (1983, BC DC Vt) 38 BR 52.
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11 USCS § 522
Debtor would not be allowed to amend schedule to claim exemption in interest in civil service
retirement plan where trustee had conducted considerable administration to recover interest for
benefit of estate and debtor had used non-exempt assets for personal reasons during pendency of
case, and thus allowance of amendment would be prejudicial and unfair to trustee and creditors. In
re Patterson (1986, BC ED Mo) 3 BAMSL 1899.
Where Chapter 11 debtors opted to claim exemptions under 11 USCS § 522(b)(1) as set forth in
§ 522(b)(4), debtors are not entitled to amend their exemptions to those allowed under state law
pursuant to § 522(b)(2), over objection of creditor, where debtors have already received greater part
of their exemptions under § 522(b)(1) and (4) through completed sale of their home, since such is
not insignificant change but one which will dramatically charge distribution of sale proceeds to
creditors who might have opposed sale of home and distribution of proceeds to debtors had they
known of debtor's ultimate intentions. In re Shaffer (1988, BC ED Pa) 92 BR 632, 21 CBC2d 90.
Chapter 7 debtor may exempt proceeds from originally unscheduled prepetition personal injury
claim although debtor first amended his exemptions to list such claim only after trustee had liqui-
dated claim where trustee does not assert that debtor acted in bad faith or concealed property or that
failure to list claim was intentional, and where there is no prejudice to creditors since notice of
commencement of case mailed to creditors stated that this was no-asset case, trustee learned early in
case at first meeting of creditors of existence of pending personal injury action, and proceeds from
compromise of claim had not been distributed to creditors before debtor amended his exemption
schedule; debtor's amended exemption may not be disallowed solely on ground that trustee relied
upon original exemption schedule in administering estate; trustee is allowed reasonable compensa-
tion and expenses for his efforts in liquidating debtor's personal injury action. In re Fournier (1994,
BC DC Conn) 169 BR 282, CCH Bankr L Rptr P 76033.
Debtor/grantee's post-delivery alteration of deed by adding language "as tenants by the entirety
with right of survivorship as at common law" had no effect on type of estate conveyed so that
debtor and his wife did not, under Virginia law, own property by right of entireties, with result that
it was not exempt under 11 USCS § 522(b)(2)(B). In re Scialdone (1995, BC ED Va) 197 BR 225.
Failure of debtor to disclose his personal injury claim until case was converted from Chapter 13
and Chapter 7 trustee stated in his opening remarks at creditors' meeting that debtors were obligated
to disclose all assets and might lose their exemption rights or have their discharge denied or revoked
if they failed to do so constituted bad faith, and debtor would not be allowed to amend exemptions
schedule to assert exemption for lawsuit. In re Lundy (1998, BC ED Mich) 216 BR 609, 39 CBC2d
629.
Two months after filing bankruptcy, debtors received offer to sell their home for $ 150,000,
which was summarily rejected as too low; and since debtors initially stated value was $ 80,000,
when they claimed exemption of $ 0 under 11 USCS § 522(d)(1), amended homestead exemption
was disallowed. In re Bauer (2003, BC DC Minn) 291 BR 127, 40 BCD 265, affd (2003, BAP8) 298
BR 353, 41 BCD 255, CCH Bankr L Rptr P 78918.
Where debtors sabotaged Chapter 7 bankruptcy trustee's efforts to sell their house by posting
appraisals, list of defects, and crime statistics in order to chill offers from prospective buyers, debt-
ors' amendment, on eve of sale of house, to increase exemption under California law was in bad
faith and trustee's objection to amended exemption under 11 USCS § 522(l) was sustained due to
debtors' bad faith; debtors' scorched earth policy showed that they had not complied with their du-
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11 USCS § 522
ties under 11 USCS 521(3) of cooperating with trustee in administration of estate. In re Rolland
(2004, BC CD Cal) 317 BR 402.
When debtors sought to claim their "wild card" exemption under 11 USCS § 522(d)(5) in pro-
ceeds of sale of certain real estate, court determined that only way for them to specifically claim
asset of estate was to file amendment to Schedule C under Fed. R. Bankr. P. 1009 within next 30
days. In re Goucher (2007, BC MD Pa) 378 BR 445.
Where debtor had attempted to claim as exempt payments that she received under policy of dis-
ability insurance under Minn. Stat. § 550.39, but bankruptcy court sustained Chapter 7 Trustee's ob-
jection, holding that statute violated Minn. Const. art. I, § 12, debtor's amended exemption claiming
that payments were exempt under different statute, Minn. Stat. § 550.37, subd. 24, debtor's amend-
ment was not made in bad faith; bad faith in context of amending exemption required concerted in-
tent to delay, frustrate, or prevent bankruptcy estate from realizing value of subject assets; this was
not shown in instant case. In re Reiland (2008, BC DC Minn) 382 BR 779.
Where debtor, in her claim to exempt payments that she received under policy of disability in-
surance, had listed value of asset as "unknown," failure to specify value did not invalidate claim of
exemption; given that total value would have been based on projected length of term of disability--
actuarially determined, medically predicted, or otherwise--for reduction to present value, given
complexities of asset, requiring debtor to do so for initial bankruptcy schedule would have been un-
fairly burdensome. In re Reiland (2008, BC DC Minn) 382 BR 779.
D.Objections
1.Generally 55. Generally
Absent timely filed objection under Bankruptcy Rule 4003 within 30 days after creditors' meet-
ing or filing of amendment to exemption list, property claimed by debtor as exempt under 11 USCS
§ 522 is exempt, and no provision of Code provides that failure to object is excused where debtor's
exemption claim is not advanced in good faith or where claimed exemption has only questionable
basis; in present case, proceeds from settlement of tort action are exempt, where debtor claimed
them as exempt and trustee never filed timely objection, even though trustee notified debtor's coun-
sel through correspondence that settlement proceeds were property of estate. Taylor v Freeland &
Kronz (1991, CA3 Pa) 938 F2d 420, 22 BCD 633, 25 CBC2d 167, CCH Bankr L Rptr P 74067, affd
(1992) 503 US 638, 118 L Ed 2d 280, 112 S Ct 1644, 92 CDOS 3363, 92 Daily Journal DAR 5260,
22 BCD 1396, 26 CBC2d 487, CCH Bankr L Rptr P 74513A, 6 FLW Fed S 194 (criticized in In re
Thompson (2001, BC WD Okla) 263 BR 134) and (criticized in In re Patterson (2002, BC DC Colo)
275 BR 578) and (criticized in In re Lang (2002, BC SD Fla) 276 BR 716, 48 CBC2d 1291, 15 FLW
Fed B 143) and (criticized in Novak v Woodin (In re Woodin) (2003, BC DC Conn) 294 BR 436, 50
CBC2d 1109) and (criticized in In re Sacred Heart Hosp. (1995, BC ED Pa) 186 BR 891).
Unless there is timely objection from party in interest, any property claimed as exempt by
debtor, regardless of whether claimed exemption is valid, is automatically exempt under 11 USCS §
522. In re Hyman (1992, CA9) 967 F2d 1316, 92 CDOS 5323, 92 Daily Journal DAR 8504, 23
When trustee believed that claimed exemption under 11 USCS § 522(d)(5) was proper, there
was no need for her to object to debtors' valuation of property in manner prescribed by Fed. R.
Bankr. P. 4003(b). Lewandowski v Lim (In re Lewandowski) (2008, ED Mich) 386 BR 643.
Page 122
11 USCS § 522
Timely raised objections to Chapter 7 debtors' claimed exemptions on ground that property con-
stituted partnership property rather than personal property of debtors renders it unnecessary for
creditors to renew objection when same items are claimed exempt under amendments. In re Indvik
(1990, BC ND Iowa) 118 BR 993, 23 CBC2d 948.
Settlement of creditor's objection to Chapter 11 debtors' claimed exemptions cannot be approved
under Bankruptcy Rule 9019 where creditor has undertaken obligation to prosecute objections to
debtors' claimed exemptions on behalf of general creditor body, but having done so, it seeks to
compromise that litigation in return for $ 1750,000 payment to itself alone; creditor objecting to ex-
emption does so for benefit of all creditors and it should not be permitted to abdicate responsibilities
to creditors that are similar to trustee's, by sacrificing potential benefits it might win for general
creditor body in order to obtain private benefit solely for itself; furthermore, settlement fails best
interest of estate test because there is absolutely no correspondence between what is being given in
connection with settlement and what might be received if objections to debtors' claimed exemptions
are fully litigated. In re Krizmanich (1992, BC ND Ind) 139 BR 456, 22 BCD 1374.
56. Standing to object
Trustee is proper party in interest under 11 USCS § 522(l) to file objections to household ex-
emptions claimed by debtors where, in objecting to claim exemptions, trustee was not using avoid-
ing powers of 11 USCS § 544, but was acting as representative of state under 11 USCS § 323, with
capacity to sue and be sued and trustee's duty to collect property of state inevitably involved deter-
mining what property is exempt. First Nat. First Nat'l Bank v Norris (1983, CA11 Ala) 701 F2d
902, 10 BCD 473, 8 CBC2d 1078 (criticized in In re Betz (2002, BC DC Mass) 273 BR 313).
Trustee, as designated representative of Chapter 7 estate, 11 USCS § 323(a), is party in interest"
entitled to oppose exemption claims under 11 USCS § 522(l); to extent there are joint creditors, on
proper objection by party in interest, entireties exemption claim would be invalid ab initio. Edmon-
ston v Murphy (In re Edmonston) (1997, CA1 Mass) 107 F3d 74, 37 CBC2d 780, CCH Bankr L
Rptr P 77303.
Although creditor legally possessed claim having bought claim of debtors' former attorney, and
therefore is legally entitled to object to debtors' claims of exempt property, creditors' bad faith in
obtaining to claim and filing objection merely to gain advantage in state court litigation results in
claim being disallowed and thus creditor is not party in interest entitled to object under 11 USCS §
522(1). In re Keyworth (1985, DC Colo) 47 BR 966, 12 BCD 1137, CCH Bankr L Rptr P 70314.
State is party of interest and has standing to object to claim of exempt property since question of
what is or what is not exempt property is inextricably interwoven with duties of trustee to collect
property of estate. In re Brooks (1981, BC SD Ohio) 12 BR 22, CCH Bankr L Rptr P 68230 (super-
seded by statute as stated in In re Lester (1992, SD Ohio) 141 BR 157).
As administrative claimant who received award of compensation after conversion to chapter 13,
former chapter 7 trustee had necessary financial interest to be considered party in interest under 11
USCS § 522(l) and thus had standing to object to debtors' claimed exemptions. In re Barnes (2002,
BC ED Cal) 275 BR 889 (criticized in In re Greenfield (2003, BC SD Cal) 289 BR 146).
Chapter 7 trustee could continue to object to debtor's claimed homestead exemption even though
matter had been converted from Chapter 7 proceeding to Chapter 13 proceeding because trustee was
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11 USCS § 522
creditor of estate and case could potentially be converted back to Chapter 7 proceeding at some
point. In re Landahl (2006, BC MD Fla) 338 BR 920.
Chapter 7 trustee did not have authority to object to debtors' claimed exemption in their home-
stead on behalf of domestic support obligation (DSO) creditors scheduled in proceedings; if DSO
creditors sought to collect amounts owed to them, they needed to do so on their own behalf. In re
Duggan (2007, BC MD Fla) 21 FLW Fed B 14.
In context of 11 USCS § 522(l) and Fed. R. Bankr. P. 4003(b), "party in interest" is person enti-
tled by law to enforce substantive right. In re Tofani (2007, BC DC Mass) 365 BR 338.
Trustee has standing to object to debtor's claim of exemptions. Moss v Block (In re Moss) (2001,
BAP8) 266 BR 697, affd (2002, CA8) 289 F3d 540, 39 BCD 144.
In 11 USCS § 522 matter, Chapter 13 debtors had standing to exercise trustee avoiding powers
for benefit of estate. Houston v Eiler (In re Cohen) (2004, BAP9) 305 BR 886, 52 CBC2d 737, 53
UCCRS2d 148 (criticized in Gilliam v Bank of Am. Mortgage, L.L.C. (In re Gilliam) (2004, BC DC
Kan) 52 CBC2d 1735).
57. Sufficiency of objection
Trustee objected properly to claimed homestead exemption under 11 USCS § 522(l) where, al-
though trustee did not specifically claim that debtors had overstated their homestead exemption,
trustee did object to undervaluation of homestead property and requested further relief as court
deemed just and proper; where objection to claim exemption is filed trustee should be able to raise
any arguable ground, even if it was not specifically set forth in objection. First Nat'l Bank v Norris
(1983, CA11 Ala) 701 F2d 902, 10 BCD 473, 8 CBC2d 1078 (criticized in In re Betz (2002, BC DC
Mass) 273 BR 313).
Trustee's application for appraisal of property debtors claim as exempt, although termed mere
request for clarification of statutory provisions governing value of exemptions, is in fact objection
to exemption claim, which, to be timely, must be filed within 15 day limit applicable to objections
to exemption claim which could have been made on basis of information reflected in debtors'
schedules, as provided by former Rule 403, and such application is barred were not brought within
such time limit. In re Walsh (1980, BC DC Dist Col) 5 BR 239, 6 BCD 793, 2 CBC2d 815, CCH
Bankr L Rptr P 67970 (criticized in In re Richardson (2001, BC SD Ala) 280 BR 717).
Trustee's objection to debtor's homestead exemption is not timely filed where filing occurred af-
ter bar date set in notice to creditors and where trustee did not apply for extension of time; objection
on minute report is not appropriate procedure for perfecting formal objection to exemption; trustee
must make application to court and request hearing on issue so that final determination regarding
exemption can be entered. In re Thomas (1983, BC SD NY) 27 BR 367.
Chapter 7 trustee's unadorned statement that Ohio exemption statute was inapplicable to IRA's
claimed as exempt was not sufficient to rebut presumption of prima facie validity in absence of fur-
ther detail; in view of fact that over $ 300,000 was at issue, court would grant trustee 30 days to file
amended objection providing clear and detailed factual basis for challenge to exemption claims, ex-
cept as to one account to which trustee was time-barred from objecting. In re Long (2001, BC SD
Ohio) 260 BR 859.
Chapter 7 trustee's motion for order requiring debtor to turn over federal and state income tax
refunds adequately provided debtor with written and timely notice, for purposes of Fed. R. Bankr.
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11 USCS § 522
P. 4003(b), of trustee's intent to object to her claimed exemption of EIC and was construed as objec-
tion to claimed exemption. In re Tatum-Charlemagne (2006, BC ND Ohio) 368 BR 654.
58. Procedure to object
Since court has ruled that creditor on joint debt can proceed against entireties property owned by
debtor and nondebtor spouse, and claimed as exempt by debtor, proper procedure is to file objection
under Bankruptcy Rule 4003 to claim of exemption under 11 USCS § 522 rather than seek lift of
stay to pursue remedy in state court, and since proper procedure was uncertain, creditor's motion to
lift stay will be considered timely filing of objection. In re Grosslight (1985, CA6 Mich) 757 F2d
District court did not err in reversing bankruptcy court's decision admitting into evidence bank
records of debtors' undisclosed account where bankruptcy trustee filed supplemental declaration at-
taching bank account records of which trustee's attorney had no personal knowledge with respect to
authenticity of records as required under Fed. R. Evid. 602; declaration by trustee's attorney did not
satisfy Fed. R. Evid. 803(6) because requisite testimony was required to come from custodian of
record or other qualified witness, and attorney's declaration did not constitute proper certification
because it did not provide written notice or opportunity to challenge declaration as required by Fed.
R. Evid. 902(11). Latman v Burdette (2004, CA9 Wash) 366 F3d 774, 52 CBC2d 639, CCH Bankr L
Rptr P 80087, amd (2004, CA9 Wash) 2004 US App LEXIS 11231 and reprinted as amd (2004, CA9
Wash) 2004 US App LEXIS 11212.
Because Arizona homestead provision, Ariz. Rev. Stat. § 33-1101(C), unequivocally required
debtors to reinvest proceeds from sale of their home in new homestead within 18 months in order to
maintain exempt status, debtors could not have reasonably relied on Trustee's failure to provide no-
tice that she had continued interest in proceeds as indication of permanent exemption. Gaughan v
Smith (In re Smith) (2006, BAP9) 342 BR 801.
59. Notice
District Court did not err in finding that trustee's letters to Chapter 7 debtors, informing them
that he was contemplating filing preferential and fraudulent transfer actions against them arising
from their construction of home on premises owned by debtor husband's father, and informing them
that they should file homestead declaration if they intended to claim residence as their homestead
and that adversary proceeding seeking to recover value of house under either 11 USCS § 542 or 363
did not give debtors sufficient notice of trustee's intention to object to claimed homestead which
would preclude dismissal of objection on timeliness grounds under Bankruptcy Rule 4003, because
there is nothing in complaint or correspondence that would put debtors on notice that trustee ob-
jected to their claimed homestead. In re Peterson (1990, CA8 Minn) 920 F2d 1389, 21 BCD 186,
24 CBC2d 525, CCH Bankr L Rptr P 73756.
Creditor's motion for relief from stay filed prior to first meeting of creditors operates as timely
objection to claim of exemptions even though creditor did not file objection to claim of exemptions
within time limit established by Bankruptcy Rule 4003(b) because: (1) debtor received actual notice
of creditor's objection; (2) debtor has not been prejudiced; (3) steps taken were sufficient to bring
issue before court in timely manner, with sufficient notice to interested parties; thus, creditor's ac-
tion satisfies intent of Bankruptcy Rule 4003 that exemption questions be resolved early in bank-
ruptcy proceedings. In re Starns (1985, SD Tex) 52 BR 405, 13 CBC2d 853.
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11 USCS § 522
Although "actual notice" may be substituted for formal objection to debtor's claimed exemption,
that notice should at least be timely under Bankruptcy Rule 4003. In re Velis (1989, BC DC NJ)
109 BR 64, affd (1991, DC NJ) 123 BR 497, 21 BCD 591, affd in part and revd in part on other
grounds (1991, CA3 NJ) 949 F2d 78, 22 BCD 414, 25 CBC2d 1362, 14 EBC 1922, CCH Bankr L
Rptr P 74329, reh den (1991, CA3) 1991 US App LEXIS 30075 and (criticized in Reitmeyer v
Gralka (In re Gralka) (1997, BC WD Pa) 204 BR 184, 37 CBC2d 490, CCH Bankr L Rptr P
77301).
Ohio Rev. Code Ann. § 2329.66(A)(12)(c) would ordinarily allow Ohio resident that was debtor
in Chapter 7 bankruptcy to claim exemption of up to $ 5,000 for personal injury settlement, but
debtor's claimed exemption under 11 USCS § 522(b)(2) was disallowed when trustee showed that
debtor acted in bad faith in reporting personal injury settlement and other assets as part of her estate.
In re Robinson (2003, BC SD Ohio) 292 BR 599.
Pursuant to interim Fed. R. Bankr. P. 4003(b), trustee's objection to debtor's claim of exemp-
tions must be delivered or mailed to debtors and debtor's attorney within same 30-day period as re-
quirement for filing; where trustee's objection is not delivered or mailed to appropriate parties
within 30 days after first meeting of creditors has concluded, trustee's objection to debtors' claim of
exemptions will be dismissed, and trustee will be barred from contesting validity of exemptions
claimed under 11 USCS § 522; thus, trustee's objection was dismissed because although he had filed
objection with court within 30 days after first creditor's meeting had concluded, as required under
interim Fed. R. Bankr. P. 4003(b), trustee waited until 87 days after meeting to mail copy of objec-
tion to debtors' attorney. In re Bush (2006, BC ED Wash) 346 BR 523.
60. Burden of proof
Debtor cannot premise objection to allowance of only half of homestead exemption on 11 USCS
§ 522(m) because section applies only to "joint case" and debtor's spouse and joint tenant is not also
filing petition. In re Robinson (1984, DC Colo) 44 BR 292.
Under 11 USCS § 522, claimed exemption enjoys presumption of validity, and trustee has bur-
den of challenging claim and burden of proof. In re Crump (1980, BC SD Fla) 2 BR 222, 5 BCD
Burden of proof is on objecting creditors, pursuant to Bankruptcy Rule 4003(c), to show that
items initially claimed exempt by Chapter 7 debtors are partnership property. In re Indvik (1990,
BC ND Iowa) 118 BR 993, 23 CBC2d 948.
Under Rule 4003, thirty-day period for objecting to exemptions commences at conclusion of
"first" first meeting of creditors and not at conclusion of any subsequent meetings that may be held
as consequence of conversion of case from one chapter to another; therefore, convening of subse-
quent meeting of creditors following conversion of debtor's case from Chapter 13 to Chapter 11 did
not trigger new thirty-day period for objecting to exemptions; this conclusion is bolstered by self-
executing language of 11 USCS § 522(l). In re Page (1999, BC WD Mich) 240 BR 548, 42 CBC2d
2013, CCH Bankr L Rptr P 78027 (criticized in In re Mims (2000, BC DC NJ) 249 BR 378) and
(criticized in Thurmond v Copeland (In re Copeland) (2004, BC ND Ga) 2004 Bankr LEXIS 1828).
As party objecting to Chapter 7 debtors' claim of exemption, trustee has burden of proving that
exemption is improper. Shelley v Kendall (In re Shelley) (1995, BAP9 Cal) 184 BR 356, 95 CDOS
Page 126
11 USCS § 522
5654, 95 Daily Journal DAR 9605, adopted, affd (1997, CA9) 110 F3d 68, reported at (1997, CA9)
109 F3d 639, 97 CDOS 2162, 97 Daily Journal DAR 4007.
61. Miscellaneous
Election of remedies doctrine did not bar bankruptcy trustee from further seeking to surcharge
debtors' wild card exemption of 11 USCS § 522(d)(5) based on trustee's previous election under 11
USCS § 727(a) to seek denial of discharge for misconduct because denial of discharge and subse-
quent surcharge were not repugnant and inconsistent remedies; trustee sought to deny discharge
based on her view that debtors had made material false statements on their bankruptcy schedules by
failing to account for sale of vehicle and boat two days before filing, and trustee also sought sur-
charge to protect creditors and to maximize value of bankruptcy estate. Latman v Burdette (2004,
CA9 Wash) 366 F3d 774, 52 CBC2d 639, CCH Bankr L Rptr P 80087, amd (2004, CA9 Wash)
2004 US App LEXIS 11231 and reprinted as amd (2004, CA9 Wash) 2004 US App LEXIS 11212.
Where siblings, who were referred to as creditors, objected to debtor's claimed state homestead
exemption under 11 USCS § 522(B), their claims were properly barred under principles of claim
preclusion due to their prior state court claims as they should have waged their constructive state
law claims in prior state court proceedings when they were ripe; further, claim preclusion was ap-
propriate as creditors waged state law objection to state law exemption. McGarry v Chew (In re
Chew) (2007, CA1 Mass) 496 F3d 11.
11 USCS § 522(b)(1) did not operate to bar Ch. 7 trustee from filing timely objections to two
debtors' claimed exemptions after their case was converted from Ch. 13 proceeding, even though
prior Ch. 13 trustee had not filed any objections and property had, therefore, automatically become
exempted under § 522(b)(1). 11 USCS § 348(f)(1)(A) specifically provided that any exempted prop-
erty that remained within debtor's possession or control was brought back into estate when debtors'
Ch. 13 case was converted, and thus that property was subject to Ch. 7 trustee's objections. Wiggins
v Frank (In re Wiggins) (2006, MD Pa) 341 BR 501.
Although Bankruptcy Court has power to render declaratory relief under Bankruptcy Code, trus-
tee's objection to debtors' claim of exempt property is not proper procedural vehicle to present such
claim, since, while such objection has been treated as contested matter under Bankruptcy Rules, it
has traditionally been viewed solely as method whereby trustee fulfills obligation to determine
whether exemptions are lawfully claimed and allowable; although correct procedural method of
presenting claim for declaratory relief in Bankruptcy Court has not been established, Bankruptcy
Court will require that traditional federal procedure be adhered to, and will require filing of appro-
priate complaint for declaratory relief from party requesting relief in matter. In re Spencer (1980,
BC SD Cal) 7 BR 458, 7 BCD 555.
Collateral attack on exemptions by means of application for appraisal outside period for objec-
tions is barred. In re Wiesner (1984, BC WD Wis) 39 BR 963.
Although debtor's filing chapter 11 petition was in bad faith where she knew that she had no in-
come and no assets to fund plan of reorganization, setting aside her claim of exemption of $
100,000 on homestead was too harsh sanction. In re Elia (1996, BC DC Ariz) 198 BR 588.
Where debtor broke into gas station that had been secured by trustee and sold property on hand
with intent to hinder and delay trustee, after being told that that debtor could not operate station, and
trustee had also objected to debtors' claim of exemption in gas station under 11 USCS § 522(1), gas
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11 USCS § 522
station was still property of estate and debtor's claim that debtor had right to retake possession of
station was meritless; debtor was denied discharge under 11 USCS § (a)(2)(B). Taunt v Patrick (In
re Patrick) (2003, BC ED Mich) 290 BR 306.
Trustee's objection to debtors' exemptions was overruled because married debtors were entitled
to claims of exemption under Fla. Const. art. X, § 4, since husband met requirement of domicile in
Florida, notwithstanding fact that he was not physically present for 180 days prior to Chapter 7 fil-
ing date, where he never established residence in any other state, at all times he considered himself
to be citizen of Florida, he was registered to vote there and never registered to vote in any other
state, his automobiles were registered in Florida, he held Florida driver's license, which was only
driver's license he had ever had, and wife stayed in North Carolina to take care of sick relative dur-
ing relevant time period. In re Dwyer (2004, BC MD Fla) 305 BR 582, 17 FLW Fed B 91.
Chapter 7 debtors could not claim unliquidated proceeds from personal injury lawsuits exempt
from their bankruptcy estates because Mo. Rev. Stat. § 513.427 and prior state case law were not
sufficient grounds for such exemptions; absent showing of specific state statutory provision, or fed-
eral provision other than 11 USCS § 522, that would allow for such exemption, trustee's objections
to exemption would be sustained. In re Mahony (2007, BC WD Mo) 374 BR 717.
Bankruptcy court lacked jurisdiction to consider trustee's exemption objection where no live
controversy existed in debtor's Chapter 13 case because (1) parties agreed that decision in appeal as
to merits of exemption order would have had no impact on debtor's Chapter 13 case, (2) bankruptcy
court erred in determining that 30-day objection period under Fed. R. Bankr. P. 4003(b) would not
have recommenced in event that debtor's Chapter 13 case was ever converted to case under Chapter
7, (3) there was split of authority on issue of how 30-day deadline set forth in Fed. R. Bankr. P.
4003(b) operated when Chapter 13 case was converted to Chapter 7, (4) Bankruptcy Appellate
Panel for Tenth Circuit adopted minority view and held that time to object to claimed exemptions
under Fed. R. Bankr. P. 4003(b) recommenced when Chapter 13 case was converted to Chapter 7,
and (5) accordingly, it was unnecessary for bankruptcy court to resolve exemption objection given
that, but for potential conversion of case to Chapter 7, its resolution would have had no effect in
Chapter 13 case. Campbell v Stewart (In re Campbell) (2004, BAP10) 313 BR 313, 52 CBC2d 1229
(criticized in In re Fonke (2005, BC SD Tex) 321 BR 199).
2.Time Limits for Objections
a.In General 62. Generally
Trustee may not contest validity of claimed exemption under 11 USCS § 522 after Bankruptcy
Rule 4003(b) 30-day period has expired, and no extension is sought, even though debtor had no
colorable basis for claiming exemption. Taylor v Freeland & Kronz (1992) 503 US 638, 118 L Ed
2d 280, 112 S Ct 1644, 92 CDOS 3363, 92 Daily Journal DAR 5260, 22 BCD 1396, 26 CBC2d 487,
CCH Bankr L Rptr P 74513A, 6 FLW Fed S 194 (criticized in In re Thompson (2001, BC WD Okla)
263 BR 134) and (criticized in In re Patterson (2002, BC DC Colo) 275 BR 578) and (criticized in
In re Lang (2002, BC SD Fla) 276 BR 716, 48 CBC2d 1291, 15 FLW Fed B 143) and (criticized in
Novak v Woodin (In re Woodin) (2003, BC DC Conn) 294 BR 436, 50 CBC2d 1109).
Burden is on trustee to object in timely manner to any improper exemption claims. Allen v
Green (In re Green) (1994, CA11 Ala) 31 F3d 1098, 31 CBC2d 1449, CCH Bankr L Rptr P 76098,
8 FLW Fed C 606.
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Bankruptcy Court was without jurisdiction to grant trustee extension of time to file objections to
Chapter 7 debtors' claimed exemptions after expiration of 30-day period prescribed by Bankruptcy
Rule 4003(b), although trustee filed motion for extension prior to expiration of 30-day period.
Stoulig v Traina (In re Stoulig) (1995, CA5 La) 45 F3d 957 (criticized in Block v Moss (In re Moss)
(2001, BC WD Mo) 258 BR 391).
Court order fixing deadline for filing of objections to Chapter 7 debtor's claim of exempt prop-
erty under 11 USCS § 522 is enforceable. In re Reich (1985, BC ED Mich) 54 BR 995, 13 BCD
953, 13 CBC2d 988.
Chapter 7 debtor cannot use 11 USCS § 522 and Bankruptcy Rule 4003 to acquire homestead
exemption when either or both judicial or consensual lien attaches prior to homestead exemption
right; hence, such judicial lien creditor does not have burden to object to homestead exemption
claim within time allowed under Bankruptcy Rule 4003 and may raise objection to exemption
claimed as defense to 11 USCS § 522(f) lien avoidance proceeding. In re Keenan (1989, BC DC
Colo) 106 BR 239, 6 Colo Bankr Ct Rep 303.
Despite fact that Bankruptcy Rule 1019(2) fails to retrigger time frame within which objection
to claim of exemption must be filed, Chapter 7 trustee should have opportunity to do so after con-
version from Chapter 13 when facts discovered warrant, provided that trustee files objection within
30 days of conclusion of creditors' meeting. In re Lyle (1994, BC MD Fla) 166 BR 972, 30 CBC2d
2102, 8 FLW Fed B 43, affd, cause dismd sub nom Weissman v Carr (In re Weissman) (1994, MD
Fla) 173 BR 235, 8 FLW Fed D 457 (criticized in DiBraccio v Ferretti (In re Ferretti) (1999, BC
SD Fla) 230 BR 883) and (criticized in In re Fonke (2005, BC SD Tex) 321 BR 199).
Under Fed. R. Bankr. P. 4003(b), where Chapter 7 debtor's first meeting of creditors under 11
USCS § 341 was adjourned and had never been concluded and closed, Chapter 7 trustee's objections
to exemptions were timely. Pineo v Bogan (In re Bogan) (2003, BC WD Pa) 302 BR 524.
Chapter 7 trustee's objections to debtor's exemptions were timely filed after case was converted
to case under Chapter 7 because bankruptcy case started in Chapter 11 with no creditors' committee
and debtor as only estate representative. In re Koss (2005, BC DC Mass) 319 BR 317.
If Fed. R. Bankr. P. 4003(b) were interpreted to create right to object to previously exempted
property, it would modify substantive right created for debtor by 11 USCS § 522(c), which elimi-
nates liability of exempt property for prepetition debts, by subjecting protected property to prepeti-
tion liability; such effect is prohibited because it would result in rule abridging substantive right
provided by Bankruptcy Code in violation of 28 USCS § 2075; accordingly, because statutory pro-
visions appearing to recommence objection deadline are ambiguous, and because any new deadline
would violate substantive right granted under Code, deadline to object to exemptions does not re-
commence upon conversion of case from chapter 7 to chapter 13. In re Fonke (2005, BC SD Tex)
321 BR 199.
Bankruptcy Court is persuaded that case-by-case approach is most appropriate to determine
what action is necessary to conclude meeting of creditors, and accordingly, to determine when time
limit begins for filing objections to exemptions, when meeting is continued to unspecified date be-
cause such approach affords trustee discretion in complicated cases yet restrains trustee's ability to
indefinitely postpone meeting of creditors; under this construction of rule, trustee may continue 11
USCS § 341(a) examination only while there are legitimate grounds for believing that further inves-
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11 USCS § 522
tigation will prove beneficial or when circumstances surrounding case require meeting be contin-
ued. In re Cherry (2006, BC SD Tex) 341 BR 581.
Fed. R. Bankr. P. 4003(b) provides new opportunity to file objection to exemptions whenever
new meeting of creditors is scheduled as consequence of case's conversion from one chapter to an-
other; where debtor converted his Chapter 13 case to case under Chapter 7 after his plan had been
confirmed, Chapter 7 trustee was not time-barred under Fed. R. Bankr. P. 4003(b) from filing ob-
jection within 30 days of § 341 meeting of creditors in Chapter 7 case. In re Brown (2007, BC WD
Mich) 375 BR 362.
It is well-established that debtor may claim property exempt pursuant to 11 USCS § 522(b) and
that, absent timely objection, property is exempt under § 522(l) regardless of validity of claimed
exemption; timeliness of objection to debtor's claim of exemption is not addressed in § 522(l) or
anywhere else in Bankruptcy Code, but rather, it is set forth in Fed. R. Bankr. P. 4003(b). Campbell
v Stewart (In re Campbell) (2004, BAP10) 313 BR 313, 52 CBC2d 1229 (criticized in In re Fonke
(2005, BC SD Tex) 321 BR 199).
63. Former Rule 403 time limits
Creditors are barred from seeking to satisfy state judgment on entireties property after debtor's
discharge when debtor claimed property as exempt under 11 USCS § 522 and creditors did not then
object--despite absence of any definite rule in interim period between 1978 Code and old Rule 403
and 1984 Code and new Rule 4003, which limited time for objection to exemptions--because
debtor's discharge is final determination of exempted property. In re Dembs (1985, CA6 Mich) 757
Fifteen-day time limit of former Bankruptcy Rule 403(c) for filing of objections to trustee's re-
port of allowance or disallowance of debtor's claims of exemptions does not survive passage of
Bankruptcy Code, because 11 USCS § 522(1) does not require any such trustee's report; rather, ob-
jection must be made within 30 days after creditor's meeting, under new Rule 4003. In re Dembs
(1985, CA6 Mich) 757 F2d 777, 13 BCD 592, 12 CBC2d 591, CCH Bankr L Rptr P 70330.
Trustee's filing of objection to debtor's exemption claim 18 days after he became qualified does
not require dismissal of objection because of procedural deficiency, notwithstanding provision of
Rule 403 that trustee must file report within 15 days after becoming qualified, since Bankruptcy
Code has done away with requirement of report, and since, even under former Bankruptcy Act, fail-
ure to file report disallowing debtor's claim of exemption did not constitute automatic allowance of
exemption. In re Cunningham (1980, BC DC Mass) 5 BR 709, 6 BCD 863, 2 CBC2d 1095.
11 USCS § 522 supersedes former Bankruptcy Rule 403(c), which specifies time within which
to object to debtor's claim of exemption, since § 522 does not specify time for filing objections to
debtor's claim of exemption. In re Kinney (1983, BC MD Fla) 30 BR 346.
64. Unclear claim of exemptions
Chapter 7 debtors' exemption in tax refund was properly claimed under Ohio exemption for tax
refunds where they made it clear on their schedules that they were each claiming exemption in tax
refund; however, debtors' attempt to claim $ 400 wild-card exemption which merely stated "other
property" did not sufficiently claim exemption, and thus strict time constraints of Taylor were not
applicable until schedules were clarified or trustee was otherwise put on notice of precise nature of
debtors' claim of exemption; once trustee had notice that debtor wife was claiming exemption in tax
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11 USCS § 522
refunds, as indicated in his application for appointment of attorney, trustee was required to object
within 30 days, pursuant to Bankruptcy Rule 4003, and having failed to do so, trustee is precluded
from challenging exemption. Gilbert v Zimmer (1993, BC SD Ohio) 154 BR 705.
Although debtors may exempt "disability income" in claimed amount of $ 1,000 per month due
to trustee's failure to timely object to such exemption, amounts in excess of $ 1,000 are not exempt,
where schedules do not contain any list of property which includes any reference to "lump sum" or
"annuity," and debtors' subsequent oral disclosure at creditors' meeting, that $ 1,000 listed as dis-
ability income came from annuity, purchased as result of settlement of personal injury lawsuit, and
that this annuity had at least one lump-sum component, did not put trustee on notice of precise na-
ture of debtors' claim of exemption and did not commence running of 30-day period under Bank-
ruptcy Rule 4003(b) in which trustee had to object. Foster v Moore (In re Moore) (1994, BC SD
Ohio) 175 BR 13, 32 CBC2d 840, CCH Bankr L Rptr P 76309.
65. Amended exemptions
Chapter 7 debtor's homestead exemption is limited to $ 45,000 under California as claimed in
debtor's original exemption schedule rather than his entire one-half interest in property as listed in
amended schedule, and trustee's failure to object to original schedule did not cause either entire
property or debtor's joint tenancy interest to become exempt, where trustee timely objected to broad
amended claim. Seror v Kahan (In re Kahan) (1994, CA9 Cal) 28 F3d 79, 94 CDOS 3587, 94 Daily
Journal DAR 6715, CCH Bankr L Rptr P 75890, amd (1994, CA9 Cal) 94 CDOS 5474 and re-
printed as amd (1994, CA9 Cal) 94 Daily Journal DAR 10031 and cert den (1995) 513 US 1150,
130 L Ed 2d 1067, 115 S Ct 1100.
Chapter 7 trustee's objection to debtor's amended homestead exemption claim was timely where
filed within 30 days of filing of amended schedule, although trustee did not object to debtor's initial
exemption schedule; although debtor contends that amended schedule did not reopen time to object
because it was merely clarification of original schedule, amended schedule differed significantly
from initial schedule by claiming higher exemption amount, and his initial exemption claim is to be
read as limited to "value claimed exempt," namely $ 45,000, rather than as broad exemption claim
that covered his undivided one-half interest in property; further, although debtor argues that his ini-
tial schedule claimed entire property as exempt, noting that encumbrances on property exceed stated
fair market value, his argument is premature, because bar against forced sale under California law
depends upon actual sale price, not value listed on his asset schedule, and argument is irrelevant to
amount of his homestead. Seror v Kahan (In re Kahan) (1994, CA9 Cal) 28 F3d 79, 94 CDOS
3587, 94 Daily Journal DAR 6715, CCH Bankr L Rptr P 75890, amd (1994, CA9 Cal) 94 CDOS
5474 and reprinted as amd (1994, CA9 Cal) 94 Daily Journal DAR 10031 and cert den (1995) 513
US 1150, 130 L Ed 2d 1067, 115 S Ct 1100.
As matter of course debtor should be allowed to amend his exemption claims under 11 USCS §
522 and Bankruptcy Rule 1019 to include newly found property if case has not been closed; then
any interested party can object to exemption amendment within 15 days from date amendment is
filed; if someone does object, court is to hold hearing on notice to all interested parties in order to
resolve issues raised on objections; if no one objects, amended exemption is allowed. Armstrong v
Hursman (1988, DC ND) 106 BR 625, 19 BCD 1495.
Creditor's objection to homestead exemption is not timely filed where creditor did not file
within 30 days after conclusion of meeting of creditors and did not timely seek extension; debtor's
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11 USCS § 522
amendment of exemption schedule to affect other property cannot increase time in which creditor
may object to homestead exemption. In re Gullickson (1984, BC WD Wis) 39 BR 922.
Creditors' objections to Chapter 7 debtors' amendments to claimed exemptions, filed after con-
version from Chapter 12, are not timely, regardless of whether Bankruptcy Rule 4003's 30-day time
period from amendment of exemption schedules applies or whether 30 days runs from Chapter 7
creditors' meeting, where creditors, although filing objections to original claimed exemptions, filed
no objections to additional items claimed; because creditors failed to object, additional items
claimed are exempt, despite creditors' arguments that because they objected to initial claims of ex-
emption on basis of ownership, debtors were on notice of their position; merely because creditors
have objected to exemption of original items claimed exempt on ownership grounds does not permit
them to ignore time limit for objecting to additional items not previously claimed. In re Indvik
(1990, BC ND Iowa) 118 BR 993, 23 CBC2d 948.
Trustee's objection to Chapter 7 debtor's exemption in real property cannot be sustained where
trustee failed to object within 30 days as required under Bankruptcy Rule 4003; although debtor
amended his schedules to exempt automobile, and trustee asserts that objection period did not start
to run until debtor filed amendment, claimed exemption for real property on amended schedule ap-
peared exactly as it had on original filing months earlier; amendment does not open all other claims
to objection. In re Hickman (1993, BC ND Ohio) 157 BR 336.
Because debtor asserted exemption of $ 853.95 in property, to which no objection was filed,
debtor's exemption were allowed in that amount. In re Morgan (2003, BC DC Md) 299 BR 118.
66. Particular objections
Late filing of objections to trustee's report of exempt property did not prevent consideration of
objections in light of physical incapacity of attorney, lack of surprise to trustee or prejudice to ad-
ministration of estate, and fact that litigated vehicle remained with bankrupt at all times. In re
Sisemore (1979, CA5 Tex) 602 F2d 742, 5 BCD 847, 21 CBC 215, CCH Bankr L Rptr P 67239.
Creditor cannot challenge grant of exemption in entireties property where it failed to object to
claimed exemption in Bankruptcy Court at appropriate time under 11 USCS § 522(l) and Bank-
ruptcy Rule 4003(b); furthermore, court cannot challenge Indiana entireties exemption statute as
unconstitutional where creditor failed to raise issue before Bankruptcy Court and noted it only in
perfunctory manner in District Court. In re Hunter (1992, CA7 Ind) 970 F2d 299, 27 CBC2d 536,
Creditor's failure to object to debtor's claim of exemption in annuity which was assigned to
creditor prepetition does not prevent creditor from challenging validity of exemption where assign-
ment was valid, and since debtor's lack of interest in assigned property does not establish proper
claim of exemption, there was no need for creditor to object--having transferred his property interest
to creditor, debtor cannot claim, as exempt, property that he does not own. First Bank v Sloma (In
re Sloma) (1995, CA11 Ala) 43 F3d 637.
Under Bankruptcy Rule 4003, Chapter 7 trustee cannot attack debtor wife's claimed good-faith
homestead exemption under 11 USCS § 522 in tax refund after discharge and 1 year after first meet-
ing of creditors where exemption appears to be valid under Virginia law. Bass v Hall (1987, WD
Va) 79 BR 653.
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11 USCS § 522
Trustee's application for appraisal of property debtors claim as exempt, although termed mere
request for clarification of statutory provisions governing value of exemptions, is in fact objection
to exemption claim, which, to be timely, must be filed within 15 day limit applicable to objections
to exemption claim which could have been made on basis of information reflected in debtors'
schedules, as provided by Rule 403, and such application is barred were not brought within such
time limit. In re Walsh (1980, BC DC Dist Col) 5 BR 239, 6 BCD 793, 2 CBC2d 815, CCH Bankr
L Rptr P 67970 (criticized in In re Richardson (2001, BC SD Ala) 280 BR 717).
Trustee's objection to debtor's homestead exemption is not timely filed where filing occurred af-
ter bar date set in notice to creditors and where trustee did not apply for extension of time; objection
on minute report is not appropriate procedure for perfecting formal objection to exemption; trustee
must make application to court and request hearing on issue so that final determination regarding
exemption can be entered. In re Thomas (1983, BC SD NY) 27 BR 367.
Debtor is entitled to homestead property exemption despite objections of creditor where order
setting meeting of creditors provides that any objection to debtor's claim of exemptions must be
filed within 15 days and no objection was filed for over 4 months so that objection was untimely
within meaning of 11 USCS § 522(l). In re Blakely (1983, BC WD La) 29 BR 354.
Trustee's objection to debtor's homestead exemption claim is timely filed even though objection
was not made until case was closed where debtor is clearly not entitled to exemption, where there is
no indication of improvements to property since closing of case or that debtor has otherwise detri-
mentally relied upon trustee's previous inaction, and where time bar recited in court order is ex-
pressly subject to extension. In re Penland (1983, BC ED Tenn) 34 BR 536, CCH Bankr L Rptr P
69486.
Trustee's untimely objection to Chapter 7 debtors' claimed exemption in ERISA-qualified re-
tirement plan will not be considered where Chapter 7 debtors acted in good faith in seeking to ex-
empt ERISA-qualified retirement plan because law was unclear at time of asserted exemption as to
whether ERISA preempted state exemption law, and Eight Circuit has subsequently determined that
ERISA does not preempt state-law exemption; furthermore, debtors have established their good-
faith belief that funds sought to be exempt were reasonably necessary for their support where debt-
ors have 3 dependent children, debtor husband is in need of continued expensive medical treat-
ments, debtors have no savings and their monthly expenses exceed their income by $ 300. In re
Esterlein (1992, BC ED Mo) 136 BR 212.
Chapter 7 Trustee properly continued 11 USCS § 341 meeting where he announced date of ad-
journed meeting less than 30 days after initial meeting, properly notified all parties and creditors of
adjournment 33 days after meeting, and concluded § 341 meeting within four months of initial
meeting; accordingly, Trustee's objection to debtor's claimed exemptions filed eight days after con-
clusion of § 341 meeting was timely. In re Cherry (2006, BC SD Tex) 341 BR 581.
Debtor waived his right to challenge Chapter 7 Trustee's allegedly improper continuation of 11
USCS § 341 meeting where neither debtor nor his attorney objected to continuance, and debtor co-
operated with Trustee during entire time; accordingly, Chapter 7 Trustee's objection to debtor's
claimed exemptions was timely. In re Cherry (2006, BC SD Tex) 341 BR 581.
In case converted from Chapter 13 to Chapter 7, exempted property is brought back into estate,
as long as it remained in possession of debtor or under his or her control; Chapter 7 trustee, is there-
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11 USCS § 522
fore. allowed to file objections thereto, until 30 days after conclusion of post-conversion 11 USCS §
341 meeting. In re Bace (2007, BC SD NY) 364 BR 166.
Where debtors failed to reinvest proceeds from sale of their home in new homestead within 18
months, as required under Ariz. Rev. Stat. § 33-1101(C), bankruptcy court incorrectly found that
Trustee failed to timely object to exemption or to take any action to preserve right to object. At time
petition was filed, claimed homestead exemption was valid and Trustee had no legal basis to object
to exemption. Gaughan v Smith (In re Smith) (2006, BAP9) 342 BR 801.
b.Effect of Failure to File Timely Objection 67. Generally
Bankruptcy trustee who, after debtor filed schedule of exempt property pursuant to 11 USCS §
522(l) and claimed exemption therein for proceeds of pending employment discrimination lawsuit,
failed to object to that claim within 30 days as required under Bankruptcy Rule 4003(b) is barred
from contesting validity of exemption in subsequent action against debtor's attorneys to recover
proceeds from settlement of lawsuit, regardless of whether debtor had colorable statutory basis for
claiming exemption. Taylor v Freeland & Kronz (1992) 503 US 638, 118 L Ed 2d 280, 112 S Ct
1644, 92 CDOS 3363, 92 Daily Journal DAR 5260, 22 BCD 1396, 26 CBC2d 487, CCH Bankr L
Rptr P 74513A, 6 FLW Fed S 194 (criticized in In re Thompson (2001, BC WD Okla) 263 BR 134)
and (criticized in In re Patterson (2002, BC DC Colo) 275 BR 578) and (criticized in In re Lang
(2002, BC SD Fla) 276 BR 716, 48 CBC2d 1291, 15 FLW Fed B 143) and (criticized in Novak v
Woodin (In re Woodin) (2003, BC DC Conn) 294 BR 436, 50 CBC2d 1109).
In analyzing whether untimely objections to claimed exemptions should be considered, court
must determine whether debtor had good-faith statutory basis for claimed exemption because such
approach best effectuates policies underlying Bankruptcy Rules 4003(b) and 9006(b)(3); in present
case, Chapter 7 debtors had good-faith statutory basis for claiming homestead exemption in resi-
dence situated on real property owned by debtor husband's father, even though Bankruptcy Court
eventually determined that debtors were required to own real property on which residence was lo-
cated, because plain language of statute does not require debtor to own land on which house is lo-
cated and modern cases exist granting homestead exemptions to individuals who did not own land
on which house was located; furthermore, trustee's actions indicate that, at best, he was unsure
whether to object to claimed exemption, and therefore, Bankruptcy Court properly struck trustee's
objection as untimely. In re Peterson (1990, CA8 Minn) 920 F2d 1389, 21 BCD 186, 24 CBC2d
Trustee is not entitled to turnover where trustee's objection to claimed exemptions filed more
than 30 days after first meeting of creditors was untimely under Bankruptcy Rule 4003(b) as was
turnover motion; where no objections to exemption are filed, property claimed as exempt is in fact
exempt, and this finalization of exemptions effectively accepts debtor's valuation of his or her inter-
est in property claimed as exempt within scope and dollar value of applicable exemption statute. In
re Okoinyan (1991, BC SD Fla) 135 BR 691.
Where debtors scheduled stock valued at $ 1.00 as exemption, trustee's failure to object to such
exemption did not revest title to stock in debtors by operation of law thirty days after conclusion of
meeting of creditors; rather, debtors' exemption interest in stock entitled them to not more than $
1.00. In re DeSoto (1995, BC DC Conn) 181 BR 704, 33 CBC2d 902, CCH Bankr L Rptr P 76521.
Trustee was not legally required to abandon property, where total amount of liens against it and
exemptions claimed by debtor exceed its scheduled value as of filing date, and trustee failed to
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11 USCS § 522
make timely objection to debtor's claimed exemptions, since trustee was under no obligation to ob-
ject, where there was appropriate statutory basis for exemption and amount claimed was within
statutory limits; debtor may compel abandonment if trustee should fail to sell property after reason-
able time that was of no benefit to estate. In re Heflin (1997, BC WD Mich) 215 BR 530, 38 CBC2d
1701.
Debtor cannot properly claim exemption in property while at same time denying any interest in
that property; Bankruptcy Courts have authority under 11 USCS § 105 (a) to consider untimely ex-
emption objection where necessary to prevent abuse of process, and thus could consider untimely
objection and disallow homestead exemption where debtor denied any interest in homestead prop-
erty. In re Montanez (1999, BC ED Mich) 233 BR 791, 41 CBC2d 1727.
Although personal injury claim scheduled by Chapter 13 debtors at value of one dollar but ulti-
mately settled for over $ 46,000 could have been property of estate pursuant to 11 USCS §§ 541 and
1306(a), settlement became exempt under Bankruptcy Rule 4003(b) and 11 USCS § 522(l) when no
party objected to debtors' claim of exemption within thirty days of § 341 meeting; settlement could
not be treated as "disposable income" under 11 USCS § 1325(b) because it was conclusively ex-
empted under § 522(l) and thus protected from liability to prepetition creditors pursuant to § 522(c).
In re Graham (2001, BC MD Fla) 258 BR 286, 45 CBC2d 905, 14 FLW Fed B 165 (criticized in In
re Launza (2005, BC ND Tex) 2005 Bankr LEXIS 1017).
Where debtors in bankruptcy listed market value of term life insurance policy as zero and
amount of their exemption as zero, this information did not sufficiently put Chapter 7 Trustee on
notice that they claimed exemption exceeding amount provided by state law; thus, trustee's failure
to initially object to claim of exemption did not bar trustee from attempting to administer asset be-
cause trustee had no basis to object to claim of exemption and debtors were entitled to claim life
insurance proceeds as exempt, but only as prescribed by applicable state law. Lekas v Mann (In re
Lekas) (2003, BC DC Ariz) 299 BR 597.
Where debtor declared certain property exempt and no party in interest objected, property be-
came exempt under 11 USCS § 522(l) and was no longer part of debtor's bankruptcy estate; there-
fore, property was no longer protected by automatic stay of 11 USCS § 362 or by discharge injunc-
tion, and creditor's attempt to impose constructive trust on that property was outside bankruptcy
court's jurisdiction. Cousatte v Lucas (In re Lucas) (2004, BC DC Kan) 307 BR 703, 52 CBC2d
982.
While 11 USCS § 522(l) conditions exemption on lack of objection, section sets no deadline for
when party must object; this deadline is instead supplied by Fed. R. Bankr. P. 4003(b). In re Fonke
(2005, BC SD Tex) 321 BR 199.
Assuming that attorney had standing to seek revocation of Chapter 13 debtor's discharge, attor-
ney's basis for revocation, that debtor's exemption was fraudulent, was untimely; attorney could
have objected to claimed exemption within time allowed under Fed. R. Bankr. P. 4003. In re Rodri-
gues (2007, BC DC Mass) 370 BR 467.
Trustee's failure to object to exemption does not waive estate's right to any sum in excess of al-
lowed limit; by simply agreeing to valid claim of exemption, estate is not forced to abandon valu-
able asset. In re Bronner (1992, BAP9 Cal) 135 BR 645, 22 BCD 953.
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11 USCS § 522
Fed. R. Bankr. P. 4003(b)'s 30-day period is strictly interpreted in conjunction with 11 USCS §
522(l) to bar any objections not made within that period of time. Campbell v Stewart (In re Camp-
bell) (2004, BAP10) 313 BR 313, 52 CBC2d 1229 (criticized in In re Fonke (2005, BC SD Tex) 321
BR 199).
68. Absolute right to exemption
Unless there is timely objection from party in interest, any property claimed as exempt by
debtor, regardless of whether claimed exemption is valid, is automatically exempt under 11 USCS §
522. In re Hyman (1992, CA9) 967 F2d 1316, 92 CDOS 5323, 92 Daily Journal DAR 8504, 23
Chapter 11 debtors' exemption in livestock and crops could not be denied in absence of timely
objection, even though exemption lacked legal basis in state law. FDIC v Coones (In re Coones)
(1993, CA10 Wyo) 996 F2d 250, CCH Bankr L Rptr P 75349, cert den (1994) 510 US 1041, 126 L
Ed 2d 651, 114 S Ct 684.
Failure to file timely objection to exemption is absolute bar to consideration of merits of objec-
tion; where trustee filed his objection to Chapter 7 debtor's exemption within 30 days of debtor's
filing of amended exempt property list, as required under Bankruptcy Rule 4003(b), court can con-
sider merits of debtor's supplemental schedule of exempt property. In re Yonikus (1993, CA7 Ill)
996 F2d 866, 29 CBC2d 114, CCH Bankr L Rptr P 75276 (criticized in In re Daniels (2001, BC ED
Mich) 270 BR 417) and (criticized in In re Robinson (2003, BC SD Ohio) 292 BR 599) and (criti-
cized in In re Rolland (2004, BC CD Cal) 317 BR 402).
Use of equitable powers, under 11 USCS § 105(a), to sustain creditor's belated objection to
Chapter 13 debtor's claimed exemption in potential wrongful garnishment cause of action would be
inconsistent with operation of 11 USCS § 522(l), Bankruptcy Rule 4003(b), and Supreme Court's
interpretation of these provisions, where creditor missed explicit 30-day deadline for filing objec-
tions, and § 105(a) "does not allow Bankruptcy Court to override explicit mandates of other sections
of Bankruptcy Code." Coie v Sadkin (In re Sadkin) (1994, CA5 Tex) 36 F3d 473, 32 CBC2d 575,
CCH Bankr L Rptr P 76188, reh den (1994, CA5 Tex) 1994 US App LEXIS 36124.
Even assuming that Chapter 7 debtor's claimed exemption of potential wrongful garnishment
cause of action is without colorable basis, striking debtor's exemption claim, pursuant to Bankruptcy
Rule 9011, would still not be warranted, where creditor's objection to claimed exemption was filed
well past 30-day deadline of Bankruptcy Rule 4003(b), since even if disputed exemption is wholly
without merit and devoid of statutory basis, claim is exempt under 11 USCS § 522(l) because of late
objection. Coie v Sadkin (In re Sadkin) (1994, CA5 Tex) 36 F3d 473, 32 CBC2d 575, CCH Bankr L
Rptr P 76188, reh den (1994, CA5 Tex) 1994 US App LEXIS 36124.
Chapter 7 trustee's motion to sell business equipment that debtor had claimed as exempt from
bankruptcy on her Schedule C was properly denied where she had listed equipment's full value on
her Schedule B, indicated her intent to exempt her entire interest in property by claiming exemption
of same full value on her Schedule C, and trustee had neither filed timely objection under Fed. R.
Bankr. P. 4003 nor requested extension before 30-day deadline had passed. In re Reilly (2008, CA3
Pa) 534 F3d 173.
Failure to challenge Chapter 13 debtor's claimed exemption of residence within 30 days allowed
by Bankruptcy Rule 4003(b) precluded any later challenge to exemption, including challenge based
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11 USCS § 522
on attempted distinction between existence and effect of exemption. Great Southern Co. v Allard
(1996, ND Ill) 202 BR 938 (criticized in In re Thompson (2001, BC WD Okla) 263 BR 134).
Bankruptcy Court will not examine merits of claimed exemption if objection thereto is not filed
within strict time constraints set forth in Bankruptcy Rules 4003 and 9006. In re Napier (1991, BC
SD Miss) 134 BR 1.
Exemption need not have apparent legal basis to overcome untimely objection under Bank-
ruptcy Rule 4003; even if exemption were required to have apparent legal basis, such requirement
would be satisfied in instant case because pension plan appears to qualify as exempt property under
11 USCS § 510(d)(10)(E) to extent reasonably necessary for support of debtor and any of his de-
pendents, and debtor's assertion that entire amount is reasonably necessary is not outside realm of
good faith, given that meaning of "reasonably necessary" is unsettled and subject to court's discre-
tion. In re Levitt (1992, BC DC Mass) 137 BR 881 (criticized in Smith v Kennedy (In re Smith)
(2000, CA9 Cal) 221 F3d 1101, 2000 CDOS 6581, 2000 Daily Journal DAR 8721, 36 BCD 150,
CCH Bankr L Rptr P 78240) and (criticized in Premier Capital, Inc. v DeCarolis (In re DeCarolis)
(2001, BAP1) 259 BR 467) and (criticized in In re Koss (2005, BC DC Mass) 319 BR 317).
Chapter 7 debtor's claim of exemption in 1984 in IRA fund to which trustee did not timely ob-
ject is allowed and Chapter 7 trustee is directed to return fund moneys, along with all interest accu-
mulated thereon, to debtor, but debtor's request for compound interest or other damages is denied
inasmuch as debtor had it in his power to precipitate this issue at time of trustee's seizure of account
but delayed until 1992 in taking effective action; applying "middle-ground" approach, which in-
volves determining whether debtor had good-faith statutory basis for claimed exemption, debtor's
assertion in 1984 that his IRA account was exempt did have colorable or good-faith basis in law ex-
isting at time, since opinion that IRAs are not exempt had not been rendered at that time, and due to
uncertainty of law regarding exemptibility of IRAs from property of estate prior to that decision,
trustee had burden to object to debtor's claim of exemption and obtain ruling thereon, but trustee not
only failed to object, he also took almost 2 years to take any adverse action with respect to property
claimed as exempt; prior to that time, debtor had no way of knowing that trustee took issue with
debtor's claim of exemption regarding IRA funds, and during that time debtor was entitled to make
his future plans on assumption that IRA account was exempt; even if trustee's action in seizing ac-
count moneys was equivalent to objection, objection was untimely. In re Riso (Chapter 7) (1994,
BC DC NH) 170 BR 484.
If bad faith and prejudice to creditors may be found in circumstances where debtor disputes that
asset is property of estate and thus fails to claim exemption, intentional concealment of asset raises
heightened concerns regarding good faith. In re Grogan (2003, BC DC Utah) 300 BR 804 (criti-
Debtors acted with intent to conceal proceeds of personal injury settlement that were bankruptcy
estate assets and debtors' conduct and amended schedules established debtors' bad faith; accord-
ingly, debtor's state exemption was disallowed and they were ordered to turnover settlement pro-
ceeds to trustee for distribution to estate. In re Grogan (2003, BC DC Utah) 300 BR 804 (criticized
in In re Rolland (2004, BC CD Cal) 317 BR 402).
Although amendments to bankruptcy schedules, pursuant to Fed. R. Bankr. P. 1009, to claim
exemption may be disallowed for either bad faith or prejudice to creditors, egregious facts of this
case resulted in clear and convincing evidence of both bad faith and prejudice to creditors of estate.
Page 137
11 USCS § 522
In re Grogan (2003, BC DC Utah) 300 BR 804 (criticized in In re Rolland (2004, BC CD Cal) 317
BR 402).
Bankruptcy court does not have authority to allow late objection to exemption, even if debtors
do not have valid legal basis for claiming exemption, nor can it extend time to object after it has ex-
pired; where trustee discovered that debtors' residence was owned by wife alone, and not husband
and wife jointly, after time for filing objections to exemptions had passed, trustee was not entitled to
recover overpayment of homestead exemption. In re Rolfes (2004, BC ED Tenn) 307 BR 59.
Trustee's objections to debtor's list of exempt property, which were not filed until after case was
converted from chapter 13 to chapter 7, were untimely under Fed. R. Bankr. P. 4003; because
debtor properly filed exemptions without objection, property was deemed exempt pursuant to 11
USCS § 522(l), vested in debtor, and was not recaptured by estate upon conversion. In re Fonke
(2005, BC SD Tex) 321 BR 199.
Where trustee did not timely file objection to debtor's exemptions, they were deemed allowed.
In re Stone (2005, BC ND Iowa) 329 BR 860.
Pursuant to 11 USCS § 522, debtor makes election as to whether to exempt property and
whether to use § 522(b)(2) or (b)(3); if the debtor "elects" § 522(b)(2) in Nevada, or any other opt-
out state, and if party timely objects, then he is denied exemption; but if there is no timely objection,
property is exempt even if there is no basis for claiming exemption. In re Virissimo (2005, BC DC
Nev) 332 BR 201, CCH Bankr L Rptr P 80385.
Although trustee did not timely object to bankruptcy debtors' claim of homestead exemption in
real property with mobile home in which debtors' resided, debtors were not entitled to exemption
even though objection to exemption was barred since property was not owned by debtors and thus
debtors had no interest in property which they attempted to exempt. In re LaVelle (2005, BC DC
Idaho) 350 BR 505.
Chapter 7 debtor was entitled to homestead exemption under N.Y. C.P.L.R. § 5206(a) because
no objection was filed with respect to debtor's claim of homestead exemption within time limits set
forth under Fed. R. Bankr. P. 4003(b). In re Novak (2006, BC ED NY) 354 BR 611.
Bankruptcy court could not approve Chapter 7 trustee's proposed settlement of selling debtors'
interest in property to property's co-owners where trustee failed to file objection to debtors' claimed
exemption in property within 30-day period established by Fed. R. Bankr. P. 4003(b), and thus,
property was no longer part of bankruptcy estate; court reached this result in spite of possibility that
debtors may have misstated property's value because if trustee had question as to accuracy of prop-
erty's valuation, she had duty to conduct timely investigation. Olson v Anderson (In re Anderson)
(2006, BC WD Mich) 357 BR 452.
Chapter 7 debtor's claimed exemption of child tax credit (CTC) was allowed because trustee
failed to object, despite having notice that debtor was claiming CTC portion of her federal income
tax refund as exempt, pursuant to Ohio Rev. Code Ann. § 2329.66(A)(11). In re Tatum-
Charlemagne (2006, BC ND Ohio) 368 BR 654.
Attempt by holder of judgment lien on property owned by Chapter 7 debtor and asserted by
debtor to be exempt homestead under state law to assert belated objection to amount claimed by
debtor was rejected because bankruptcy court lacked power to extend deadlines imposed by in 11
Page 138
11 USCS § 522
USCS § 522(i) or Fed. R. Bankr. P. 4003(b) where, as here, no objection was timely filed. In re
Caudill (2007, BC SD Tex) 58 CBC2d 1231.
Where Chapter 7 Trustee's objection to debtors' claimed exemption in their vehicle pursuant to
Wyo. Stat. Ann. § 1-20-106(a)(iv) (2006) was untimely under Fed. R. Bankr. P. 4003(b), 11 USCS §
522(g) could not "save" Trustee from failing to timely object where Trustee did not "avoid" lien;
instead, Trustee's counsel convinced creditor to release lien, and by pursuing this course, Trustee
failed to preserve lien for estate. Kuhnel v Russell (In re Kuhnel) (2006, BAP10) 346 BR 528.
Where Chapter 7 Trustee's objection to debtors' claimed exemption in their vehicle pursuant to
Wyo. Stat. Ann. § 1-20-106(a)(iv) (2006) was untimely under Fed. R. Bankr. P. 4003(b), Trustee's
reliance on In re Duncan as creating exception to time limit was misplaced; in that case, although
trustee had filed untimely objection to claimed exemption, trustee subsequently filed adversary pro-
ceeding claiming that debtor had fraudulently transferred asset in order to create exemption. Kuhnel
v Russell (In re Kuhnel) (2006, BAP10) 346 BR 528.
Although bankruptcy court applied improper standard in disapproving settlement agreement en-
tered into by trustee and owners of certain real property, under facts of case, court's use of wrong
standard was harmless error; court's conclusion that settlement was invalid because property was
exempt was correct. Olson v Anderson (In re Anderson) (2007, BAP6) 377 BR 865.
Debtor's disability insurance payments were exempt from creditors' garnishment because credi-
tors did not object to debtor's claimed exemption within 30-day period of Fed. R. Bankr. P. 4003(b);
further, under 11 USCS § 522(c), debtor's disability insurance payments were protected from gar-
nishment by creditors. Kancilia v Pearson (2008, Colo) 187 P3d 542.
69. Effect on avoiding liens
11 USCS § 522(g) is such that it precludes exemptions in recovered property even beyond time
limit imposed by Fed. R. Bankr. P. 4003(b); trustee acting under 11 USCS § 522(g) is not contesting
exemption per se, but rather is asserting fact that he or she has set aside debtor's voluntary transfer
(Fed. R. Bankr. P. 4003(b) is not defiled because unless and until trustee successfully avoids trans-
fer, debtor is entitled to exemption). Kuhnel v Kuhnel (In re Kuhnel) (2007, CA10) 495 F3d 1177,
Fed. R. Bankr. P. 4003(b) did not bar trustee's objection to debtors' claimed exemption in their
truck because debtors' exemption was precluded by 11 USCS § 522(g); 11 USCS § 522(g) objection
did not need to be timely because statute specifically prohibited debtor from claiming exemption in
voluntarily transferred property recovered by trustee. Kuhnel v Kuhnel (In re Kuhnel) (2007, CA10)
Even though scheduled exemption is effective under 11 USCS § 522(l) in absence of creditor's
timely objection, creditor is not prevented from arguing that debtor lacks substantive entitlement to
exemption under 11 USCS § 522(b) within context of motion to avoid lien under 11 USCS §
522(f)(1)(A). In re Chinosorn (2000, BC ND Ill) 243 BR 688 (criticized in In re Mukhi (2000, BC
ND Ill) 246 BR 859, CCH Bankr L Rptr P 78151) and revd, remanded (2000, ND Ill) 248 BR 324,
43 CBC2d 1786, CCH Bankr L Rptr P 78185 (criticized in In re Thompson (2001, BC WD Okla)
263 BR 134) and (criticized in In re Patterson (2002, BC DC Colo) 275 BR 578) and (criticized in
Schoonover v Karr (2002, SD Ill) 285 BR 695, CCH Bankr L Rptr P 78748) and (ovrld in part by In
re Schoonover (2003, CA7 Ill) 331 F3d 575, CCH Bankr L Rptr P 78862).
Page 139
11 USCS § 522
City was entitled to defend its lien avoidance action by challenging debtors' homestead exemp-
tion, even though City did not file timely exemption or provide excuse for its failure to do so, since
to hold otherwise would deny City due process, defeat settled expectations of secured creditors, and
foster unnecessary litigation over exemptions. In re Patterson (2002, BC DC Colo) 275 BR 578.
11 USCS § 541(d) did not prevent trustee from exercising his avoidance powers under 11 USCS
§ 544 to cut off unperfected lien against vehicle, and trustee, as hypothetical lien creditor, would
prevail under state law against equitable, unperfected lien claimant; further, as between debtor and
trustee, trustee must prevail under 11 USCS § 522, since property that was voluntarily transferred by
debtor, recovered by trustee, and preserved under 11 USCS § 551 cannot be exempted; thus, where
trustee sold vehicle for less than creditor's claim, no exempt portion remained in proceeds from sale
of vehicle, and avoided purchase money security interest was preserved for benefit of estate. Lewis
v Hare (In re Richards) (2002, BC DC Colo) 275 BR 586, 39 BCD 101.
Chapter 13 debtor had no standing to assert avoidance powers under fraudulent transfer provi-
sions of 11 USCS § 548(a) and, since property was commercial, foreclosure sale purchasers could
still use 11 USCS § 522(l) to challenge validity of exemption in opposition to avoidance under 11
USCS § 522(h), even if time for filing objections to debtor's claim of exemption had passed under
11 USCS § 522(l) and Fed. R. Bankr. P. 4003(b). Ryker v Current (In re Ryker) (2004, BC DC NJ)
315 BR 664.
Debtors' motion to reopen their Chapter 7 case to assert avoidance of lien in farm equipment
under Iowa Code § 627.6 (11) was granted, over objections of one of creditors, because debtors' at-
torney had set forth some reasons for not addressing issue in timely manner, it was undisputed that
lien avoidance under Iowa Code § 627.6(11) would have been appropriate if it had been timely, and
creditor had not established that it was prejudiced by delay when it had not made any attempts to
recover equipment. Vaske (2006, BC ND Iowa) 339 BR 489.
While no objections had been filed to debtor's claim of homestead exemption and it was thus
exempt under 11 USCS § 522(l), because debtor had waited 17 months to file his motion to partially
avoid lien to assert his homestead exemption, and appeared to have side deal with foreclosure sale
buyer to detriment of creditor, motion was denied as precluded by laches. In re Kelly (2006, BC ND
Ill) 350 BR 778.
E.Fraudulent Conduct as Bar to Exemption
Surcharge against debtors' wild card exemption of 11 USCS § 522(d)(5) did not exceed bank-
ruptcy court's equitable powers because it prevented what would otherwise have been fraud on
bankruptcy court and creditors as result of debtors' non-disclosure of monies that should have been
listed on bankruptcy schedules and available for their creditors. Latman v Burdette (2004, CA9
Wash) 366 F3d 774, 52 CBC2d 639, CCH Bankr L Rptr P 80087, amd (2004, CA9 Wash) 2004 US
App LEXIS 11231 and reprinted as amd (2004, CA9 Wash) 2004 US App LEXIS 11212.
Debtor may not claim as exempt property which he knowingly concealed and failed to disclose
to trustee, even if property would have been exempt had it been properly scheduled and claimed.
Sheehan v Lincoln Nat'l Life (2001, ND W Va) 257 BR 449, affd (2002, CA4 W Va) 283 F3d 199,
Page 140
11 USCS § 522
Fraudulent concealment of asset may result in forfeiture of debtor's right to exempt asset from
bankruptcy estate. Sheehan v Lincoln Nat'l Life (2001, ND W Va) 257 BR 449, affd (2002, CA4 W
Va) 283 F3d 199, CCH Bankr L Rptr P 78614.
Issue of debtor's intent is question of fact or inference to be drawn by bankruptcy court from
facts; bad faith is generally determined from totality of circumstances. Sheehan v Lincoln Nat'l Life
(2001, ND W Va) 257 BR 449, affd (2002, CA4 W Va) 283 F3d 199, CCH Bankr L Rptr P 78614.
Bankruptcy court will deny and dismiss trustee's request for denial of exemption under 11 USCS
§ 522(d) where alleged actual fraud is unrelated to exemptions. In re Ayers (1982, BC MD Tenn)
25 BR 762.
Assets concealed by debtor, and property recovered by trustee which was fraudulently conveyed
by debtor are barred from exemption under 11 USCS § 522. In re Roberts (1987, BC WD Pa) 81
BR 354.
Where, as here, state law does not provide for denial of homestead exemption for fraudulent
conduct, including arson, appropriate sanction is denial of discharge; thus, Chapter 7 debtor may
claim Virginia homestead exemption in proceeds from sale of debtor's homestead property which is
subject to judgment lien in favor of insurer arising from debtor's arson, where real property which is
subject of claimed exemption is not property which insurer insured or property which was subject of
arson by debtor. Rockingham Mut. Ins. Co. v Beahm (In re Beahm) (1995, BC WD Va) 177 BR 839,
7 Fourth Cir & Dist Col Bankr Ct Rep 522.
Chapter 7 debtor did not conceal his age discrimination cause of action so as to bar claiming
proceeds of judgment as exempt where debtor testified he did not know cause of action should be
listed as asset and that his bankruptcy attorney knew about lawsuit from "day one" and where, when
trustee objected, debtor amended his preconversion Chapter 13 plan to provide for submission of
nonexempt amount of any recovery to Chapter 13 trustee for distribution to creditors. In re Williams
(1996, BC MD Ga) 197 BR 398.
Unpublished: Trustee need not have gotten court order avoiding transfer nor even have filed
formal adversary proceeding to recover property in question, but some action to recover property is
necessary before 11 USCS § 522(g) will operate to deny debtor exemption in voluntarily transferred
but reconveyed property. Silagy v Marzilli (In re Hunter) (2008, BC ND Ohio) 2008 Bankr LEXIS
1510.
71. Under particular circumstances
Bankruptcy Court did not err in concluding that Chapter 7 debtor fraudulently concealed exis-
tence of workers' compensation award, and debtor's protest of innocent misunderstanding is insuffi-
cient to overturn such clear factual analysis by Bankruptcy Court, and therefore exemption was
properly denied. In re Yonikus (1993, CA7 Ill) 996 F2d 866, 29 CBC2d 114, CCH Bankr L Rptr P
75276 (criticized in In re Daniels (2001, BC ED Mich) 270 BR 417) and (criticized in In re Robin-
son (2003, BC SD Ohio) 292 BR 599) and (criticized in In re Rolland (2004, BC CD Cal) 317 BR
402).
Chapter 13 debtor may not claim exemption under 11 USCS § 522 of his interest in entireties
property which was transferred by debtor and his nondebtor spouse 5 days before bankruptcy be-
Page 141
11 USCS § 522
cause (1) debtor's interest was extinguished 5 days before filing by transfer, (2) property was delib-
erately transferred in attempt to avoid consequences of bankruptcy, and (3) equitable principles
should estop debtor from claiming exemption. In re Rotunda (1985, WD Pa) 55 BR 386.
Debtor's action to invalidate judgment and promissory note, brought in to delay execution on
creditor's judgment lien, in order to gain time to sell property and repay debt, does not constitute
fraudulent act barring debtors from subsequently claiming exemption in homestead where done
without intent to defraud creditors. In re Natale (1980, BC ED Pa) 5 BR 454, 6 BCD 784, 2 CBC2d
Debtor's entitlement to a $ 10,000 exemption under state law entitles debtor to exempt $
3,052.15 on deposit in bank account where objecting creditor does not prove funds in question were
fruit or instrumentality of crime or that debtor fraudulently concealed funds both before and after
bankruptcy filing. In re Hanson (1984, BC DC ND) 41 BR 775.
Funds on deposit in bank account which are last remaining funds traceable to sale of debtors'
home are not exemptible under 11 USCS § 522(g) because they were obtained by fraud in that debt-
ors represented to creditors that they would not receive any proceeds from sale of their home. In re
Bidlofsky (1985, BC ED Mich) 57 BR 883.
Judgment creditor's allegations that debtor has fraudulently failed to schedule certain property in
which creditor claims security interest is no basis for refusing avoidance, under 11 USCS §
522(f)(1), of creditor's judgment liens on debtor's homestead. In re Magosin (1987, BC ED Pa) 75
BR 545, 16 BCD 476.
Although debtors' misleading and fraudulent actions in misidentifying size of their homestead
and later partitioning tract containing residence in such manner as to render nonexempt portion val-
ueless could result in total denial of exemption, debtors will be allowed to claim fair share of pro-
ceeds from sale of their residence since issues in this case have not been directly addressed by court
construing Florida law and one court, in dicta, indicated that debtor had great leeway in selecting
shape of his homestead. In re Englander (1992, BC MD Fla) 156 BR 862, affd (1996, CA11 Fla)
95 F3d 1028, 10 FLW Fed C 399, cert den (1997) 520 US 1186, 137 L Ed 2d 682, 117 S Ct 1469.
Chapter 7 debtor's sale of vehicle and use of proceeds to make deposit on lease of new vehicle
was not with intent of converting nonexempt property into exempt property or in fraud of creditors
where debtor's exemption in motor vehicle remained same and estate was not diminished by trans-
action. In re Ayre (1993, BC CD Ill) 158 BR 123.
Exemption under 11 USCS § 522 was disallowed for failure to disclose true value of asset at fil-
ing or to amend debtor's schedules to accurately reflect value of judgment after reasonable opportu-
nity for further investigation or discovery on part of his counsel. In re Kelley (2000, BC ND Ala)
254 BR 44.
Chapter 13 debtor's original Chapter 7 schedules stated he owned no real property, but after
trustee inquired as to any transfers of assets, debtor disclosed his interest in 80 acres, which he later
valued at $ 15,000 and amended his schedules to claim as exempt under 11 USCS § 522(d); bank-
ruptcy court held that due to debtor's fraudulent concealment of real property, exemption in acreage
was denied, and amendment of schedule under Fed. R. Bankr. P. 1009(a), to claim exemption, was
also denied. In re Terry (2002, BC WD Ark) 279 BR 240.
Page 142
11 USCS § 522
Debtors' failure to disclose $ 10,000 tax refund as asset was intentional concealment, not just
oversight, given it was their only non-exempt asset, they had filed their tax return prior to their
bankruptcy petition and were aware of refund, and they spent money prior to Chapter 7 trustee's
discovering asset; accordingly, asset should be turned over to trustee completely and debtors denied
any exemption in asset. In re Colvin (2003, BC ED Mich) 288 BR 477, 91 AFTR 2d 611.
Bankruptcy court denied any and all exemptions in estate because of debtor's embezzlement
from debtor's employer during pendency of case; embezzlement was exceptional circumstance in
which bad faith of debtor was clearly demonstrated and allowance of any exemption in known
property of estate would constitute further abuse of bankruptcy process. Pineo v Bogan (In re
Bogan) (2003, BC WD Pa) 302 BR 524.
11 USCS § 105 allowed bankruptcy court to disallow debtor's exemption on account of any post
petition bad acts provided trustee could prove them. In re Koss (2005, BC DC Mass) 319 BR 317.
Where bankruptcy debtors sold their house and disclosed sale and claimed portion of sale pro-
ceeds as exempt, but debtors amended their filings to disclose additional proceeds which debtors
also claimed as exempt after trustee demanded more information concerning proceeds, debtors' bad
faith concealment of additional proceeds precluded their claim of exemption. In re Salvucci (2006,
BC DC Mass) 339 BR 279.
Chapter 7 debtors were required to turn over personal property that they failed to initially dis-
close in their schedules and were denied exemption in property, even though property would have
otherwise been exempt, because debtors acted in bad faith by waiting nine months after filing of
original petition to amend their schedules to add unscheduled assets, despite fact that they were
aware of omissions on filing date. In re Evinger (2006, BC WD Ark) 354 BR 850.
Where Chapter 7 trustee claimed that debtor's purchase from his company of two parcels of
property, which were titled with he and his wife as tenants by entireties, were fraudulent transfers,
claim was rejected because properties were purchased with money borrowed using exempt property
as collateral, and, alternatively, there was no showing that company was insolvent at time of trans-
fer, that purchase price was inadequate, or that purchase price somehow ended back up in debtor's
pocket. In re Mathews (2007, BC MD Fla) 360 BR 732, 20 FLW Fed B 249.
Committee's objection under 11 USCS § 522(o) to homestead exemption was sustained because
debtor used proceeds from May 2006 sale of his homestead, which were nonexempt under Tex.
Prop. Code Ann. § 41.001(c), to make property improvements within 10 years of filing for bank-
ruptcy in July 2006; facts that debtor was only person occupying homestead, did not disclose im-
provements on his statement of financial affairs, concealed tax refund check, and was insolvent
were some of 13 badges of fraud showing that he intended to deplete proceeds to prevent committee
from recovering on its judgment obtained five months before he began improvements. In re Presto
(2007, BC SD Tex) 376 BR 554.
Objection under 11 USCS § 522(q)(1)(B)(ii) to debtor's homestead exemption was sustained be-
cause debtor's ex-wife was awarded half of any potential tax refund, Tex. Fam. Code Ann. §
9.011(b) created fiduciary duty and constructive trust upon debtor's receipt of tax refund proceeds,
and debtor intentionally concealed proceeds by failing to give ex-wife her half at time of petition
date. In re Presto (2007, BC SD Tex) 376 BR 554.
Page 143
11 USCS § 522
Where Chapter 7 debtor purchased home with his wife as tenants by entireties, debtor was enti-
tled to exempt his interest under state law and 11 USCS § 522(b)(3)(B), and § 522(o) did not apply
to limit debtor's exemption due to fraud because, by its own provisions, § 522(o) did not address
exemption claims asserted under § 522(b)(3)(B). Dillworth v Hinton (In re Hinton) (2007, BC MD
Fla) 378 BR 371, 21 FLW Fed B 40.
Where debtor had not disclosed pre-petition workers' compensation claim and had never in-
formed her bankruptcy counsel, special counsel, or trustee of settlement, settlement was not exempt
under 11 USCS § 522 or state law. Wood v Premier Capital, Inc. (In re Wood) (2003, BAP1) 291
Unpublished: In case in which Chapter 7 debtors had engaged in deception and active conceal-
ment of value of their real property, which constituted bad faith, appellate court affirmed district
court's affirmation of bankruptcy court's denial of debtors' motion to amend their exemptions to
claim state exemptions instead of federal exemptions they had claimed under Bankruptcy Code. In
re Unruh (2008, CA5 Tex) 2008 US App LEXIS 2616.
Unpublished: Where elderly Chapter 7 debtor and his wife repeatedly changed their positions as
to whether they would agree to sell their interests in their home or obtain refinancing and buy out
estate's interest, surcharge against debtor's homestead exemption for attorneys' fees and costs in-
curred due to delay was not warranted because, although debtor's actions did not speak well of
debtor and were unacceptable level of game playing and delay, they were still not within scope of
express fraud that would warrant surcharge. In re Sinclair (2006, BC CD Cal) 2006 Bankr LEXIS 9.
Unpublished: Where Chapter 7 trustee claimed that debtor lost right to exempt certain otherwise
exempt funds when she fraudulently transferred funds to her sister-in-law, court could not categori-
cally hold that debtor retained right to exempt monies because nothing in record indicated when
monies were fully reconveyed to debtor, nor when sister-in-law or debtor first became aware that
trustee was preparing to bring action to avoid transfer. Silagy v Marzilli (In re Hunter) (2008, BC
ND Ohio) 2008 Bankr LEXIS 1510.
2.Conversion of Nonexempt Assets Into Exempt Assets 72. Generally
Chapter 7 debtors may claim exemptions under 11 USCS § 522, because debtor's conversion of
nonexempt property to exempt property on eve of bankruptcy for express purpose of placing that
property beyond reach of creditors, without more, will not deprive debtor of exemption to which he
otherwise would be entitled. Hanson v First Nat'l Bank (1988, CA8 SD) 848 F2d 866, 17 BCD
Chapter 7 debtors may claim exemption under 11 USCS § 522, because absent extrinsic evi-
dence of fraud, debtor's mere conversion of nonexempt property to exempt property, even while in-
solvent, is not evidence of fraudulent intent as to creditors. Hanson v First Nat'l Bank (1988, CA8
SD) 848 F2d 866, 17 BCD 1195, 19 CBC2d 247, CCH Bankr L Rptr P 72317.
Under 11 USCS § 522(b)(2), conversion of nonexempt property for purpose of placing property
out of reach of creditors, without more, will not deprive debtor of exemption to which he would
otherwise be entitled. Norwest Bank Nebraska, N.A. v Tveten (1988, CA8 Minn) 848 F2d 871, 17
BCD 1205, 19 CBC2d 287, CCH Bankr L Rptr P 72316, reh den, en banc (1988, CA8) 1988 US
Page 144
11 USCS § 522
App LEXIS 11321 and (criticized in Murphey v Crater (In re Crater) (2002, BC DC Ariz) 286 BR
756, 49 CBC2d 1829).
Desire to convert assets into exempt forms by itself does not constitute fraud, but rather, extrin-
sic evidence of fraudulent intent is required to establish fraud. In re Johnson (1989, CA8 Minn) 880
Indicia of fraud necessary to find fraudulent use of exemption include conduct intentionally de-
signed materially to mislead or deceive creditors about debtors' position or to use credit to buy ex-
empt property, converting very great amount of property, or existence of conveyances for less than
adequate consideration; finding of fraudulent intent, or lack thereof, is crucial in determining
whether conversion of nonexempt property on eve of bankruptcy is ground for setting aside exemp-
tion--extrinsic evidence of fraud must exist. In re Armstrong (1991, CA8 Neb) 931 F2d 1233, 21
BCD 1262, CCH Bankr L Rptr P 73927, reh, en banc, den (1991, CA8) 1991 US App LEXIS 11174
and reh den (1991, CA8) 1991 US App LEXIS 12276.
Chapter 7 debtors' exemption is properly upheld under 11 USCS § 522, despite allegation that
debtors converted nonexempt assets into exempt assets on eve of bankruptcy, where there is no ex-
trinsic evidence of fraud as transfers were made for adequate consideration. In re Armstrong (1991,
CA8 Neb) 931 F2d 1233, 21 BCD 1262, CCH Bankr L Rptr P 73927, reh, en banc, den (1991, CA8)
1991 US App LEXIS 11174 and reh den (1991, CA8) 1991 US App LEXIS 12276.
Chapter 7 debtors' exemption will be upheld under 11 USCS § 522, despite contention that debt-
ors transferred property precisely for purpose of taking advantage of statutory exemption, because if
transfer is legitimate under established state law, intent to effect such transfer is merely intent to ex-
ercise valid right, rather than intent to defraud. In re Armstrong (1991, CA8 Neb) 931 F2d 1233, 21
BCD 1262, CCH Bankr L Rptr P 73927, reh, en banc, den (1991, CA8) 1991 US App LEXIS 11174
and reh den (1991, CA8) 1991 US App LEXIS 12276.
Under Bankruptcy Code, as under former Bankruptcy Act, debtor is permitted to convert nonex-
empt property into exempt property before filing bankruptcy petition, and such eleventh-hour prac-
tice is not fraudulent as to creditors, absent more than such act itself, and permits debtor to make
full use of exemptions to which he is entitled. In re Ford (1980, BC DC Md) 3 BR 559, 6 BCD 202,
1 CBC2d 840, CCH Bankr L Rptr P 67429, affd (1981, CA4 Md) 638 F2d 14, 3 CBC2d 549, CCH
Bankr L Rptr P 67768 and (superseded by statute as stated in In re Bell-Breslin (2002, BC DC Md)
283 BR 834) and (criticized in In re Spears (2004, BC WD Mich) 308 BR 793).
Debtor does not act in bad faith when converting nonexempt assets to exempt assets on eve of
filing bankruptcy petition. In re James (1983, BC DC SD) 31 BR 67.
Debtor may convert non-exempt property into exempt property on eve of bankruptcy without
necessarily committing fraud upon his creditors; such conversions are only fraudulent to extent that
exempt property was obtained as result of fraudulent conduct. In re Saunders (1984, BC ND Ohio)
37 BR 766.
Under 11 USCS § 522 it is perfectly proper and indeed may be good planning, for debtor to
convert non-exempt assets into those which are exempt, even on eve of bankruptcy; however, under
11 USCS § 548(a), same transfer may be avoidable if specified conditions are met. In re Oliver
(1984, BC DC Mass) 38 BR 407.
Page 145
11 USCS § 522
Prebankruptcy transfer of property from nonexempt to exempt status is not badge of fraud and is
not automatically prohibited; such transfer is approved method of prebankruptcy planning. In re
Levine (1984, BC SD Fla) 40 BR 76, 10 CBC2d 876.
Mere act of debtor of converting property from nonexempt to exempt status immediately prior
to bankruptcy, without more, is neither badge of fraud nor prohibited by Bankruptcy Code; thus,
such conversion of assets does not affect debtor's right to exemptions under 11 USCS § 522. In re
Blum (1984, BC SD Fla) 41 BR 816, 12 BCD 259, CCH Bankr L Rptr P 70009.
Despite fact that debtors made numerous transfers of nonexempt property just prior to filing and
purchased exempt property with cash from these transfers, objector to exemptions has burden of
proving fraudulent intent; legislative history of 11 USCS § 522 indicates that such transfers do not
by themselves constitute fraud. In re Butts (1984, BC DC ND) 45 BR 34, 12 BCD 633.
Debtor may convert nonexempt property into exempt property on eve of bankruptcy under 11
USCS § 522, as long as it is not done with intent to conceal assets or hinder, delay, or defraud credi-
tors. In re Holt (1988, BC WD Ark) 84 BR 991, affd (1988, WD Ark) 97 BR 997, affd (1990, CA8
Ark) 894 F2d 1005, 22 CBC2d 337, CCH Bankr L Rptr P 73239.
Generally, debtor's conversion of nonexempt property to exempt property on eve of bankruptcy
is not fraudulent per se; extrinsic evidence of fraud must be present to invalidate exemption. In re
Summers (1988, BC DC Or) 85 BR 121.
Under 11 USCS § 522, Chapter 7 debtor may convert his non-exempt property into exempt
property. In re Brown (1988, BC DC Hawaii) 88 BR 280, 17 BCD 1296, 19 CBC2d 387 (criticized
in Deglin v Keobapha (In re Keobapha) (2002, BC DC Conn) 279 BR 49, 39 BCD 182, 48 CBC2d
485).
Preponderance of evidence is appropriate standard of review in action brought under 11 USCS §
522(o). In re Lacounte (2005, BC DC Mont) 342 BR 809, CCH Bankr L Rptr P 80653.
Preponderance of evidence is appropriate standard of review in action brought under 11 USCS §
522(o); because Congress elected to draft 11 USCS § 522(o) with language that is identical to that
used in 11 USCS § 548(a)(1)(A) and § 727(a)(2), case law under 11 USCS § 548(a)(1)(A) and §
727(a)(2) provides instructive guidance with respect to 11 USCS § 522(o). In re Lacounte (2005,
BC DC Mont) 342 BR 809, CCH Bankr L Rptr P 80653.
73. Homestead exemption

Where there was no intent to defraud in Chapter 7 debtor's payoff of mortgages on house and
dissolution lien in favor of his ex-wife, debtor is entitled to homestead exemption and amount of
money involved in this exemption is irrelevant to determination of whether debtor intended to de-
fraud his creditors, as there is no dollar limit on homesteads in Minnesota; however, remand is nec-
essary for Bankruptcy Court to determine with respect to exemptions for musical instruments and
life insurance whether facts, including amounts involved, show fraud warranting denial of discharge
under 11 USCS § 727(a)(4) in conversion of nonexempt assets into these exempt items. In re John-
son (1989, CA8 Minn) 880 F2d 78, 19 BCD 1033, 21 CBC2d 498, CCH Bankr L Rptr P 73028.
Bankruptcy court's finding of sufficient extrinsic evidence of intent to defraud based on "badges
of fraud" approach was not clearly erroneous, where ninety-year-old debtor, who had been recently
named defendant in personal injury suit with claimed damages well in excess of his liability insur-
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ance, converted his non-exempt property into exempt property in form of house valued at $
135,000, into which he moved from assisted care facility, in radical departure from his previous
lifestyle, after which he immediately filed bankruptcy. Jensen v Dietz (In re Sholdan) (2000, CA8
Minn) 217 F3d 1006, CCH Bankr L Rptr P 78216 (criticized in Murphey v Crater (In re Crater)
(2002, BC DC Ariz) 286 BR 756, 49 CBC2d 1829).
Where Chapter 13 debtor is entitled under Texas state exemption provisions to claim as home-
stead some portion of property sought to be recovered by trustee as fraudulent conveyance, trustee
may not enforce equitable lien on property in spite of fact that debtor's machinations in transferring
property between himself and corporation in which he is sole shareholder may have been prompted
by desire to remove assets from execution by creditors. In re Moody (1987, SD Tex) 77 BR 566,
affd (1989, CA5 Tex) 862 F2d 1194, CCH Bankr L Rptr P 72633, reh den (1989, CA5) 1989 US
App LEXIS 3526 and cert den (1992) 503 US 960, 118 L Ed 2d 209, 112 S Ct 1562.
Pursuant to 11 USCS § 522(d), trustee's objections to debtors' claim of homestead exemption
would be sustained and debtors' motion to dismiss denied where debtors attempted to shift their po-
sition from nonexempt to exempt and from federal to state by unseasonably filed documents and
amendments after administration of estate was well under way in order to circumvent trustee's ad-
ministration and liquidation of estate for benefit of all creditors. In re Myers (1982, BC ED Cal) 17
Debtor's prepetition liquidation of savings account to satisfy mortgages on property claimed in
homestead exemption under 11 USCS § 522(b)(2) is not fraudulent because both Minnesota law and
Bankruptcy Code allow conversion of non-exempt to exempt property as long as debtors in fact use
property as homestead, there was fair consideration, assets converted were nonbusiness assets, and
trustee can prove no actual fraud. In re Olson (1984, BC DC Minn) 45 BR 501, 11 CBC2d 1077.
Under appropriate circumstances, constructive trust may be imposed as lien upon homestead
property where fraudulently obtained proceeds can be traced and can be shown to have been used in
purchase or construction of homestead property, notwithstanding homestead character of property;
however, relief in such cases is limited to funds actually traced and does not preclude debtor from
claiming as exempt remaining untainted equity. In re Mart (1987, BC SD Fla) 75 BR 808.
Chapter 7 debtors' conduct in converting non-exempt assets to exempt asset via paydown on
principal amount of their mortgage on homestead property on attorney's advice for admitted pur-
poses of removing property from reach of creditors was improper and trustee will be granted equi-
table lien on debtors' homestead to secure payment of sum of $ 21,000 which was amount con-
verted. In re Spoor-Weston, Inc. (1992, BC ND Okla) 139 BR 1009, affd without op (1993, CA10
Okla) 13 F3d 407, reported in full (1993, CA10 Okla) 1993 US App LEXIS 33662.
When debtor's right to exemption is challenged on grounds that debtor converted nonexempt
property into exempt property, it is appropriate to inquire into circumstances surrounding transfer,
as there is substantial and respectable authority to support denial of debtor's right to exemptions
upon showing by extrinsic evidence that debtor converted nonexempt property into exempt property
with specific intent to defraud his or her creditors; showing that conversion of nonexempt asset into
exempt asset for specific purpose of placing asset out of reach of creditors is sufficient to deprive
debtor of his right to claim property as exempt; Chapter 11 debtors will be denied their exemption
in paid up annuities and their homestead where it is clear that systematic conversion of assets was
undertaken by debtors in order to protect these assets from claim of creditor who had obtained
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11 USCS § 522
judgment against debtor and who was no doubt ready to undertake whatever steps were necessary to
obtain satisfaction of its judgment. In re Schwarb (1992, BC MD Fla) 150 BR 470, CCH Bankr L
Rptr P 75135, 7 FLW Fed B 8.
Chapter 7 debtors who incurred substantial indebtedness in their home state of Wisconsin
moved to Florida, converted their nonexempt assets into property that is exempt under Florida law,
and then filed Chapter 7 in Florida in order to take advantage of Florida's liberal exemption laws are
not entitled to homestead exemption to extent that debtors achieved benefit greater than their enti-
tlement under Wisconsin law where debtors' actions suggest concerted effort to defeat ability of ex-
isting creditors to be paid moneys owed them by maximizing exemption protections offered under
Florida law; under Wisconsin law, debtors would have been entitled to $ 40,000 exemption in pro-
ceeds of sale of their home and thus they will be allowed to exempt $ 40,000. In re Coplan (1993,
BC MD Fla) 156 BR 88, 17 EBC 1125, CCH Bankr L Rptr P 75341, 7 FLW Fed B 160 (criticized in
In re Young (1999, BC MD Fla) 235 BR 666, 12 FLW Fed B 249).
Objecting creditor has not demonstrated that debtor acted with specific intent to defraud his
creditors by prepetition conversion of nonexempt assets to exempt, although debtor, within days of
entry of judgment against him, relocated to Florida which has more generous exemption laws than
Tennessee, which is where debtor previously resided, and although debtor purchased homestead
within days of entry of judgment against him, where there was evidence that debtor had planned on
Florida retirement for many years before doing so, debtor was, in fact, of retirement age at time he
purchased Florida residence, debtors placed their Tennessee home on market with anticipation that
they would purchase home in Florida, debtors purchased home only after tough negotiations with
seller, it was not unusual for debtors to purchase homes with cash, debtors did not attempt to con-
ceal purchase of home, and purchase occurred more than 18 months prior to bankruptcy filing. In
re Hill (1994, BC ND Fla) 163 BR 598, 30 CBC2d 1233, 7 FLW Fed B 369.
property to exempt property it is appropriate to inquire into circumstances surrounding transfer; in
present case, although facts support inference that debtors embarked upon elaborate strategy to pre-
vent creditor from recovering on note and guarantee by disappearing, successfully preventing credi-
tor from finding them, and using all available funds to purchase their homestead, placing all funds
out of reach of creditor, facts also permit inference that debtors believed that surrender of 2 store
locations was satisfactory resolution of claims against creditor and that they embarked on extended
journey for innocent reason of enjoying their well-deserved retirement, and inasmuch as creditor
must prevail by preponderance of evidence, debtors cannot be found to have fraudulently converted
nonexempt assets into exempt assets which would deprive them of right to exempt homestead prop-
erty. In re Snape (1994, BC MD Fla) 166 BR 184, CCH Bankr L Rptr P 75915A, 8 FLW Fed B 31.
Chapter 7 debtors' homestead exemption is disallowed to extent of conversion of nonexempt as-
sets, where 2 days prior to bankruptcy filing and after consultation with their attorney, debtors sold
their nonexempt automobile which was free of liens and used portion of proceeds to make mortgage
payments, which constituted intentional hindrance or delay of creditors and was, therefore, fraudu-
lent under Florida law. In re Thomas (1994, BC MD Fla) 172 BR 673, 32 CBC2d 312 (criticized in
In re Wilbur (1997, BC MD Fla) 206 BR 1002, CCH Bankr L Rptr P 77355, 10 FLW Fed B 281)
and (criticized in Key Bank v Jost (In re Jost) (1998, CA11 Fla) 136 F3d 1455, 11 FLW Fed C
1145).
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11 USCS § 522
Chapter 7 debtors' down payment of $ 66,043.59 cash on purchase of residence less than ten
months before their bankruptcy filing, which resulted in approximately $ 65,000 of equity in resi-
dence, constituted transfer of non-exempt assets to exempt assets with intent to hinder, delay, or de-
fraud debtors' creditors, thus forfeiting debtors' homestead exemption under Florida law to extent of
their use of non-exempt assets to purchase residence, where circumstances of case made it apparent
that debtors undertook well considered and carefully orchestrated series of maneuvers for purpose
of shielding their assets from creditors; in addition, fact that debtors had foresight to begin process
of transferring assets approximately 18 months prior to filing did not alter conclusion that debtors
improperly shielded their assets from creditors. In re Bandkau (1995, BC MD Fla) 187 BR 373
(criticized in In re Young (1999, BC MD Fla) 235 BR 666, 12 FLW Fed B 249).
Trustee's avoidance powers could not defeat debtors' homestead exemption under following cir-
cumstances: (a) assuming trustee avoided April 2003 mortgage either as preference or as fraudulent
transfer, mortgage would have been preserved for benefit of estate, 11 USCS § 551; (b) because
mortgage was voluntary transfer, debtors would not have been able to exempt any such property
recovered by trustee, 11 USCS § 522(g); (c) avoidance of mortgage, however, would not have de-
feated debtors' claim of exemption in equity in their home; (d) debtors would have retained home-
stead subject to mortgage held by trustee, and (e) debtors' homestead exemption claim appeared to
be limited to their equity in property. Sergeant v G.R.D. Invs. L.L.C. (In re Schaefer) (2005, BC ND
Iowa) 331 BR 401.
In Chapter 13 case, homestead exemption under Minn. Stat. § 510.01 was denied under 11
USCS § 522(o) because evidence showed that debtor sold property obtained from proceeds of line
of credit in order to pay down that same debt; this was done with intent to hinder, delay, or defraud
creditors, and court examined badges of fraud in making its decision. In re Maronde (2005, BC DC
Minn) 332 BR 593, CCH Bankr L Rptr P 80394.
Chapter 13 debtors' homestead exemption was reduced by $ 42,500 and plan confirmation de-
nied because debtors violated 11 USCS § 522(o) by selling $ 42,500 in nonexempt assets and apply-
ing proceeds to their home mortgage only months before they filed their bankruptcy petition--period
of time when they were admittedly insolvent and contemplating bankruptcy. In re Lacounte (2005,
BC DC Mont) 342 BR 809, CCH Bankr L Rptr P 80653.
Chapter 13 debtors homestead exemption was reduced by $ 42,500 and plan confirmation de-
nied because debtors violated 11 USCS § 522(o) by selling $ 42,500 in nonexempt assets and apply-
ing proceeds to their home mortgage only months before they filed their bankruptcy petition, during
period of time when they were admittedly insolvent and contemplating bankruptcy. In re Lacounte
(2005, BC DC Mont) 342 BR 809, CCH Bankr L Rptr P 80653.
Trustee's objection under 11 USCS § 522(o)(4) to that portion of Chapter 7 debtors' claimed
homestead exemption that was acquired less than month before debtors filed bankruptcy, in part
through exchange of non-exempt property, was denied because trustee had not established that
debtors acted with intent to hinder, delay, or defraud creditors; debtors made exchange to assist one
debtor's mother with estate planning, and debtors did not attempt to conceal transaction during
bankruptcy proceedings. In re Agnew (2006, BC DC Kan) 355 BR 276.
Recording of homestead exemption declaration is not analogous to types of transfers of nonex-
empt property that are covered under 11 USCS § 522(o), and mere fact that debtor files homestead
declaration within 10 years of filing for bankruptcy protection does not bring debtor within §
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11 USCS § 522
522(o)(4); filing homestead declaration is essentially nothing more than taking advantage of exemp-
tion available under state law. In re Lyons (2006, BC DC Mass) 355 BR 387.
Chapter 7 debtor's action in filing homestead exemption declaration pursuant to Mass. Gen.
Laws Ann. ch. 188, § 1, less than 10 years before he filed his bankruptcy petition did not bring him
within exemption limitations set out in 11 USCS § 522(o) because recording of exemption declara-
tion did not constitute sale or transfer of property, which was required to come within purview of §
522(o). In re Lyons (2006, BC DC Mass) 355 BR 387.
Where Chapter 7 trustee argued that borrowing of money against parcel of property, which loan
proceeds were deposited into joint checking account of debtor and his wife and then used to pay off
their homestead mortgage, was fraudulent transfer of non-exempt property to exempt property in
violation of Fla. Stat. § 222.30(2) and 11 USCS § 522(o), claim was rejected because parcel was
owned by debtor and his wife as tenants by entireties, and debtor merely transferred exempt prop-
erty into other exempt property; fact that debtor alone signed loan documents and that loan proceed
checks were made out to debtor solely did not make loan proceeds non-exempt. In re Mathews
Where Chapter 7 debtor obtained several large cash advances from his credit cards when he had
no ability to repay them and transferred some of that money within one year of filing bankruptcy to
pay off secured line of credit on his home, and to improve his home, debtor's conduct warranted re-
duction of debtor's homestead exemption pursuant to 11 USCS § 522(o). Turner v Keck (In re Keck)
(2007, BC DC Kan) 363 BR 193.
Chapter 7 debtor's homestead exemption was reduced pursuant to 11 USCS § 522(o) by amount
of funds used by debtor's wife to help purchase property that could be traced to debtor's sale of non-
exempt stock because conversion of nonexempt assets into exempt asset was made with intent to
hinder, delay, or defraud creditors, based on existence of 11 badges of fraud, including that (1)
transfer of proceeds to wife was to insider, (2) transfer was concealed, (3) value received for stock
was not reasonably equivalent to value of stock, (4) debtor was insolvent at time of transfer, (5)
transfer was substantially all of debtor's assets, and (6) transfer was done just prior to filing of
debtor's bankruptcy petition. In re Sissom (2007, BC SD Tex) 366 BR 677.
Where court determined that debtor's homestead exemption had to be reduced pursuant to 11
USCS § 522(o) by amount of funds used to help purchase property that could be traced to sale of
nonexempt stock, appropriate remedy was to grant trustee equitable lien on debtor's homestead in
amount of reduction, and give debtor and his wife 120 days to pay off lien or trustee would be per-
mitted to foreclose his lien. In re Sissom (2007, BC SD Tex) 366 BR 677.
Debtor was entitled to take homestead exemption as claimed pursuant to Kan. Stat. Ann. § 60-
2301 (2005) and 11 USCS § 522(o), although he had used nonexempt assets of $ 240,000 to pay
down his mortgage and thus increased value of exemption, but had not done so with fraudulent in-
tent. In re Anderson (2008, BC DC Kan) 386 BR 315.
74. Life insurance exemption
Although it is not fraudulent per se for insolvent debtor to convert nonexempt property into ex-
empt property on eve of bankruptcy, debtor who, while insolvent, liquidated all nonexempt assets,
collected accounts receivable, paid off certain favored creditors, and bought paid up life insurance
policy through lump-sum payment, will not be entitled to exemption on insurance where, under
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11 USCS § 522
state law, no exemption is created when premium payment is made with intent to defraud creditors;
fact that transaction between debtor and insurance company is bona fide, i.e., fair consideration is
given in exchange for insurance policy, does not mitigate against conclusion that debtor intended to
defraud creditors by placing property in exempt status. In re Mehrer (1980, BC ED Wash) 2 BR
309, 5 BCD 1240, 22 CBC 301.
Sale of nonexempt properties by debtors on eve of bankruptcy and use of proceeds obtained
from sale to enhance values of exempt properties is not fraudulent act where funds obtained from
liquidation of nonexempt properties were used to repay loan obtained by them against cash surren-
der value of life insurance policy; repayment of legitimate obligation prior to commencement of
bankruptcy case is not fraudulent; fact that debtors replaced heat pump and air handler unit in resi-
dence does not operate as forfeiture of debtors' right to claim residence exempt as homestead. In re
Russell (1982, BC MD Fla) CCH Bankr L Rptr P 69538.
Chapter 7 debtors have fraudulently converted nonexempt property to exempt property under
Oregon opt-out provisions on eve of bankruptcy by repaying loan on life insurance policy where:
(1) debtors were insolvent at time of repayment; (2) debtors admit that sole reason for making re-
payment was to shelter assets from creditors and maximize exemptions, not to protect dependents;
(3) repayment was made 6 days before bankruptcy filing; and (4) after repayment, debtors are left
with less than $ 5,000 in nonexempt assets to satisfy scheduled unsecured claims in excess of $
150,000. In re Summers (1988, BC DC Or) 85 BR 121.
75. Annuity exemption
property into exempt property, it is appropriate to inquire into circumstances surrounding transfer,
as there is substantial and respectable authority to support denial of debtor's right to exemptions
upon showing by extrinsic evidence that debtor converted nonexempt property into exempt property
with specific intent to defraud his or her creditors; showing that conversion of nonexempt asset into
exempt asset for specific purpose of placing asset out of reach of creditors is sufficient to deprive
debtor of his right to claim property as exempt; Chapter 11 debtors will be denied their exemption
in paid up annuities and their homestead where it is clear that systematic conversion of assets was
undertaken by debtors in order to protect these assets from claim of creditor who had obtained
judgment against debtor and who was no doubt ready to undertake whatever steps were necessary to
obtain satisfaction of its judgment. In re Schwarb (1992, BC MD Fla) 150 BR 470, CCH Bankr L
Rptr P 75135, 7 FLW Fed B 8.
Trustee has failed to establish that debtors forfeited exemption in annuity to which they other-
wise would be entitled by converting nonexempt assets into cash to purchase exempt annuity where
record is devoid of any evidence of imminent threat of levy, attachment, garnishment, or execution
on judgment just prior to debtors' conversion of assets. In re Swecker (1993, BC MD Fla) 157 BR
694, CCH Bankr L Rptr P 75434, 7 FLW Fed B 221.
Chapter 13 debtor acted with intent to hinder, delay, or defraud creditors by placing proceeds
from sale of her business into exempt annuities where debtor purchased annuities on date of sale
closing, one month prior to bankruptcy filing, debtor's lack of knowledge about terms of annuities
indicates that, rather than trying to insure that she could continue to pay living expenses, debtor was
attempting to place proceeds of land sale out of reach of her creditors, debtor failed to list sale of
property on bankruptcy schedules, debtor understands bankruptcy process and is aware of effect of
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11 USCS § 522
placing funds into annuities, and debtor testified that one reason for purchasing annuities was to
protect funds from her creditors. In re Mackey (1993, BC MD Fla) 158 BR 509, 7 FLW Fed B 260.
Under Wis. Stat. § 815.18(3)(j) and (10), chapter 7 debtor was entitled to exempt $ 136,000 in
retirement-related annuities that she purchased on eve of bankruptcy with her non-exempt property;
though she thereby placed her assets beyond creditor's reach, she did so to provide for her retire-
ment, and there was no extrinsic evidence of fraud. In re Vangen (2005, BC WD Wis) 334 BR 241.
76. Other particular exemptions
Trustee is entitled to automobile purchased with nonexempt assets subsequent to filing of bank-
ruptcy petition since nonexempt assets may not be converted into exempt assets under 11 USCS §
522(d)(2) once case has been commenced. In re Ayers (1982, BC MD Tenn) 25 BR 762.
Chapter 7 debtor is entitled to claimed exemptions, even though exempt property was purchased
with nonexempt funds on eve of bankruptcy, where none of exempt items were purchased with
funds procured from secured creditor and there has been no showing of actual intent to defraud. In
re Barash (1986, BC DC Kan) 69 BR 231.
Debtor is entitled to convert nonexempt property into exempt property under 11 USCS § 522 up
until filing of bankruptcy petition and this practice is not fraudulent per se; but when conversion is
intended to defeat interests of creditors, such exemptions may be denied to extent of any fraudulent
conduct; fraudulent intent by debtor is not established by delay in depositing funds received from
sale of produce, immediate withdrawal of funds after depositing checks, procurement of cashier's
check from proceeds, and conversion of nonexempt business assets to exempt personal assets, all
done while debtor was insolvent. In re Elliott (1987, BC MD Fla) 79 BR 944, 16 BCD 922.
Debtor did not fraudulently convert non-exempt stocks to exempt ones, where his entire pattern
of investing with his wife was by tenancy by entirety, even after creditor's claim arose, and was not
marked by secrecy. In re Allen (1996, BC MD Fla) 203 BR 786, 10 FLW Fed B 141.
Chapter 7 trustee could not use 11 USCS § 522(o) to prevent debtor's claim of exemption to cer-
tain consumer goods purchased on eve of bankruptcy because § 522(o) only applied to real or per-
sonal property that debtor used as residence or claimed as homestead. In re Sissom (2007, BC SD
Tex) 366 BR 677.
F.Valuation of Exempt Property 77. Generally
Where property is sold during pendency of appeal from lien avoidance action for amount con-
siderably in excess of value mentioned in debtors' complaint and where there is no suggestion that
property increased in value after date of bankruptcy filing, court should use sale price of property
for determining fair market value; fair market value of property is important factor under 11 USCS
§ 522(f) because extent to which lien impairs valid exemption depends on amount of debtor's equity
in property. Fitzgerald v Davis (1984, CA4) 729 F2d 306, 11 BCD 968, CCH Bankr L Rptr P
69737.
Where debtor attaches precise dollar value to interest he is claiming under Virginia homestead
exemption and does not amend that value upward within amount allowed under Virginia homestead
law, debtor's exemption for that interest is limited to precise value debtor listed as exempt, regard-
less of trustee's failure to object to exemption. Addison v Reavis (1993, ED Va) 158 BR 53, 5
Fourth Cir & Dist Col Bankr Ct Rep 903, affd without op sub nom Ainslee v Grablowsky (In re
Page 152
11 USCS § 522
Grablowsky) (1994, CA4 Va) 32 F3d 562, reported in full (1994, CA4 Va) 1994 US App LEXIS
20701.
Value of property for purpose of determining exemption is fair market value as of date of filing
of petition, as provided by 11 USCS § 522; however, in determining fair market value, Bankruptcy
Court must take into account all considerations which might reasonably affect valuation of property,
including fact that purpose of valuation under exemption provisions is to determine whether prop-
erty is subject to liquidation by trustee because it is in excess of specified monetary amounts, so
that, for purpose of exemption, value should be liquidation value of property, rather than price that
seller in ordinary market, and under no obligation to sell, might obtain. In re Walsh (1980, BC DC
Dist Col) 5 BR 239, 6 BCD 793, 2 CBC2d 815, CCH Bankr L Rptr P 67970 (criticized in In re
Richardson (2001, BC SD Ala) 280 BR 717).
In determining value of property in proceeding under 11 USCS § 522(f), fair market value is to
be determined and such determination is not thereafter to be reduced by any expenses or costs
which might be incurred in sale of such property. In re Nellis (1981, BC DC Conn) 12 BR 770.
Both federal and state exemptions are to be determined as of date of filing of petition and value
of property claimed as exempt for purposes of 11 USCS § 522(f) is fair market value as of that date
and value should not include post-filing appreciation. In re Tarrant (1982, BC DC Alaska) 19 BR
Fair market value referred to in 11 USCS § 522(a) does not mean liquidation value but price
which could be obtained under normal business conditions by reasonably able and conscientious
business person. In re Henderson (1982, BC DC NM) 33 BR 149, 11 BCD 101, CCH Bankr L Rptr
P 69419.
Valuation of medical equipment exempted by joint Chapter 7 debtors as tools of trade is not
based on replacement cost or going concern value because creditor who holds security interest in
equipment is not in medical business, thus it is commercially reasonable to use wholesale value. In
re Reeder (1986, BC DC Colo) 60 BR 312.
Valuation of property in divorce decree cannot be binding on Bankruptcy Court since 11 USCS
§ 522(a)(2) requires that property claimed as exempt must be valued as of date petition is filed. In
re Sanderfoot (1988, BC ED Wis) 83 BR 564, 18 CBC2d 598, CCH Bankr L Rptr P 72212, revd on
other grounds (1988, ED Wis) 92 BR 802, affd (1990, CA7 Wis) 899 F2d 598, 20 BCD 651, 22
CBC2d 780, CCH Bankr L Rptr P 73322, revd, remanded on other grounds (1991) 500 US 291, 114
L Ed 2d 337, 111 S Ct 1825, 91 CDOS 3705, 91 Daily Journal DAR 6028, 21 BCD 1160, 24 CBC2d
841, CCH Bankr L Rptr P 73964, on remand, remanded on other grounds (1991, CA7 Wis) 943 F2d
Although creditors failed to object to debtors' claimed exemption in their personal residence,
this did not prevent creditors from challenging debtors' valuation of exemption when they defended
against debtors' motion to avoid judicial lien pursuant to 11 USCS § 522(f)(1) because creditors did
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11 USCS § 522
not challenge propriety of exemption, only value. Conner v Wrobel (In re Conner) (2003, BC WD
Pa) 300 BR 644.
11 USCS § 522(p)(1)'s $ 125,000 cap does not only apply to property purchased within 1,215
days of bankruptcy petition as plain language of statute applies to any property interest that was ac-
quired. In re Greene (2006, BC DC Nev) 346 BR 835 (criticized in Rogers v Wallace (In re Rogers)
(2006, ND Tex) 2006 US Dist LEXIS 75826).
78. Deduction for transaction costs
There is no reduction in fair market value of Chapter 7 debtor's residence for cost of transfer
taxes and broker's commission prior to calculating amount available for debtors' claimed exemp-
tions under 11 USCS § 522(d)(1) and (d)(5), and thus amount for mortgagee's judicial liens after
deduction of nonavoidable mortgages and debtors' exemptions, because to allow such reduction in
effect is to avoid all or part of judicial liens by modifying accepted meaning of fair market value,
particularly where, in this case, debtors intend to remain in residence, thus making it doubtful there
will be any actual transfer taxes or broker's fee. In re Clendennen (1986, BC WD Pa) 67 BR 909.
Where Chapter 13 debtor is choosing to claim exemption in property without liquidating, no
transaction costs are contemplated, and, thus, where debtor seeks to avoid liens absent liquidation,
she is not entitled to deduct transaction costs from creditor's valuation of property; 11 USCS §
522(a)(2) specifically mandates that fair market value be used for purposes of any valuation. In re
Windfelder (1988, BC ED Pa) 82 BR 367.
Where bankruptcy court determined that debt in nature of alimony was nondischargeable, bank-
ruptcy granted debtor's ex-spouse relief from stay to pursue collection, but noted that ex-spouse
could not attempt to satisfy alimony award from any asset that debtor had properly exempted pursu-
ant to 11 USCS § 522. Collins v Tielsch (In re Tielsch) (2003, BC WD Pa) 299 BR 114.
79. Hearing
Bankruptcy Court will set up valuation hearing to determine value of property scheduled by
debtors as exempt, upon request of either debtors or creditors, where parties cannot agree upon
valuation of respective exempt items. In re Lyon (1980, BC DC Kan) 6 BCD 343, 2 CBC2d 561.
Valuation hearing is required within deadline provided in Bankruptcy Rule 4003(b) where it is
necessary to value property in order to measure exemption claim; however, when objection goes
only to nature of exemption claim, or when exemption claim is to liquidated monetary amount well
within exemption's monetary limitations, no valuation of property is implicated or required. In re
DeSoto (1995, BC DC Conn) 181 BR 704, 33 CBC2d 902, CCH Bankr L Rptr P 76521.
Where Chapter 7, 11 USCS §§ 701 et seq., debtors claimed $ 4,000 exemptions pursuant to 11
USCS § 522(d) for two lawsuits, and their trustee did not object pursuant to Fed. R. Bankr. P.
4003(b) at subsequent creditors' meeting held pursuant to 11 USCS § 341, when they later claimed
that full value of suits was exempted, settlement of suits was properly upheld as their explanation-
that $ 4,000 was expected value-was dubious, and such was implausible full valuation; trustee's
reading of exemption was not objectively unreasonable, and remainder of $ 100,000 settlement that
trustee unilaterally negotiated properly became estate property pursuant to 11 USCS § 541. Bar-
roso-Herrans v Lugo-Mender (In re Barroso-Herrans) (2008, CA1 Puerto Rico) 524 F3d 341, CCH
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11 USCS § 522
Lawsuits two debtors and company they owned filed against Puerto Rico Aqueducts and Sewer
Authority, alleging breach of contract, were not completely removed from bankruptcy estate by ex-
emptions debtors claimed under 11 USCS § 522(d)(5) because exemptions covered only part of
claims debtors made in their lawsuits, and remaining value in lawsuits was property of bankruptcy
estate. Barroso Herrans v Lugo Mender (2007, DC Puerto Rico) 364 BR 463.
In valuing exemption amount that debtor may take in mineral interest not claimed as having any
value in schedule filed with debtor's petition, debtor must measure his exemptions claimed in min-
eral rights by deducting from value one-half of value of real estate together with amount of royalties
debtor has received and will have received at time trustee sells mineral rights to private buyer or
debtor buys them from trustee. In re Schumacher (1982, BC ED Mo) 1 BAMSL 699.
Neither estimated value used by Chapter 7 debtors in preparing their bankruptcy schedules nor
valuation placed on home in state court dissolution judgment is binding on debtors in determining
value of property for purposes of motion to avoid lien under 11 USCS § 522(f) because admission in
schedule filed in bankruptcy proceeding, like other admissions, may be corrected or explained by
debtor and is not res judicata either as to creditors or debtor; where evidence was presented that
home had declined in value after dissolution judgment due to structural damage and debtors' ap-
praiser testified that property was worth $ 46,000, debtors have sustained burden of establishing that
value of property is $ 46,000; with that valuation, there is insufficient equity in home above amount
of mortgage to allow for former spouse's lien of $ 3,500 in addition to $ 7,500 homestead exemp-
tion of debtor husband and therefore, former spouse's lien impairs exemption, regardless of whether
debtor wife may claim additional exemption if she does not hold title to property. In re Boggess
(1989, BC SD Ill) 105 BR 470, 21 CBC2d 1015.
Chapter 7 debtors are not entitled to 41 percent of value of entire crop just because that is way
they described property in which exemption was claimed, where, since debtors control information
placed on their bankruptcy schedules, any ambiguities must be construed against them; by focusing
on description of property in which exemption was claimed, without any consideration for value of
claimed exemption, debtors attempt to create ambiguity with regard to just what it was they claimed
as exempt--41 percent of crop or $ 5,950--and they then proceed to resolve this ambiguity in their
favor, rather than against them as law requires. In re Sherbahn (1994, BC ND Ind) 170 BR 137.
Debtors' assigning of zero value to residence and other property claimed as exempt under Mary-
land statutes did not remove debtors' equity in that property, if any, from property of estate; debtors'
claimed exemption which assigned "unknown" value to assets claimed as exempt under Maryland
law would not be allowed since where exemption is subject to dollar limitation, some dollar value
must be assigned to property claimed as exempt. In re Forti (1998, BC DC Md) 224 BR 323, 10
Fourth Cir & Dist Col Bankr Ct Rep 593, 40 CBC2d 1025.
11 USCS § 522(p)(1) cap applied to Chapter 7 debtor's claimed homestead exemption where
debtor had elected to exempt property for purposes of § 522(p)(1) simply by claiming exemption
rather than choosing not to claim exemption. In re Greene (2006, BC DC Nev) 346 BR 835 (criti-
cized in Rogers v Wallace (In re Rogers) (2006, ND Tex) 2006 US Dist LEXIS 75826).
11 USCS § 522(p)(1) limited Chapter 7 debtor's claimed homestead exemption to $ 125,000
where debtor had acquired homestead interest in property when he started to live on property and
that had occurred well within 1,215 days of bankruptcy filing. In re Greene (2006, BC DC Nev) 346
BR 835 (criticized in Rogers v Wallace (In re Rogers) (2006, ND Tex) 2006 US Dist LEXIS 75826).
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11 USCS § 522
Debtor's claimed exemption in homestead under Fla. Const. art. X, § 4 that was made in debtor's
property within 1215 days before filing bankruptcy, but that was made in property that debtor and
his wife had owned since 1995, was not subject to $ 125,000 cap set forth in 11 USCS § 522(p) be-
cause debtor and his wife had previously claimed homestead exemption in their Tallahassee resi-
dence; § 522(p) cap did not apply to interest transferred between residences that were both in same
state. Venn v Reinhard (In re Reinhard) (2007, BC ND Fla) 377 BR 315, 21 FLW Fed B 52.
Unpublished: Though testimony offered by real estate appraiser retained by creditor of Chapter
7 debtor to substantiate creditor's objection to debtor's valuation of her interest in real estate in
which exemption was claimed pursuant to 11 USCS § 522 was credible as far as it went, testimony
from debtor's real estate appraiser was generally accorded more weight because debtor's appraiser
had not only viewed exterior and adjoining cell phone tower and fire station but had also had access
to interior of residence; moreover, "comparables" utilized by debtor's appraiser were, in court's
view, more consistent with subject property than those proposed by creditor's real estate appraiser.
In re Stromer (2006, BC DC NJ) 2006 Bankr LEXIS 4089.
V.COLLECTION OF PREPETITION DEBT FROM EXEMPT PROPERTY 81. Gener-
ally
Creditor's right to foreclose on mortgage survives or passes through bankruptcy pursuant to 11
USCS § 522(c). Johnson v Home State Bank (1991) 501 US 78, 115 L Ed 2d 66, 111 S Ct 2150, 91
CDOS 4334, 91 Daily Journal DAR 6694, 21 BCD 1293, 24 CBC2d 1171, CCH Bankr L Rptr P
73993, on remand, remanded (1991, CA10) 940 F2d 609 and (criticized in In re Kirchner (1997,
BC WD Wis) 216 BR 417, 32 BCD 9, 39 CBC2d 537).
Although state law specifies which and to what extent assets may be exempt, federal law pre-
scribes manner in which exemptions may be allowed and declares in 11 USCS § 522(c) which
claims are not affected by exemption; fact that debtor may be allowed exemption under state law
does not mean that asset is immediately available to debtor without performance of further adminis-
trative duties on part of trustee in accordance with federal law. In re Kaufman (1986, SD NY) CCH
Trustee will not be directed immediately to turn over to Chapter 7 debtor allowed $ 10,000
homestead exemption where debtor has not established that trustee has concluded duties of investi-
gating all aspects of debtor's financial condition and ascertaining if exemption is subject to nondis-
chargeable alimony, maintenance, or support claim with respect to which allowed exemption would
continue to be liable under 11 USCS § 522(c)(1); trustee will be permitted reasonable time in which
to perform her administrative duties. In re Kaufman (1986, SD NY) CCH Bankr L Rptr P 71578.
11 USCS § 522(c)(1) providing that exempt property can be used to pay certain prepetition debts
such as those for nondischargeable tax, alimony and child support obligations preempts state home-
stead exemption law so that state exemption is inoperative against claims for nondischargeable tax,
alimony and child support obligations. In re Gregory (1997, SD Tex) 214 BR 570, 97-2 USTC P
50750, 80 AFTR 2d 6768.
Debtor may avoid creditor's security interest lien on their exempted property under 11 USCS §
522(c) regardless of any alleged impropriety or wrongdoing, i.e., fraud, on behalf of debtor with
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11 USCS § 522
respect to underlying debt. In re Haupt (1981, BC ED Pa) 16 BR 118, 5 CBC2d 1005, CCH Bankr
L Rptr P 68546.
Security of creditor is preserved despite debtor's claim of exemptions under 11 USCS §
522(c)(2). In re Hamilton (1982, BC DC Del) 22 BR 560.
Operation of 11 USCS § 541 vests title even to properly exempt property in Chapter 7 trustee,
and thus prior law compelling trustee to turn over exempt assets to debtor, who retained title, is in-
applicable, and trustee may retain exempt property in estate, but trustee may not necessarily be enti-
tled to hold distribution of exempt assets to final distribution under 11 USCS § 726; rather, various
subsections of 11 USCS § 704 require only that trustee satisfy himself that exempt assets are not
subject to some unavoidable claim such as tax claim under 11 USCS § 523(a)(1); where, as here,
debtor has been divorced, Chapter 7 trustee is entitled to hold Chapter 7 debtor's homestead exemp-
tion until trustee is satisfied within reasonable time that exempt assets are not subject to superior
rights, including claims for alimony or support under 11 USCS § 522(c)(1). In re Kaufman (1986,
BC SD NY) 68 BR 391, 15 BCD 273.
Trust fund tax liability of individual Chapter 7 debtor who is "responsible person" for unpaid
wage taxes of his corporation is nondischargeable under 11 USCS § 523 and proceeds of debtor's
homestead exemption remain liable to satisfy debt under 11 USCS § 522(c)(1). In re Clate (1987,
BC WD Pa) 69 BR 506.
Provision of 11 USCS § 522(c)(1) expressly provides that only 2 types of debt, certain tax
claims and alimony and support, may be paid out of proceeds of exempt property; hence nondis-
chargeability of debt on account of debtor's fraud under 11 USCS § 523(a) does not impair protec-
tion afforded to exempt property, nor does it impair debtor's right to claim his exemptions in first
instance, and therefore it also follows that judicial lien based upon nondischargeable claim is also
available, otherwise protection envisioned by § 522(c) would fail; in such circumstances when
judgment lien is avoided, judgment holders are free to obtain postpetition execution against debtor's
nonexempt after-acquired property. In re Ewiak (1987, BC WD Pa) 75 BR 211, 17 CBC2d 117,
Chapter 7 debtor's avoidance of liens which impair his right to exemptions is wholly unaffected
by nature of debt secured by liens; even if debtor is personally obligated after bankruptcy discharge
to pay nondischargeable debt, debtor still holds right to exemptions provided by 11 USCS § 522. In
re Sullivan (1988, BC SD Iowa) 83 BR 623.
Valid, perfected judicial liens which precede bankruptcy survive and are enforceable after bank-
ruptcy, under 11 USCS §§ 506(d) and 522(c)(2); discharge does not prevent postpetition enforce-
ment of valid liens; secured creditor may proceed to enforce lien, as in rem action, and is not barred
by injunctive terms of 11 USCS § 524. In re Hermansen (1988, BC DC Colo) 84 BR 729, 18
CBC2d 952.
Debtors may plan their bankruptcies to take full advantage of exemption laws, and upon dis-
charge debtors may do whatever they wish with their exempt property. In re Cilek (1990, BC WD
Wis) 115 BR 974, 11 UCCRS2d 937.
Determination of types of debts that remain collectible after bankruptcy from exempt property is
controlled by federal rather than state law, and state law will be enforced only to extent consistent
with federal law; baseline against which impairment of exemptions is measured under 11 USCS §
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11 USCS § 522
522(f) is not exemption to which debtor is entitled, but one to which debtor "would have been enti-
tled" but for lien in question; in present case, even though homestead would not apply against
judgment creditor under Kentucky law because it existed prior to time when debtor acquired home-
stead property, lien is avoidable because debtor would have been entitled to nearly full amount of
allowable homestead exemption, but for judgment creditor's lien. In re Conyers (1991, BC ED Ky)
If Chapter 7 debtor should sell homestead, proceeds from sale would be subject to execution by
claimant only to extent provided under state law, while 11 USCS § 522(c) would require that pro-
ceeds obtained from sale of entire property be set aside as exempt in bankruptcy despite fact that
homestead claim may exceed that allowed by state law. In re Karrer (1994, BC ND Iowa) 183 BR
177.
Interaction of 11 USCS §§ 522(c) and 524(a)(3) protects entire value of community property
homestead claimed exempt that passes through bankruptcy; exempt portion cannot be reached after
bankruptcy as this is prohibited by § 522(c); if value of house increased after bankruptcy because of
market conditions or because debtor reduced outstanding mortgage, this increase in value could be
considered after-acquired community property protected by discharge under § 524(a)(3). In re
Schmiedel (1999, BC ED Wis) 236 BR 393.
Maine's homestead exemption statute, Me. Rev. Stat. Ann. tit. 14, § 4422(1), limiting exemption
to amount against single category of lien claim, conflicted with 11 USCS § 522(c)'s limitation of
debts that exempt property could be called upon to pay; creditor's judicial lien was, therefore,
avoided. Dubois v Fales (In re Dubois) (2004, BC DC Me) 306 BR 423.
Chapter 7 trustee's objections to debtor's exemptions and his motion to sell automobile were de-
nied because 11 USCS § 522(c)(1) did not provide for disallowance of exemptions or liquidation of
exempt property merely because debtor owned nondischargeable domestic support obligation. In re
Covington (2006, BC ED Cal) 56 CBC2d 1110.
82. Tax debt or liens
Pursuant to 11 USCS § 522(c)(2)(B), property otherwise exempted from bankruptcy estate re-
mains subject to properly filed federal tax lien, including that portion of lien securing tax penalties;
fact that debtor may be able to exempt property subject to tax lien, pursuant to 11 USCS § 522(h) or
11 USCS § 724(a), does not mean that debtor can remove lien itself, or that portion of it which se-
cures penalty. DeMarah v United States (In re DeMarah) (1995, CA9 Cal) 62 F3d 1248, 95 CDOS
6490, 95 Daily Journal DAR 11085, 33 CBC2d 1744, CCH Bankr L Rptr P 76607, 76 AFTR 2d
5997, 95 TNT 167-13.
Without deciding whether 11 USCS § 522(c) immunizes exempt property from setoff, bank-
ruptcy court erred in permitting debtor to exempt her 1997 federal income tax overpayment which
IRS setoff against her unpaid 1993 tax liability which had been discharged in bankruptcy under 11
USCS § 727, since debtor was not entitled to refund, where her tax liability was greater than her
overpayment; thus, tax refund did not become property of estate and could not be exempted under
11 USCS § 522. IRS v Luongo (In re Luongo) (2001, CA5 Tex) 259 F3d 323, 38 BCD 43, 2001-2
USTC P 50527, 88 AFTR 2d 5752.
Lien and subsequent levy by IRS on Chapter 7 debtor's property for assessment of additional
taxes do not remove proceeds from sale of property from debtor's bankruptcy estate, and proceeds
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11 USCS § 522
are subject to valid tax lien under federal law and may not be exempted under Kentucky homestead
exemption under 11 USCS § 522. Davenport v United States (1991, WD Ky) 136 BR 125, 91-2
USTC P 50531, 71A AFTR 2d 4042 (criticized in Stanley v United States (1996) 35 Fed Cl 493, 96-
1 USTC P 50273, 77 AFTR 2d 2027).
Although Congress desired to relieve debtor under 11 USCS § 522(f) of any impairment of his
exemptions which arose by way of judicial lien, under 11 USCS § 522(c) it insulated exempt prop-
erty from prepetition claims only to extent that they were not tax claims or certain other claims;
since bankruptcy discharge does not therefore prevent enforcement of valid liens and taxes which
are nondischargeable may be collected from exempt assets it would be futile to grant 11 USCS §
522(f) motions with regard to nondischargeable taxes and New York State Tax Commission may
continue to enforce its lien against property and debtor. In re Sechrist (1981, BC WD NY) 9 BR
862, 7 BCD 464.
Avoided judicial liens may not be preserved for benefit of estate and applied to homestead ex-
emption before IRS statutory lien which arose after avoided judicial lien because to do so would
thwart 11 USCS § 522(c)(2)(B) which provides that validly filed tax liens are exempted from avoid-
ance. In re Bernstein (1986, BC DC Vt) 62 BR 545.
Tax lien attaches to and is secured by all debtor's assets, including property debtor has exempted
under state or federal exemptions under 11 USCS § 522. In re Mikrut (1987, BC WD Wis) 79 BR
404, 87-2 USTC P 9661, 60 AFTR 2d 5965.
Where notice of tax lien is properly filed, provisions of 11 USCS § 522(c)(2)(B) prohibit Chap-
ter 13 debtors from using powers otherwise available to them under 11 USCS § 522(h) to avoid tax
lien on personal property they have claimed exempt under 11 USCS § 522(b)(2). In re Ridgley
(1987, BC DC Or) 81 BR 65.
Pursuant to 11 USCS § 522(c)(2), debtors may not exempt personal residence in order to avoid
statutory tax lien which has attached to property. Verma v First United Fed. (In re Verma) (1987,
BC WD Pa) 91 BR 17, 87-2 USTC P 9630, 60 AFTR 2d 5787.
Even though Chapter 7 debtors' tax liabilities for tax years 1984 through 1986 are dischargeable,
federal tax liens for those years remain enforceable against exempt assets of debtors' estate and from
any assets acquired prepetition, because property exempted under 11 USCS § 522 remains liable
after case for any prepetition debt secured by tax lien, notice of which is properly filed; but even if
notice of tax lien has not been properly filed, IRS lien is not avoidable under § 522(f) because tax
lien is not nonpossessory, nonpurchase-money security interest, nor is it judicial lien, but rather it is
nonavoidable statutory lien. In re Rench (1991, BC DC Kan) 129 BR 649, CCH Bankr L Rptr P
73960.
Issuance and service of notice of levy by IRS are tantamount to lien in favor of IRS against
wages debtor has exempted under 11 USCS § 522, and because instant suit involves only debtor and
IRS, with no third parties asserting interest in wages, court need not decide whether notice of levy
transfers interest and whether notice of seizure is condition precedent to transfer; § 522(c) does not
give IRS right to or claim against specific property but simply preserves right of IRS to collect non-
dischargeable taxes or tax debt secured by tax lien from property so exempted, and where IRS has
not properly filed tax lien, § 522(c)(2)(B) is unavailable as avenue of collection for IRS, but §
522(c)(1) is available to IRS in that taxes which IRS seeks to collect are nondischargeable under 11
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11 USCS § 522
USCS §§ 523(a)(1) and 507(a)(7). Hebermehl v United States ex rel. IRS (In re Hebermehl) (1991,
BC DC Colo) 132 BR 651, 91-2 USTC P 50443, 71A AFTR 2d 4665, 93 TNT 254-22.
Discharge in bankruptcy only extinguishes debtor's personal liability on tax claim and does not
prevent enforcement of valid tax claim and discharged taxes can be collected from exempt assets; in
instant case, debtor beneficiary does not have property interest in withheld discretionary disburse-
ments from testamentary spendthrift trust to which IRC § 6321 federal tax lien could attach and
subsequent IRC § 6331 levy could be applied in order to satisfy tax liability. United States v Wilson
(In re Wilson) (1992, BC ND Tex) 140 BR 400, 92-2 USTC P 50333, 71A AFTR 2d 4221.
Where Chapter 7 debtors have claimed their homestead as exempt asset, 11 USCS § 506(a) is
not applicable and IRS lien may not be stripped down to value of property, even though IRS failed
to file proof of claim; properly filed tax liens continue against exempt property unaffected by bank-
ruptcy under 11 USCS § 522(c)(2)(B). Koppersmith v United States (1993, BC SD Tex) 156 BR
537.
Property exempted from bankruptcy estate, even under state law, is still subject to federal tax
liens. In re Carlson (1995, BC ED Cal) 180 BR 593, 75 AFTR 2d 937, 95 TNT 30-18.
Chapter 11 debtor's declaration of her homestead as exempt property did not affect any valid
liens against property; accordingly, prepetition tax liens filed by IRS against property of debtor
were fully secured and were allowed as filed, where it was undisputed that tax liens were timely
filed in same county where debtor's homestead and all her personal property was located. In re Carr
(1995, BC MD Fla) 185 BR 892.
Exempt property is subject to tax lien, notice of which is properly filed. Tourville v IRS (In re
Tourville) (1997, BC DC Mass) 216 BR 457, 97-2 USTC P 50976, 80 AFTR 2d 8294.
Federal tax liens could properly attach to Chapter 7 debtor's bank accounts, other exempt assets,
and pension plan since 11 USCS § 522(c)(2)(B) provides for survival of tax liens on property ex-
empted. Dinatale v United Stated (In re Dinatale) (1999, BC DC Md) 235 BR 569, 11 Fourth Cir &
Dist Col Bankr Ct Rep 574, 34 BCD 783, 42 CBC2d 489, 23 EBC 2850, CCH Bankr L Rptr P
77973, 85 AFTR 2d 981.
Because debtor could exempt portion of her tax refund as Earned Income Credit benefits under
Ky. Rev. Stat. Ann. § 205.220(3) and another portion under general exemption statute of Ky. Rev.
Stat. Ann. § 427.160, and those exemptions were not subject to levy under 11 USCS § 522(c), Inter-
nal Revenue Service was granted relief from automatic stay to offset only remaining amount of re-
fund under 11 USCS § 553. In re Sharp (2002, BC ED Ky) 286 BR 627, 90 AFTR 2d 6095.
Bankruptcy court had jurisdiction and found that federal government was entitled to judgment in
debtor's action to determine that debtor's tax liability was subject to tax lien and debtor could not
avoid tax lien on property claimed exempt. Piper v United States (In re Piper) (2003, BC DC Mass)
291 BR 20, 41 BCD 25, CCH Bankr L Rptr P 78827, 2003-1 USTC P 50438, 91 AFTR 2d 1812.
Trustee's objection to homestead exemption based on exception for tax debts owed to IRS under
11 USCS § 522(c)(a) was denied because IRS had not chosen to assert its rights under 11 USCS §
522(c)(a) based on debtor's "941 tax debt" under 11 USCS § 507(a)(8)(C). In re Stone (2005, BC
ND Iowa) 329 BR 860.
VI.KINDS OF PROPERTY EXEMPT
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11 USCS § 522

Property added to estate after commencement of proceeding under 11 USCS §§ 541(a)(3)
through (a)(7) is "property of the estate" and can be claimed by debtor as exempt under 11 USCS §
522(b). In re Wilson (1982, CA11 Fla) 694 F2d 236, 9 BCD 1352, 7 CBC2d 895, CCH Bankr L
Rptr P 68910.
Before exemption can be claimed, it must be property of estate. In re Yonikus (1993, CA7 Ill)
996 F2d 866, 29 CBC2d 114, CCH Bankr L Rptr P 75276 (criticized in In re Daniels (2001, BC ED
Mich) 270 BR 417) and (criticized in In re Robinson (2003, BC SD Ohio) 292 BR 599) and (criti-
Traceable assets are not exempt under 11 USCS § 522(d)(10). In re Williams (1995, BC WD
Mich) 181 BR 298, 33 CBC2d 1118, affd (1995, WD Mich) 1995 US Dist LEXIS 17212.
Chapter 7 trustee's objection was denied, where trustee sought to prevent bankruptcy debtor
from exempting from administration by trustee debtor's interest in single family residence owned by
debtor and debtor's spouse (not in bankruptcy), as tenants by entireties; ruling sought by trustee
would render 11 USCS § 522(b)(2)(B) nugatory. In re Greathouse (2003, BC DC Md) 295 BR 562,
92 AFTR 2d 5265.
84. Debtor's "interest" as equity in property
Phrase "debtor's interest" in 11 USCS § 522(d)(1) does not mean only debtor's equity, and it is
broad term encompassing many rights of party. In re Maddox (1983, ND Ga) 27 BR 592, affd
(1983, CA11 Ga) 713 F2d 1526, 9 CBC2d 568, CCH Bankr L Rptr P 69770.
Congress, in enacting 11 USCS § 522, did not intend word "interest", as used in provision per-
mitting debtor's interest in household goods to be exempted, to be used interchangeably with word
"equity", and it was not intention of Congress to allow debtor to exempt property only where debtor
had equity in such property; rather, 11 USCS § 522 is to be construed as providing that only unen-
cumbered portion of property, in other words, debtor's equity, is to be used for purpose of determin-
ing when debtor has used up exemptions so that if debtor claims exemption in property in which he
has no equity, there is no reduction in amount of exemptions. In re Van Gorkom (1980, BC DC SD)
4 BR 689, 6 BCD 541, 2 CBC2d 477.
Provisions of Bankruptcy Code in 11 USCS §§ 541, granting trustee all legal or equitable inter-
ests of debtor in property, and 522, granting debtor right to claim exemption in certain property,
represent departure from Bankruptcy Act, under which title to all property of debtor except exempt
property vested in trustee; therefore, to be exemptable under 11 USCS § 522, portion of property
must be unencumbered. In re Boteler (1980, BC SD Ala) 5 BR 408, 6 BCD 798.
Debtor's exemption rights in property subject to security interest is limited to equity which is
amount by which value of property exceeds secured debt; thus, debtor's claim to exemption in mo-
bile home is denied since debtor may exempt only equity in property subject to security interest and
debtor has no equity in mobile home because unpaid balance of indebtedness exceeds its value. In
re Morgan (1980, BC MD Tenn) 6 BR 701, 6 BCD 1202.
Debtor is entitled to homestead exemption under 11 USCS § 522(f)(1) to avoid judicial lien even
though debtor has no equity interest in property where § 522(f) allows debtor to create equity by
avoiding nonpossessory, non-purchase money liens and state homestead exemption statute makes
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11 USCS § 522
no reference to debtor's equity interest. In re Farley (1982, BC ED Tenn) 19 BR 868, CCH Bankr L
Rptr P 68692.
Debtor may claim exemption in property as to which he has no equity since 11 USCS §
522(d)(1) refers to "debtor's aggregate interest, not to exceed $ 7,500 in value, in real property";
debtor's interest in property is not extinguished by his lack of equity therein. In re Chesanow (1982,
BC DC Conn) 25 BR 228.
Under 11 USCS § 522(d)(1) debtor may claim exemption in real property owned as joint tenant
that exceeds his equity in property where his aggregate interest does not exceed statutory limit;
debtor's aggregate interest in residence is not limited to equity in sense of excess of value over other
liens; debtor's aggregate interest in residence includes right to possession, right to redeem after de-
fault but prior to foreclosure, and right to make mortgage payments in future and thus create future
equity. In re Ricks (1984, BC DC Dist Col) 40 BR 507, 11 BCD 1341, CCH Bankr L Rptr P 69945.
Under opt out provision of 11 USCS § 522 and Colorado courts' interpretation of state exemp-
tions, debtors are only entitled to exemption to extent of their equity in mortgaged property, thus
debtors can claim no exemptions where they have no equity. In re Holcomb (1985, BC DC Colo)
54 BR 59.
Chapter 7 debtors cannot claim certain consumer goods purchased from Sears to be exempt
where Sears's purchase money security interest in goods is $ 400 more than stated retail value of
goods purchased; equity in property is required to exempt all or portion of it and, if indebtedness
exceeds value of goods, lack of equity forecloses use of 11 USCS § 522 exemptions. In re Orecchio
(1985, BC DC NJ) 54 BR 685, 42 UCCRS 1438.
Bankruptcy court agreed with trustee's objection to debtor's exemption and found that debtor
where court agreed that state Supreme Court's decision did not extend presumption of tenancy by
entireties to all personal property; court sustained trustee's objection to debtor's claim of exemptions
where debtor was unable to produce documentary proof of his intention to own personal property at
issue by entireties. In re McAnany (2003, BC MD Fla) 294 BR 406, 16 FLW Fed B 152.
Bankruptcy court agreed with Chapter 7 trustee's argument that there was no prior intent on part
of debtor and his non-debtor spouse to hold personal property by entireties; court sustained trustee's
objection to debtor's claim of exemption. In re McAnany (2003, BC MD Fla) 294 BR 406, 16 FLW
Fed B 152.
Debtor could not claim exemption in her engagement ring and wedding band as entireties prop-
erty under Pennsylvania law because title to these items vested in debtor once she and her husband
were married. Walsh v Gregorchik (In re Gregorchik) (2004, BC WD Pa) 311 BR 52.
With respect to eight subsections of 11 USCS § 522(d) that have monetary limitations (§
522(d)(1), (2), (3), (4), (5), (6), (8), and one subpart of (11)), preferred rule is that in-kind exemp-
tion of property from bankruptcy estate should not be granted; rather, exemptions should be limited
by monetary amount set forth in statute. In re Cormier (2008, BC WD Mich) 382 BR 377.
85. "Wild card" and spillover exemptions
11 USCS § 522(d)(5) contemplates exemptions limited by maximum monetary amount; it does
not provide for "in kind" exemptions. Lewandowski v Lim (In re Lewandowski) (2008, ED Mich)
386 BR 643.
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11 USCS § 522
11 USCS § 522(d)(5) exemption meant only that Chapter 7 debtors were entitled to recover first
$ 7,500 from proceeds of sale of their property and that remaining proceeds were property of estate
under 11 USCS § 541(a)(1); thus, bankruptcy court properly authorized trustee to sell property un-
der 11 USCS § 363(b). Lewandowski v Lim (In re Lewandowski) (2008, ED Mich) 386 BR 643.
Spillover provided by 11 USCS § 522(d)(5) is to be given liberal construction, and may be ap-
plied without limitation or restriction of any kind with regard to type of property which may be ex-
empt under such section. In re Boozer (1980, BC ND Ga) 4 BR 524, 6 BCD 529, 2 CBC2d 435,
Fact that community property interests are indivisible under California law does not invalidate
any exemption claim not joined in by both debtors; only limitation on exemptions provided by 11
USCS § 522(d)(5) is that claims cannot total more than $ 7900. In re Smith (1980, BC SD Cal) 8
BR 375.
11 USCS § 522(d)(1) and (5) when used in conjunction allow debtor to exempt up to $ 7900 of
equity in any property. In re Gagnon (1983, BC MD Pa) 26 BR 926.
Under California catch-all exemption provision, Chapter 7 debtors may exempt their interest in
excess value of goods which are not fully exemptible under other provisions. In re Lucas (1986, BC
SD Cal) 62 BR 949, 14 BCD 729, affd in part and revd in part on other grounds (1987, BAP9 Cal)
77 BR 242.
Vermont wildcard exemption statute which allows debtor to exempt aggregate interest in "any
property," not to exceed $ 400 in value, plus up to $ 7,000 of any unused amount of other exemp-
tions applies to real property. In re Christie (1992, BC DC Vt) 139 BR 612.
$ 850 wildcard exemption under 11 USCS § 522(d)(5) means that total of exemptions claimed
may not exceed $ 850 rather than limiting exemption to $ 850 in any one asset. In re Burnett (1999,
BC ED Ark) 241 BR 438.
Since plain language of 11 USCS § 522(d)(5) and its legislative history reflect congressional in-
tent that federal wild card exemption apply to all types of property, not just types described in 11
USCS § 522(d), such exemption may be combined or stacked with other exemptions to protect any
type of property. Vaillancourt v Granite Group (In re Vaillancourt) (2001, BC DC NH) 2001 BNH
10, 260 BR 66, 46 CBC2d 230.
Any property can be exempted under 11 USCS § 522(d)(5), provided that property is part of
debtor's bankruptcy estate under 11 USCS § 541. In re Cohen (2001, BC DC NJ) 263 BR 724.
When debtor takes exemption in particular asset pursuant to 11 USCS § 522(d)(5), property
claimed as exempt within meaning of 11 USCS § 522(l) is merely interest in property not to exceed
specified value; accordingly, where value of asset exceeds amount of claimed exemption, asset as
whole does not become exempt. Soost v NAH, Inc. (In re Soost) (2001, BAP8) 262 BR 68.
Unpublished: Where debtor exempted pending tort action, which alleged violation of § 1983,
malicious prosecution, and negligence, in connection with false arrest, trustee's objection to exemp-
tion under 11 USCS § 522(d)(5) was sustained; debtor could only exempt recovery of lawsuit up to
$ 9,288 because he had claimed other property, totaling $ 362, as exempt under § 522(d)(5). In re
David (2004, BC DC Dist Col) 2004 Bankr LEXIS 2245.
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86.--Use for specific property

Bankruptcy court incorrectly ruled that a debtor must first take a homestead exemption in order
to exempt up to $ 7,500 of unused amount of homestead exemption under wild card provision of 11
USCS § 522(d)(5) as wild card exemption allows exemption of unused amount of homestead ex-
emption in order not to discriminate against non-homeowner, and case is remanded for determina-
tion whether Chapter 7 debtor has interest in two lawsuits for which debtor claimed exemption and
whether debtor is entitled to wild card exemption for them. Martin v Cox (In re Martin) (1998, CA8
Ark) 140 F3d 806.
Where debtors who filed joint petitions in two separate Chapter 7 cases were spouses who held
property as tenants by entirety, each debtor's "aggregate interest" in property for purposes of exemp-
tion under 11 USCS § 522(d)(5) was not limited to 50% of value of property, as bankruptcy filings
did not sever tenancies; debtors in first case could therefore exempt unequal portions of stock port-
folio; in second case, one debtor could exempt entire value of parcel of real estate and could exempt
more than 50% of value of personal property owned by entireties. In re Brannon (2007, CA3 Pa)
Debtors may claim exemption in household goods in excess of $ 200 limit prescribed by 11
USCS § 522(d)(3) by use of spillover exemption provided for in 11 USCS § 522(d)(5), inasmuch as
there is no limitation or restriction of any kind with regard to type of property which may be exempt
under such spillover provision. In re Boozer (1980, BC ND Ga) 4 BR 524, 6 BCD 529, 2 CBC2d
Exemption provision of 11 USCS § 522(d)(5) must be liberally construed and words selected by
Congress "any property" mean just that and this largesse variously described as "spillover, grub-
stake, wildcard, and unfilled bin" includes $ 3,500.00 in income tax refunds and $ 7,500.00 remain-
der owing on contract for deed in case of joint debtors who are each entitled to federal exemption of
$ 7,900.00; although it may be argued that stacking of 2 exemptions is unjust and windfall to debt-
ors and for some debtors such benefits may be unwarranted to others same relief may be essential
element of fresh start envisioned by Congress. In re Schuler (1981, BC DC Mont) 13 BR 478, 7
BCD 503.
Debtor may aggregate $ 7500 exemption of 11 USCS § 522(d)(1) with $ 400 exemption of §
522(d)(5) without first applying exemption of § 522(d)(1) against debtor's residence, and debtor
may use § 522(d)(5) to exempt any property, including insurance proceeds, up to $ 7900 limit; pur-
pose of § 522(d)(5) is to equalize treatment between those who own their residences and those who
rent. In re Hawley (1982, BC MD Pa) 24 BR 42, 6 CBC2d 1496.
Louisiana homestead exemption which limits exemption to real property is authorized under 11
USCS § 522(b)(1) notwithstanding allegation that it violates federal policy behind 11 USCS §
522(d)(5) to provide equal treatment to owners and nonowners of real property and therefore vio-
lates supremacy clause of United States Constitution; Louisiana debtors who did not own real prop-
erty will not be permitted to establish "wild card" exemption pursuant to 11 USCS § 522(d) in order
to exempt their income tax refunds and utility deposits. In re Gauntt (1984, BC WD La) 36 BR 721.
Debtor may claim $ 750 tools-of-trade exemption under Illinois law and may exempt his excess
equity of $ 850 pursuant to Illinois wild card provision, there being no evidence that Illinois legisla-
ture intended to repeal tools-of-trade exemption by limiting exemptions to property used for per-
sonal purposes; rather, combining 2 exemptions enhances debtor's opportunity to realize self-
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11 USCS § 522
sufficiency, which is goal of exemption statutes and thus debtor may avoid bank's nonpurchase
money security interest in amount of $ 1600 which is extent that it impairs debtor's exemption. In
re Allman (1986, BC CD Ill) 58 BR 790.
Assuming that Nebraska statute intends that only necessary items may be exempted as house-
hold furnishings, Chapter 7 debtors' stereo and color television are not necessities and thus not ex-
empt; however, debtors may exempt these items under "wild card" exemption, whose only limita-
tion is that it does not apply to wages. In re Welborne (1986, BC DC Neb) 63 BR 23.
Chapter 7 debtors may, under 11 USCS § 522(d)(5), use unused portion of homestead exemp-
tion to exempt pension monies paid postpetition. In re Magnus (1988, BC ED Pa) 84 BR 976, 17
BCD 632.
Debtors who valued tools of at maximum exempt amount under federal exemptions were not es-
topped from amending schedule to include any excess value in their "wild card" exemption under
11 USCS § 522(d)(5). In re Henry (1995, BC ND Tex) 183 BR 748, 33 CBC2d 1545.
Upon filing bankruptcy, debtor's entire employee stock option became property of bankruptcy
estate, and formula by which portion allocatable to post-petition efforts of debtor would be excluded
from estate was not good law; debtor's claim of exemption could not stand, where option had some
value as of filing, even though he could not yet exercise it, but he was out of "wild card" to shelter
it; although trustee could have received entire stock option, bankruptcy court could only award her
proportion of option for which she pleaded under prior case law. In re Dibiase (2001, BC WD Tex)
270 BR 673, 47 CBC2d 631.
Where debtor claimed as exempt his stock in several corporations undergoing bankruptcy reor-
ganization and debtor listed value of claimed exemption (and market value of stock) as $ 10, and
where trustee was concerned that, although stock was probably worthless, it might appreciate if
corporations' reorganizations were successful, trustee could not prevail on claims that (1) exemption
should be limited to amount debtor claimed; and (2) trustee was entitled to any post-petition appre-
ciation in value of stock. Tidwell v Leskosky (In re Leskosky) (2002, BC MD Ga) 287 BR 295.
Chapter 7 trustee's objections to four exemptions claimed by Chapter 7 debtor were partially
sustained since (1) debtor had claimed $ 2,000 exemptions under 11 USCS § 522(d)(5) with regard
to one professional corporation and three limited liability companies; (2) after objections were filed,
debtor agreed to waive two of his claimed exemptions and to amend his Official Bankr. Sched. C to
reflect $ 6,000 exemption in company one and $ 2,000 exemption in company two; (3) because
trustee did not object, debtor would be allowed to amend his schedule to reflect two agreed-upon
exemptions; and (4) although debtor argued that his interest in company one should not remain as
part of bankruptcy estate under 11 USCS § 541, because value of his interest in that asset was less
than $ 6,000 exemption amount, court could not determine that issue because debtor had not pre-
sented any evidence establishing what value of his interest in that asset was. In re McCabe (2006,
BC DC Mass) 356 BR 314.
B.Entireties and Joint Property Exempt From Process
Maryland entireties property is not exempt under 11 USCS § 522(b)(2)(B) to extent of joint
claims scheduled by individual Chapter 7 debtor spouse, thus trustee may administer entireties
property for benefit of joint creditors under 11 USCS § 363(h); to allow individual debtor to exempt
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11 USCS § 522
entireties property and defeat joint creditor's claim entirely would also destroy creditor's claim
against nonfiling spouse and recreate "legal fraud" practiced under 1898 Act. Sumy v Schlossberg
(1985, CA4 Md) 777 F2d 921, 13 BCD 1237, 13 CBC2d 1213, CCH Bankr L Rptr P 70861.
Indiana exemption statute is intended to shield entirety property of debtor in bankruptcy from
claims of creditors, including joint creditor, to greatest extent possible and it has in effect exempted
entirety property, if listed by debtor, from debtor by bankruptcy trustee; exemption statute does not
merely codify Indiana common-law practice of immunizing entirety property from execution by
individual, as opposed to joint, creditors. In re Paeplow (1992, CA7 Ind) 972 F2d 730, 23 BCD
Interests of debtor and his wife in property as tenants by entirety is exempt under 11 USCS §
522(b)(2)(B) where wife did not file for bankruptcy, and both are not indebted to any common
creditor. In re Lausch (1981, MD Fla) 16 BR 162, 6 CBC2d 59.
Bankruptcy Court, by ordering joint administration of separate petitions of husband and wife,
may defeat exemption of each debtor's interest in property held by entirety to which he or she would
be entitled as sole debtor in bankruptcy. D'Avignon v Palmisano (1982, DC Vt) 34 BR 796.
Chapter 7 debtor is entitled to 11 USCS § 522(b)(2)(B) exemption in property held as tenants by
entirety with non-debtor spouse to extent that Rhode Island law provides that property held as ten-
ants by entirety is immune from grasp of creditors until such time as debtor outlives nondebtor
spouse; attachment of property may stand, but immediate levy may not go forward. In re Furkes
(1986, DC RI) 65 BR 232.
In light of Virginia's strong common law rule defining nature of tenancy by entireties, exemp-
tions may properly be claimed by both spouses when both are in bankruptcy, but no joint creditors
are present, so that individual creditors for each debtor may not reach real property, because interest
of other debtor acts to bar their claim; nor may trustee, acting as couple's joint creditor, administer
entireties property under 11 USCS § 544. Thomas v Peyton (2001, ED Va) 274 BR 450, affd (2002,
CA4 Va) 312 F3d 145, 49 CBC2d 1157, CCH Bankr L Rptr P 78750.
Properties held by debtor and her husband as tenants by entirety was part of bankruptcy estate,
and bankruptcy court, thus, had jurisdiction to determine how properties should have been utilized
to satisfy debts of debtor, and, because bankruptcy court looked to property that was in estate of
debtor in any given case, fact that husband's bankruptcy proceeding was dismissed with prejudice
was irrelevant; absent claim of exemption under Bankruptcy Code for estates by entirety, two prop-
erties were properly included in bankruptcy estate of debtor and were subject to provisions of Bank-
ruptcy Code that allowed debtor as debtor-in-possession to avoid deeds of trust as fraudulent con-
veyances. Coleman v Cmty. Trust Bank, N.A. (In re Coleman) (2003, WD Va) 299 BR 780, 92 AFTR
2d 7145.
Exempt entireties property was free from any individual claims of creditors, and bankruptcy
court was ordered to disregard any claims of scheduled creditors unless creditors made timely ob-
jections to exemption under Fed. R. Bankr. P. 4003(b); in event of any such valid objection, joint
creditors were entitled to reach entireties property subject only to separate state homestead exemp-
tion. Spears v Boyd (In re Spears) (2004, WD Mich) 313 BR 212.
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11 USCS § 522
It would not be equitable for husband and wife debtors to retain entirety property as exemption
under 11 USCS § 522(b)(2)(B) to detriment of creditors to whom they are indebted jointly. In re
D'Avignon (1981, BC DC Vt) 34 BR 790, affd (1982, DC Vt) 34 BR 796.
Debtors may claim as exempt under 11 USCS § 522(b)(2)(B) that interest in entireties property
which exceeds amount of joint obligations of debtor and non-debtor spouse. In re Hovatter (1982,
BC DC Del) 25 BR 123.
Wife debtor is entitled to her interest in estate by entirety declared exempt under 11 USCS §
522(b)(2)(B) where no debts were incurred by wife and under local law, estate by entirety is pro-
tected from sole creditors of either spouse; her interest in homestead premises as tenant by entirety
may not be charged with obligations of her husband. In re Pauquette (1984, BC DC Vt) 38 BR 170.
11 USCS § 522(b)(2)(B) does not exempt nonhomestead entireties property in joint case, at least
where there are joint obligations of debtors exceeding value of nonhomestead entireties property. In
re Blum (1984, BC SD Fla) 39 BR 897, CCH Bankr L Rptr P 69878.
Debtor cannot simultaneously exempt real property owned by entireties under 11 USCS §
522(b)(2) and § 522(b)(1), as personal property, because exemptions are alternative and exclusive;
thus, debtor must elect state exemption scheme to claim exemption as tenant by entireties. In re
Lawson (1985, BC DC Vt) 45 BR 686, 12 BCD 818.
Individual Chapter 7 debtor's entireties property is not exempt under 11 USCS § 522(b)(2)(B)
because Rhode Island Supreme Court has held creditors may attach, but not levy upon, entireties
property, and thus Rhode Island does not shield entireties property from all "process." In re Gibbons
(1985, BC DC RI) 52 BR 861, 13 BCD 705, 13 CBC2d 759, CCH Bankr L Rptr P 70745.
Trustee of Chapter 7 debtor wife may not sell properties held by debtor and husband by entire-
ties, because under 11 USCS § 522(b)(2)(B) and Tennessee law, debtor's possessory interest in
property held by entireties is immune from process; only debtor's survivorship interest may be sold.
In re Hankins (1985, BC MD Tenn) 53 BR 18.
Debtor's claimed state law exemption of real estate held by entireties is of no effect as to joint
creditor of debtor and spouse, since under state law entirety property was subject to execution on
judgment against husband and wife for same obligation. In re Bonner (1986, BC ED Mo) 3 BAMSL
1825.
Chapter 7 debtor may claim entireties property as exempt from bankruptcy estate pursuant to 11
USCS § 522(b)(2)(B), if that property is immune from process under applicable nonbankruptcy law.
In re Bialon (1986, BC WD Pa) 67 BR 451.
Under Ohio law, entireties property is not subject to process for debts of one spouse and pursu-
ant to 11 USCS § 522(b)(2)(B), therefore, property held in estate by entireties is exempt property in
bankruptcy case filed by individual spouse where debts scheduled are not joint marital debts but
rather are debtor husband's individual debts with exception of mortgage debt on marital residence.
In re Pernus (1992, BC ND Ohio) 143 BR 856, CCH Bankr L Rptr P 74832.
Looking to Maryland law, creditors' objections to joint Chapter 11 debtors' amended claim of
exemptions in property they owned as tenants by the entirety are overruled; under 11 USCS §
522(b)(2)(B) and applicable state law, joint debtor spouses may exempt their equity in entireties
property to extent that their equity in the property exceeds sum of all joint claims against both debt-
ors. In re Ginn (1995, BC DC Md) 186 BR 898, 8 Fourth Cir & Dist Col Bankr Ct Rep 235.
Page 167
11 USCS § 522
If bankruptcy petition is filed after divorce, when property is no longer held in tenancy by en-
tireties, that property is no longer entitled to exemption under 11 USCS § 522(b)(2)(B). Webster v
Hope (In re Hope) (1999, BC DC Dist Col) 231 BR 403, 11 Fourth Cir & Dist Col Bankr Ct Rep
290.
Bankruptcy court found that trustee's objection to claim of exemption reflected that debtor and
her spouse did not agree to sever estate during their divorce action, which was never finalized, and
their conduct and manner that proceeds were held was not inconsistent with tenants by entireties in
Virginia; thus, court overruled trustee's summary judgment motion on objection to claim of exemp-
tion. In re Nagel (2003, BC ED Va) 298 BR 582.
Debtor's brokerage account was exempt under state law where account was held with debtor's
husband as tenants by entireties; although account application showed that "joint tenancy" box was
checked, box was checked by sales representative without debtor's consent as this was brokerage
firm's standard operating procedure, and both debtor and her husband testified they held, and had
always intended to hold, all of their assets as marital property. In re Bellwoar (2003, BC ED Pa)
299 BR 369.
Separate from 11 USCS § 522(d) exemptions, this special provision, § 522(b)(2)(B), is available
to debtors who file in opt-out states like Illinois; even though it is federal exemption, it is clearly
dependent on state law as entireties interest is exemptible only to extent such interest is exempt
from process under applicable nonbankruptcy law, thus any contention that Illinois tenancy by en-
tireties provision is not exemption statute must be rejected; by casting it as federal exemption, Con-
gress has eliminated any inquiry into whether state legislature intended its tenancy by entirety stat-
ute to be kind of exemption provision available to debtor in bankruptcy by operation of 11 USCS §
522(b)(2). In re Tolson (2005, BC CD Ill) 338 BR 359.
Where bankruptcy debtor transferred real property to debtor and debtor's spouse as tenants by
entirety prior to filing bankruptcy, and trustee avoided fraudulent transfer and sold property, debtor
was not entitled to homestead exemption under state law; debtor and spouse did not have separate
interests in property under state law, undivided interest of debtor and spouse passed to estate upon
bankruptcy filing, and thus 11 USCS § 522(g)(1) applied to bar debtor's homestead exemption based
on debtor's fraudulent and voluntary transfer of property. Zubrod v Duncan (In re Duncan) (2003,
CA10 Wyo) 329 F3d 1195, CCH Bankr L Rptr P 78863.
Where trustee argued that 11 USCS § 544(a)(2) allowed him to stand in shoes of IRS as creditor
for purposes of reaching debtor's entireties property despite exemption that was created by 11 USCS
§ 522(b)(2), appellate court found that (1) it was clear from plain definitions of "extend" and
"credit" that voluntariness of extension of credit was implicit in 11 USCS § 544(a)(2) and IRS was
not voluntary creditor; (2) Congress did not intend bankruptcy trustee to wield extraordinary collec-
tion powers of federal government; and (3) were trustee able to stand in shoes of IRS, conceivably
no state law exemption would continue to exist, despite Bankruptcy Code's explicit recognition of
exemptions under state law; thus, strong-arm clause of Bankruptcy Code, 11 USCS § 544(a)(2), did
not vest trustee with rights and powers of IRS under federal tax laws to reach entireties property for
benefit of debtor's individual creditors. Schlossberg v Barney (2004, CA4 Md) 380 F3d 174, CCH
Bankr L Rptr P 80148, 94 AFTR 2d 5505.
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11 USCS § 522
Bankruptcy court's allowance of exemption for property that debtor held with her spouse as ten-
ants by entireties under 11 USCS § 522(b)(3)(B) was proper because (1) plain language of 23 Pa.
Cons. Stat. § 4102, which codified "doctrine of necessaries," did not provide that creditor could
execute on entireties property but stated expressly that creditor of debtor spouse could execute on
"separate property" of nondebtor spouse under circumstances described; (2) while statute did not
define "separate property," state legislature clearly knew how to distinguish between "separate
property" and "entirety property" and how to make entireties property available to creditors in other
contexts, and it chose not to provide for execution on entireties property in § 4102; (3) § 4102 did
not impose joint and several liability on each spouse, but instead made spouse who incurred debt
primarily liable and nondebtor spouse only secondarily liable; and (4) application of statute written
as would not give rise to absurd or unreasonable results that it might justify departure from its plain
language. In re O'Lexa (2007, CA3 Pa) 476 F3d 177, CCH Bankr L Rptr P 80843.
Chapter 7 debtor's fee simple interest, which she acquired by virtue of divorce and which be-
came property of estate within meaning of 11 USCS § 541(a)(5)(B), is not entitled to any exemption
claimed under 11 USCS § 522 in interest which debtor had "immediately before commencement of
case as tenant by entirety", where exemption was fixed at time debtor filed her petition, and after
filing, property ceased to be entireties property, since within 180 days of filing and pursuant to final
decree of divorce, debtor acquired property as fee simple owner, and thus property was swept back
into estate under § 541(a)(5)(B). Cordova v Mayer (In re Cordova) (1995, ED Va) 177 BR 527, affd
(1996, CA4 Va) 73 F3d 38, 8 Fourth Cir & Dist Col Bankr Ct Rep 622, 34 CBC2d 1457, CCH
Bankr L Rptr P 76755 (criticized in In re Martin (2001, BC MD Pa) 269 BR 119).
Bankruptcy Court's reliance on New Jersey law in sustaining creditor's objection to Chapter 11
debtor's claimed exemption under 11 USCS § 522(b)(2) of two New Jersey condominiums which
debtor owned with spouse in tenancy by the entireties is affirmed; in considering issues pertaining
to exemptions of real property, applicable state law is law of state in which property is located. Kap-
lan v First Options of Chicago (1995, ED Pa) 189 BR 882, reh den, motion dismd (1996, ED Pa)
198 BR 91.
Entireties exemption under 11 USCS § 522(b)(2)(B) is not lost simply because joint creditor
used portion of entireties property to satisfy its debt or because joint creditor is permitted to do so
under applicable nonbankruptcy law; any equity remaining after joint creditor satisfies its debt con-
tinues to be entireties property and exempt under § 522(b)(2)(B). In re Traurig (1983, BC SD Fla)
34 BR 325.
Trustee cannot defeat debtor's claim of entireties exemptions in toto merely because there was
one joint, unsecured claim at time of filing; where amount of exemption under 11 USCS §
522(b)(2)(B) exceeds amount of claims on which debtor is liable, excess may be exempted. In re
Sefren (1984, BC DC Md) 41 BR 747, CCH Bankr L Rptr P 70016.
There is no presumption under Florida law that personal property held by husband and wife is
held by entireties; thus debtor's claim, without other proof, that household goods and furnishings are
exempt because they were bought by joint funds for joint use of debtor and nondebtor wife, fails
and half value of goods and furnishings must be surrendered to trustee, or trustee may liquidate
goods and furnishings under 11 USCS § 363(h). In re Marchini (1984, BC SD Fla) 45 BR 187.
Under 11 USCS 522 property held as property by entireties can be exempted; however, joint tax
refunds, despite practice of designating each spouse as co-payee, are not jointly owned, conse-
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11 USCS § 522
quently joint tax refunds do not constitute entireties property and thus cannot be exempted, rather
refund is deemed to accrue to bankruptcy estate; furthermore, in order to determine each debtor's
interest in refund, it is necessary to allocate refund in accordance with income of each debtor. In re
Burch (1985, BC ED Mo) 3 BAMSL 1567.
Bank, joint creditor of debtor and nondebtor spouse, could have levied on property held as ten-
ants by entireties by debtor and his wife, which property debtor claimed as exempt; thus exemptions
exceed those allowed under Florida law and trustee is entitled to liquidate property under 11 USCS
§ 363(h) notwithstanding 11 USCS § 522(b)(2)(B). In re Bookman (1986, BC SD Fla) 57 BR 522.
Exemptions claimed by wife of Chapter 7 debtor on his behalf in his individual involuntary
bankruptcy are denied insofar as they purport to exempt debtor's interest in property held as tenants
by entirety from claims of joint creditors under 11 USCS § 522(b)(2)(B), where debtor was domi-
ciled in Tennessee for greater part of 180 days prior to bankruptcy and, under Tennessee law, joint
creditors can reach property held as tenants by entirety. In re Butcher (1986, BC ED Tenn) 63 BR
30.
Debtor may not claim exemption under 11 USCS § 522, in property that debtor claims is estate
by entirety, where debtor's testimony that estate by entirety was intended is self-serving and is out-
weighed by terms of purchase money mortgage and by fact that mortgage was received in payment
for house owned and titled in debtor alone. In re Spatola (1986, BC SD Fla) 65 BR 49.
Debtor may not claim exemption under 11 USCS § 522 in 100 shares of stock in Florida corpo-
ration as property held as tenant by entirety where single stock certificate has been executed to
debtor alone and title to stock remains solely in debtor's name. In re Spatola (1986, BC SD Fla) 65
BR 49.
Chapter 7 debtors have interest as tenants by entirety in proceeds from foreclosure sale of their
jointly owned property where assignee of property for benefit of creditors has, in effect, conceded
that funds are property of debtors; wife's interest is valued at 50 percent where she has elected not to
avail herself of Massachusetts common law exemptions prohibiting attachment of her interest but
instead claims property as exempt under 11 USCS § 522. In re Paul (1986, BC DC Mass) 67 BR
342.
Where lease and individual guaranty created joint debt of Chapter 7 debtor and her nondebtor
husband under Pennsylvania law that is not exempt from process under state law, debt does not
qualify for exemption under 11 USCS § 522(b)(2)(B). In re Bialon (1986, BC WD Pa) 67 BR 451.
Debtor who owns dwelling and household goods with his wife in estate by entireties is entitled
to claim state law exemptions under 11 USCS § 522 subject to right of creditors with lien against
entireties property to proceed against entireties property; however, Bankruptcy Court should not
permit creditor who has unsecured claim against both husband and wife to be prejudiced by dis-
charge of husband-debtor; thus in order to prevent prejudice to such creditor either trustee will be
permitted to collect from entireties' assets sufficient property to pay each creditor who has unse-
cured claim against both husband and wife, or discharge will be stayed until creditors with claims
against both spouses effect collection of such claims, and in order to facilitate collection of unse-
cured creditor's claims, debtor may be ordered to file affidavit setting forth names of all prepetition
creditors with claims against both spouses. In re Turner (1988, BC WD Pa) 81 BR 387.
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11 USCS § 522
Chapter 7 debtor's interest in her Massachusetts tenancy-by-entirety is not totally exempt under
11 USCS § 522(b)(2)(B) where debtor's interest is subject to attachment but not subject to levy or
execution at this time, because debtor's right to possession cannot be interfered with unless and un-
til; (1) property is sold; (2) debtor and her present spouse are divorced; or (3) debtor survives her
spouse, at which time trustee will be free to enforce his interest in debtor's estate, therefore, debtor's
exemption is limited by trustee's expectancy. In re McConchie (1988, BC DC Mass) 94 BR 245,
Chapter 7 debtor did not have actual intent to hinder, delay, or defraud her creditor in violation
of 11 USCS § 727(a)(2)(A) where she and her nondebtor husband transferred their entireties prop-
erty on eve of bankruptcy filing because entireties property was exempt from claim of creditor, who
was creditor of debtor only, not nondebtor spouse, under Virginia law and as such it would have
been exempted from creditor's claim pursuant to 11 USCS § 522(b)(2)(B) had it come into debtor's
estate; although creditor is correct in asserting that if debtor and her husband had not transferred
their entireties property prepetition debtor's interest in property would have become part of her
bankruptcy estate, debtor could have exempted her interest to extent it is exempt under Virginia
law, which provides that entireties property is exempt from claim of either spouse's individual credi-
tors, and although trustee could have sold entireties property and administered proceeds of sale for
benefit of joint creditors he could not do so for benefit of debtor's individual creditors. T.R. Press,
Inc. v Whitcomb (1992, BC ED Va) 140 BR 396, 4 Fourth Cir & Dist Col Bankr Ct Rep 388 (criti-
cized in Zanderman, Inc. v Sandoval (In re Sandoval) (1998, CA4 Md) 10 Fourth Cir & Dist Col
Bankr Ct Rep 579).
Funds held by trustee that were derived from liquidation of Chapter 7 debtors' entireties prop-
erty shall be distributed to debtors' joint creditors, less administrative expenses and appropriate ex-
emption and cannot be used to satisfy claim of creditor of debtor husband only; proceeds of entire-
ties property are unavailable to satisfy claims creditors hold against one spouse, even when spouse
who is not obligated to creditor has filed joint petition with spouse against whom creditor's claim
applies. In re Mayes (1992, BC ED Mo) 141 BR 669.
Chapter 7 debtor's asserted exemption of his entire interest in entireties property is disallowed
under 11 USCS § 522(b)(2)(B) to extent of any joint obligations owed by debtor and non-debtor
spouse, where debtor claimed as exempt entire $ 145,000 value on entireties property having $
70,000 joint debt; asserted exemption in entireties property is allowed to extent that value of
debtor's interest in entireties property exceeds amount of joint debts owed. In re Maloney (1992,
BC WD Pa) 146 BR 168, 27 CBC2d 1730.
Although Chapter 7 debtor asserts that trustee cannot file suit against her to rescind transfer that
created entireties property because he did not object to her claim of exemption under 11 USCS §
522(b)(2)(B), trustee is not contesting debtor's right to claim § 522(b)(2)(B) exemption and until
trustee successfully avoids transfer that created tenancy by entirety, debtor is entitled to exemption;
requiring trustee to bring such action within 30-day claim exemption period would defeat purpose
of much longer limitations period on trustee's avoiding powers provided in 11 USCS § 546(a); fur-
thermore, even if Bankruptcy Rule 4003(b) were to be construed to apply, trustee's description of
conveyance in his objection and his statement that he believes it can be avoided is sufficient "objec-
tion" to comply with Rule and it was filed within 30-day period. In re Harry (1992, BC WD Va)
151 BR 735.
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11 USCS § 522
Where debtor has several creditors as to whom he is jointly liable with wife, then status of own-
ership interest in property held with wife as tenants by entirety does not grant him exemption for
that interest from bankruptcy estate. In re Cochrane (1995, BC DC Minn) 178 BR 1011.
Chapter 7 debtor and wife intended to hold checking accounts and tax exempt bonds as tenants
by entireties, thus rendering checking accounts and bonds exempt from bankruptcy estate under 11
USCS § 522(b)(2)(B), where, after years of marriage, debtor and wife jointly deposited their monies
into joint bank accounts; there were no creditor activities establishing that debtor or wife acquired
any of their property, currently claimed as tenancy by entireties, for purpose of insulating any of it
from creditors; and debtor testified that he informed his bank and broker that he wished to have ac-
counts and bonds held so that he and his spouse were fully protected. Enterprise Fin. Corp. v Winn
(In re Wincorp, Inc.) (1995, BC SD Fla) 185 BR 914, 9 FLW Fed B 98 (criticized in In re Bundy
(1999, BC MD Fla) 235 BR 110).
Interest of Chapter 13 debtor/husband in limited liability company was as tenant in common so
that he was not entitled to tenancy-by-entirety exemption under 11 USCS § 522(b)(2)(B) where arti-
cles of organization were only evidence of ownership interests of debtor and his wife and articles,
which provided that each member could transfer interest on consent of other members and that re-
maining members could continue conducting business after one member's interest had been termi-
nated, did not expressly demonstrate intent to hold interest in company in tenancy by entirety or
even provide for right of survivorship, did not state percentage interest and did not state that debtor
and his nondebtor spouse were husband and wife. In re Welty (1998, BC DC Wyo) 217 BR 907.
Properties held as tenancy by entireties by debtor and non-debtor spouse lost their exempt status
under 11 USCS § 522(b)(2)(B) when they were conveyed as tenants in common to self-settled trust.
In re Stanke (1999, BC WD Mo) 234 BR 439.
Personal property held as tenancy by entireties lost its exempt status and passed into bankruptcy
estate upon death of debtor's spouse, subject to state's personal property exemption. In re Tharp
Bankruptcy court inferred sufficient intent from husband and wife's agreement to terminate en-
tireties tenancy and treat proceeds from sale of property as non-entireties property to disallow debt-
ors' entireties exemption, making funds claimed in exemption available to trustee for distribution to
both joint and non-joint creditors. Phillips v McCullen (In re McCullen) (1999, BC ED Va) 244 BR
73, 43 CBC2d 961.
Although there is nothing in Florida constitution or homestead and exemption statutes providing
any exemption based on ownership by husband and wife as tenants by entireties, 11 USCS §
522(b)(2)(B) does recognize ownership immunity provided by common law which renders property
held by spouses as tenants by entireties immune from process; automobile and bank funds were held
by wife/debtor as joint tenant, rather than tenant by entireties, and were subject to administration by
Chapter 7 trustee since Florida statute on ownership of vehicle as joint tenants applied even when
co-owners were husband and wife and since bank's signature cars left no doubt that funds could be
withdrawn by one signatory. In re Mastrofino (2000, BC MD Fla) 247 BR 330, 13 FLW Fed B 140.
For purposes of applying lien avoidance formula in 11 USCS § 522(f), debtor's interest in ten-
ancy by entirety property should be valued at 100 per cent. In re Strandberg (2000, BC DC RI) 253
BR 584.
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11 USCS § 522
Even if tax refund was received because of earned income credit due to fact that non-debtor
husband's children lived with debtor and her non-debtor husband, and debtor and her non-debtor
husband had filed joint return, debtor had earned all of income and therefore refund was property of
bankruptcy estate under 11 USCS § 541(a)(1), and was not held as tenants by entirety for exemption
purposes under 11 USCS § 522(b)(2)(B) and Missouri law, because joint tax return did not effect
change of ownership of property rights as between spouses. In re Walker (2002, BC WD Mo) 279
BR 544, 48 CBC2d 701, 90 AFTR 2d 5216.
In consolidated separate Chapter 7 cases wife successfully argued that only debtors' joint debts
were payable out of sale proceeds of home that she held with her husband as tenant by entirety, and
that sale proceeds could be used to pay creditor's administrative claim because remaining sale pro-
ceeds were exempt property under 11 USCS § 522; because debtors held their former home as ten-
ants by entirety, only creditors holding joint debts under state law could seek satisfaction from pro-
ceeds of its sale. In re Eads (2004, BC WD Mo) 307 BR 219.
Chapter 7 trustee's attorney's fees and expenses were allowable administrative claims entitled to
first priority for payment, but administrative expense claim was not joint debt; payment of adminis-
trative claim out of exempt proceeds of property held in tenancy by entirety was impermissible un-
der 11 USCS § 522(k). In re Eads (2004, BC WD Mo) 307 BR 219.
In spite of Chapter 7 trustee's objection to claimed exemptions of property owned by debtors
pre-petition as tenants by entirety with their non-filing spouses, debtors were clearly eligible to take
advantage of 11 USCS § 522(b)(2)(B) exemption; immediately before commencement of bank-
ruptcy proceedings, debtors each held, as tenant by entirety, interest claimed as exempt under §
522(b)(2)(B). In re Spears (2004, BC WD Mich) 308 BR 793, revd, remanded (2004, WD Mich)
313 BR 212, 52 CBC2d 1356.
In action in which Chapter 7 trustee objected to claimed exemptions of property owned by debt-
ors pre-petition as tenants by entirety with their non-filing spouses court, trustee's objections to 11
USCS § 522(b)(2)(B) exemptions was sustained to extent debtors contended that bankruptcy estate's
interest in subject property continued to be held by bankruptcy estate as tenant by entirety. In re
Spears (2004, BC WD Mich) 308 BR 793, revd, remanded (2004, WD Mich) 313 BR 212, 52
CBC2d 1356.
There was no dispute that debtor's domicile for purposes of 11 USCS § 522(b)(2)(A) was Illi-
nois; therefore, under 765 Ill. Comp. Stat. 1005/1c, debtor could claim exemption to Illinois prop-
erty which he held with his wife as tenants by entireties; however, Michigan properties were not
homestead property of debtor and debtor could not claim exemptions in those properties under 11
USCS § 533(b)(2)(B). In re Giffune (2006, BC ND Ill) 343 BR 883.
Debtor was entitled to claim exemption under former 11 USCS § 522(b)(2)(B) to her interest in
her residence because language of deed transfer clearly treated debtor and her husband as single en-
tity holding undivided 50 percent interest and step-daughter holding other half interest; thus, there
was clear intent to create tenancy by entireties rather than joint tenancy among three individuals. In
re Weber (2006, BC DC Del) 346 BR 346.
Debtor's claim of exemption for residential property owned by tenancy by entireties under 11
USCS § 522(b)(2)(B) was impermissible as it related to joint creditors; degree of immunity provided
to tenancy by entirety property interest is incorporated into § 522(b)(2)(B) by applicable nonbank-
ruptcy law, in instant case is Michigan law, which provides that entireties property is not exempt
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11 USCS § 522
from process by joint creditors in satisfaction of joint debts owed by husband and wife. In re Guzior
(2006, BC ED Mich) 347 BR 237.
Under 11 USCS § 522(b)(3)(b), Chapter 7 trustee was denied voidable preference under 11
USCS § 547(b)(4)(A) to recover pre-petition payment made to creditor from joint bank account held
in tenancy by entireties where there were no joint creditors with valid claims against debtor and his
non-filing spouse and there was no evidence that account contained only debtor's funds or that funds
were placed in joint account for sole purpose of immunizing them from claims of creditors. Tardif v
MBNA Am. Bank, N.A. (In re Kepley) (2006, BC MD Fla) 352 BR 526, 20 FLW Fed B 34.
Bankruptcy court found it was inequitable to allow separately filing spouses to retain ownership
of their real property held as tenancy by entireties as exemption under 11 USCS § 522(b)(3)(B), to
detriment of their joint creditors, by quirk of filing separate petitions. In re Stewart (2007, BC MD
Fla) 20 FLW Fed B 339.
Where Chapter 7 debtor owned stock in company jointly with his wife until they received pro-
ceeds from merger of company into another company, and stock certificate identified owner as
debtor and his wife as joint tenants with right of survivorship, one-half of proceeds was property of
bankruptcy estate because debtor and his wife did not own stock as tenants by entireties. In re
Mathews (2007, BC MD Fla) 360 BR 732, 20 FLW Fed B 249.
Household goods and furnishings owned by Chapter 7 debtor and his wife were not property of
bankruptcy estate because debtor and his wife owned items as tenants by entireties; trustee pre-
sented no evidence that any of household belongings claimed as exempt were purchased outside
term of marriage, no evidence that non-marital funds were used to acquire property claimed as ex-
empt, and no evidence that joint ownership between debtor and his wife was not intended. In re
Mathews (2007, BC MD Fla) 360 BR 732, 20 FLW Fed B 249.
Boat slip jointly owned by Chapter 7 debtor and his wife was not property of bankruptcy estate
because debtor and his wife owned slip as tenants by entireties; because deed was titled jointly in
names of debtor and his wife, there was presumption that slip was owned as tenants by entireties,
and trustee presented no proof to rebut presumption. In re Mathews (2007, BC MD Fla) 360 BR
732, 20 FLW Fed B 249.
Mutual fund account jointly owned by Chapter 7 debtor and his wife was property of bank-
ruptcy estate because debtor and his wife did not own account as tenants by entireties; by checking
joint tenant box on account application form, and not checking tenants by entirety box, debtor and
his wife expressly disclaimed tenancy by entireties form of ownership. In re Mathews (2007, BC
MD Fla) 360 BR 732, 20 FLW Fed B 249.
Pursuant to 11 USCS § 522(b)(3)(B), Florida real property that is owned by Florida-domiciled
debtor is exempt from administration as property of debtor's bankruptcy estate, regardless of when
debtor became Florida domiciliary, if immediately before commencement of bankruptcy case
debtor held tenancy by entireties interest in Florida real property with his or her spouse; only way
that bankruptcy trustee can reach such exempt Florida real property is if trustee can trace fraudulent
conveyance into property or if there are joint debts owed by both debtor and spouse. In re Schwarz
Chapter 7 trustee's objection to Chapter 7 debtor's exemption claim for his Florida residence was
overruled; although trustee was correct that pursuant to 11 USCS § 522(b)(3)(A), debtor could not
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11 USCS § 522
claim homestead exemption for residence under Florida law, because debtor had not lived in Florida
for two years before filing his bankruptcy petition, debtor could nevertheless claim residence as ex-
empt asset under § 522(b)(3)(B) because he owned residence with his wife, he had acquired tenancy
by entireties interest in residence before he filed his bankruptcy petition, residence was exempt from
process under Florida common law, and trustee did not allege that any debts were jointly owed by
debtor and his wife or that debtor had acquired property as result of fraudulent conveyance. In re
Schwarz (2007, BC SD Fla) 362 BR 532, 20 FLW Fed B 265.
Debtor's tax refund was properly claimed as exempt property owned as tenant by entireties
(TBE) under 11 USCS § 522(b)(3)(B); debtor and her non-filing spouse filed joint tax return, they
did not revoke that election, and they were entitled to refund that qualified as TBE property and,
thus, when debtor filed her bankruptcy petition, all required unities existed. In re Freeman (2008,
2.Nonbankruptcy Law as Determining Exempt Status 89. Generally
Under state law, to extent debtor and nonfiling spouse are indebted jointly, property owned as
tenant by entireties may not be exempted from individual debtor's bankruptcy estate under 11 USCS
§ 522 and trustee may administer such property for benefit of joint creditors. Sumy v Schlossberg
(1985, CA4 Md) 777 F2d 921, 13 BCD 1237, 13 CBC2d 1213, CCH Bankr L Rptr P 70861.
Property owned by Chapter 13 bankruptcy debtor as tenancy by entireties with non-debtor under
state law is not part of bankruptcy estate and therefore cannot be reached by creditors; provided that
property meets all requirements as tenancy by entireties under applicable law, it is exempt from
bankruptcy administration under § 522(b)(2)(B) of Bankruptcy Code, 11 USCS § 522(b)(2)(B). Mu-
solino v Sinnreich (In re Musolino) (2004, CA11 Fla) 391 F3d 1295, CCH Bankr L Rptr P 80201,
18 FLW Fed C 53.
"Applicable nonbankruptcy law", as term is used in 11 USCS § 522(b)(2)(B), and under which
court is to determine extent to which debtor's interest as tenant by entirety is exempt from process,
is not restricted to state statutory law, and includes state common law. In re Ford (1980, BC DC
Md) 3 BR 559, 6 BCD 202, 1 CBC2d 840, CCH Bankr L Rptr P 67429, affd (1981, CA4 Md) 638
F2d 14, 3 CBC2d 549, CCH Bankr L Rptr P 67768 and (superseded by statute as stated in In re
Bell-Breslin (2002, BC DC Md) 283 BR 834) and (criticized in In re Spears (2004, BC WD Mich)
308 BR 793).
Although 11 USCS § 522 exempts property held by debtor with non-debtor spouse as tenants by
entirety, it does not create additional federal exemptions with regard to such property, but merely
recognizes immunity if there is one under local law. In re Koehler (1980, BC MD Fla) 6 BR 203, 6
Debtor/spouse's interests in real estate held as tenants by entirety may be claimed as exempt un-
der 11 USCS § 522(b)(2)(B) where creditor's right to levy, as contingent/future right, does not con-
stitute sufficient interest to deprive debtor of exemption. In re Gibbons (1982, BC DC RI) 17 BR
Nature of debtor's interest in property held as tenant by the entirety is to be determined by non-
bankruptcy law; filing of petition for bankruptcy does not generally act to sever estate by the en-
tirety but where state law indicates that an estate is to be severed, each spouse is deemed entitled to
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11 USCS § 522
undivided one-half interest in equity of the property; neither spouse may exempt more than one-half
interest in residence held as tenancy by the entirety. In re Ignasiak (1982, BC ED Mich) 22 BR 828.
Where state law provides entireties property is attachable only for joint debts, 11 USCS §
522(b)(2)(B) preserves the exemption in the property and precludes creditor from selling it where
only one spouse was liable on debt. In re Hayden (1983, BC ED Ky) 41 BR 21, 12 BCD 272.
Debtor/grantee's post-delivery alteration of deed by adding language "as tenants by the entirety
with right of survivorship as at common law" had no effect on type of estate conveyed so that
debtor and his wife did not, under Virginia law, own property by right of entireties, with result that
it was not exempt under 11 USCS § 522(b)(2)(B). In re Scialdone (1995, BC ED Va) 197 BR 225.
Deed to husband and wife as joint tenants with full common law right of survivorship created
tenancy by entireties under Virginia law, so that both land and proceeds of sale of land are exempt
from claims of non-joint creditors. In re Zella (1996, BC ED Va) 196 BR 752, 8 Fourth Cir & Dist
Col Bankr Ct Rep 769, affd (1996, ED Va) 202 BR 712, 8 Fourth Cir & Dist Col Bankr Ct Rep 871
and (criticized in McNeilly v Geremia (In re McNeilly) (2000, BAP1 RI) 249 BR 576).
11 USCS § 522(b)(2)(B), by limiting exemption to property exempt from process under applica-
ble nonbankruptcy law, intended to limit debtor's exemption to that available under applicable local
law, and thus Illinois law would govern entitlement to exempt tenancy by entireties property in in-
stant case. Voiland v Gillissie (In re Gillissie) (1997, BC ND Ill) 215 BR 370.
Unlike state law governing exemption entitlements under 11 USCS § 522(b)(2)(A), state law at
play in § 522(b)(2)(B) is not "keyed into" situs of debtor's prepetition domicile, but is determined by
situs of asset held by debtor as tenant by entireties. McNeilly v Geremia (In re McNeilly) (2000,
BAP1 RI) 249 BR 576.
Filing of bankruptcy petition solely by husband-debtor does not sever estate of tenancy by en-
tirety in either real or personal property held by debtor and wife under state law, such that debtor's
interest in entireties property is property of bankruptcy estate under 11 USCS § 541 and that interest
may be exempted from property of estate by debtor pursuant to 11 USCS § 522. Greenblatt v Ford
(1981, CA4 Md) 638 F2d 14, 3 CBC2d 549, CCH Bankr L Rptr P 67768.
Debtor may not exempt property held with his wife as tenants by the entirety so as to bar lifting
of automatic stay under 11 USCS § 362 in order to allow hospital to seek and enforce state court
judgment to satisfy debt owed for wife's stay as patient in hospital, where 11 USCS § 522(b)(2)(B)
provides that debtor's interest in entireties property may only be exempted if such interest is exempt
from process under nonbankruptcy law, and state law in present case provides that entireties prop-
erty is liable for joint debts of both spouses and is reachable against them by proper process. Chip-
penham Hospital, Inc. v Bondurant (1983, CA4 Va) 716 F2d 1057, 11 BCD 11, CCH Bankr L Rptr
P 69346.
Creditor with judgment on joint debt may levy upon entireties property and thus debtor's interest
is not exempt under 11 USCS § 522(b)(2)(B) since each spouse is liable for whole debt jointly and
severally. In re Grosslight (1985, CA6 Mich) 757 F2d 773, 12 CBC2d 525, CCH Bankr L Rptr P
70332.
New York statute permitting court to make order denying, limiting, conditioning, regulating, ex-
tending, or modifying enforcement procedure is not "applicable nonbankruptcy law" making resi-
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11 USCS § 522
dences owned jointly by Chapter 7 debtors and their nondebtor spouses exempt from process under
11 USCS § 522(b)(2)(B) and not subject to sale under 11 USCS § 363(h) because statute creates no
substantive exemption for any particular type of property interest; under New York law, debtor's
interest in tenancy-by-entirety property is not exempt for enforcement purposes. In re Persky
(1989, CA2 NY) 893 F2d 15, 19 BCD 1860, 21 CBC2d 1460, CCH Bankr L Rptr P 73170.
Missouri nonbankruptcy law does not prevent creditors from attaching entireties property where
both holders of entirety interest are jointly indebted to creditors, and therefore property owned by
debtor and his nondebtor spouse as tenants by entirety may not be exempted by debtor under 11
USCS § 522(b)(2)(B). In re Garner (1991, CA8 Mo) 952 F2d 232, 26 CBC2d 274, CCH Bankr L
Rptr P 74392.
Chapter 7 debtor's bankruptcy estate does not include his present possessory interest in property
he holds as tenant by entirety, but his bankruptcy estate does include his right of survivorship in that
property pursuant to Tennessee law and 11 USCS § 522(b)(2)(B); creditor of only one spouse may
execute judgment against only that spouse's right of survivorship but not against spouse's present
possessory interest under Tennessee law. In re Arango (1993, CA6 Tenn) 992 F2d 611, CCH Bankr
L Rptr P 75231.
Judgment creditor must seek to avoid transfer by which debtor transformed his individual prop-
erty into home furnishings owned with his wife as tenants-by-the-entireties through adversary pro-
ceeding to which debtor's wife is indispensable party in order to preserve her due process rights.
Havoco of Am., Ltd. v Hill (In re Hill) (1999, CA11 Fla) 197 F3d 1135, CCH Bankr L Rptr P
78069, 13 FLW Fed C 271.
Insofar as individual creditors are concerned, entireties property is exempt from process under
Virginia law; thus, presence of individual claims against either or both of spouses in joint case does
not prevent debtor spouses from exempting their interests in entireties property under 11 USCS §
522(b)(2)(B). Bunker v Peyton (In re Bunker) (2002, CA4 Va) 312 F3d 145, 49 CBC2d 1157, CCH
Chapter 7 debtor may not avoid lien on his survivorship interest in property held by him and his
nondebtor spouse as tenants by entirety, despite his argument that allowing creditor to enforce its
judicial lien on right of survivorship will impair his 11 USCS § 522(b)(2)(B) exemption of use and
control of his entireties property because he and his nondebtor wife are now unable to convey mar-
ketable title to encumbered properties without consent of creditor, where under Tennessee law
debtor would not be entitled to exempt his survivorship interest, with or without lien. Arango v
Third Nat'l Bank (1993, ED Tenn) 155 BR 465, affd (1993, CA6 Tenn) 992 F2d 611, CCH Bankr L
Rptr P 75231.
Tennessee garnishment statute does not provide an exemption for earnings in bankruptcy pro-
ceedings and Chapter 7 podiatrist's unpaid patient accounts receivable are not exempt under 11
USCS § 522(b). Lawrence v Jahn (In re Lawrence) (1998, ED Tenn) 219 BR 786.
District court reversed bankruptcy court's order sustaining trustee's objections to debtor's claim
of exemption because entireties property, which was non-exempt under 11 USCS § 522(b)(2)(B),
could be distributed only to creditor who had rights against property under Florida law, which was
joint creditor of both spouses; therefore, because such creditor declined to file claim after non-filing
wife's satisfaction of joint debt, there were no filing by joint creditors to whom proceeds of entire-
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11 USCS § 522
ties property within bankruptcy estate could be distributed. In re McRae (2003, ND Fla) 308 BR
572.
Entireties property, which is non-exempt under 11 USCS § 522(b)(2)(B), may be distributed
only to creditor who had rights against property under Florida law, which includes joint creditor of
both spouses. In re McRae (2003, ND Fla) 308 BR 572.
Creditor's objections to debtor's claim of exemption under 11 USCS § 522 to property he alleged
was held with his wife as tenants in entireties was denied because there was no provision under state
law that altered common law presumption that conveyance of real property to husband and wife
created tenancy by entireties; therefore, debtor's conveyance of property to himself and his wife was
not fraudulent conveyance which could be avoided under 6 Del. C. § 1305(a)(1). Law Office of
Staats, P.A. v Kelly (In re Kelly) (2004, DC Del) 316 BR 629.
25 Del. C. § 309 clearly permitted debtor to convey interest in real property to himself and his
wife because statute repealed former common law rule forbidding such action and allowed married
couples to convey property in any form of interest they desire; furthermore, debtor's failure to state
in deed express description of interest he created only precluded debtor from claiming that he had
created joint tenancy under 25 Del. C. § 701 and, therefore, creditor's objection to debtor's claim for
exemption of property under 11 USCS § 522 was denied. Law Office of Staats, P.A. v Kelly (In re
Kelly) (2004, DC Del) 316 BR 629.
Because "applicable nonbankruptcy law" as that phrase is used in 11 USCS § 522(b)(3)(B) does
not mean exemption law of debtor's domicile, bankruptcy court erred in applying debtor's domicile
state law to reject debtor's exemption; here, where exemption involved Florida property, Florida law
should have been applied. Holland v Safanda (In re Holland) (2007, ND Ill) 366 BR 825.
Debtor's undivided interest in property which he held immediately before commencement of
case as tenant by entirety with nonbankrupt spouse, as such tenancy is presently constituted under
Maryland law, is property of estate in bankruptcy under 11 USCS § 541, and tenancy by entirety is
not severed by filing of petition under Code; "applicable nonbankruptcy law" as term is used in 11
USCS § 522(b)(2)(B), and under which Bankruptcy Court is to determine extent to which debtor's
interest as tenant by entirety is exempt from process, is not restricted to state statutory law and in-
cludes state common law, and where, under such common law, debtor's interest in entireties prop-
erty, standing alone, is unavailable to joint creditor, his interest in entireties property which be-
comes asset of estate is likewise exempt from process under state law, and may be exempted from
bankruptcy estate under 11 USCS § 522 when debtor chooses to exempt property under applicable
state exemption laws. In re Ford (1980, BC DC Md) 3 BR 559, 6 BCD 202, 1 CBC2d 840, CCH
Bankr L Rptr P 67429, affd (1981, CA4 Md) 638 F2d 14, 3 CBC2d 549, CCH Bankr L Rptr P
67768 and (superseded by statute as stated in In re Bell-Breslin (2002, BC DC Md) 283 BR 834) and
(criticized in In re Spears (2004, BC WD Mich) 308 BR 793).
For purpose of determining portion of tenancy by entirety exempt under applicable nonbank-
ruptcy law, debtor may not bifurcate interest in property, claiming that, in addition to interest as
tenant by entirety, allegedly of little value since creditor cannot oust wife from premises or prevent
debtor from continuing to reside on premises, debtor's interest also consists of right to continued
occupancy during wife's lifetime, alleged to constitute main value of tenancy by entirety, for pur-
pose of claiming great part of debtor's own interest, as well as wife's interest, exempt under 11
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11 USCS § 522
USCS § 522. In re Weiss (1980, BC SD NY) 4 BR 327, 6 BCD 431, 2 CBC2d 426, CCH Bankr L
Rptr P 67476.
Under 11 USCS § 541, entire interest of bankrupt spouse in entireties property is property of es-
tate, including undivided present right to use, possession, and income from property, as well as right
of survivorship, and although debtor's present income in property is exempted pursuant to 11 USCS
§ 522, debtor spouse's right of survivorship remains within estate; although, under Tennessee law,
creditors are accorded right to levy on spouse's survivorship interest, debtor spouse's right of survi-
vorship is not sufficient interest in entireties property to enable trustee to sell entire property pursu-
ant to 11 USCS § 363. In re Shaw (1980, BC MD Tenn) 5 BR 107, 6 BCD 651, 2 CBC2d 599.
Under 11 USCS § 522(b)(2)(B) it is not tenancy by entirety itself which becomes part of estate,
but only interest which debtor held in such property immediately before commencement of case;
such interest is exempt only to extent it is immune from process under state law; where at com-
mencement of Chapter 11 proceeding, debtor's interest in property held as tenant by entirety con-
sisted of statutory right to redeem, right expired on date that automatic stay was lifted, and property
was subsequently liquidated; debtor did not possess interest in property which could be considered
exempt from process under state law following termination of statutory redemption period and liq-
uidation of property; unexercised statutory right to redeem does not constitute interest as tenancy by
entirety exempt from process under applicable nonbankruptcy law. In re Jones (1983, BC ED
Mich) 31 BR 372, 8 CBC2d 1215, affd (1985, ED Mich) 49 BR 990.
Joint creditor of husband and wife is entitled to pursue their joint property, known in Florida as
tenancy by entirety property, even where one spouse files bankruptcy and obtains discharge from
indebtedness. In re Snow (1983, BC MD Fla) 38 BR 19, CCH Bankr L Rptr P 69556 (criticized in
In re Monzon (1997, BC SD Fla) 214 BR 38, 38 CBC2d 1469, 11 FLW Fed B 113).
Trustee's objection to debtor's claim of exemptions pursuant to 11 USCS § 522(b)(2)(B) and
state common-law doctrine of tenancy by the entireties will be sustained where debtor's interest in
his entireties property is not exempt from process by his joint creditors under state law. In re Seidel
(1984, BC DC Md) 38 BR 264.
Since, in bankruptcy context, there are significant logical and/or equitable impediments to allo-
cating all of estate to one of tenants by the entirety, for purpose of determining debtor's exemption
in entireties property, one-half of equity in subject property should be allocated to debtor, even
though state case law follows traditional common-law concept that generally tenants by the entirety
are each presently seized and possessed of an interest in entire estate; therefore, where all of debtor's
equity in entireties property is exempt, and there is no excess equity for creditor's lien and such lien
would impair debtor's exemption, debtor may avoid such lien pursuant to 11 USCS § 522(f). In re
Dionne (1984, BC DC RI) 40 BR 137, 10 CBC2d 1178, CCH Bankr L Rptr P 69908.
Property held as tenants by entireties by Chapter 13 spouses subject to judicial lien cannot be
exempted under 11 USCS § 522(b)(2)(B) because, under Pennsylvania law, creditors with joint
judgment or joint debt may levy on entireties property; thus, interest of both spouses and debtor's
interest is therefore not "exempt from process" under § 522; if co-debtor property may be reached to
satisfy state court judgment, if may not be exemption under § 522(b)(2)(B). In re Riley (1985, BC
ED Pa) 48 BR 194.
Where Chapter 7 debtor husband claims exemption in entireties interest in Mexican trust allow-
ing use of condominium in Mexico, "applicable nonbankruptcy law" for purposes of 11 USCS §
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11 USCS § 522
522(b)(2)(B) is situs of trust res: thus debtor and creditors, if objecting, must plead and prove under
Bankruptcy Rule 9017 that entireties interest is or is not exempt under Mexican law because court
will not take judicial notice of foreign law; absent such proof, Bankruptcy Court will apply laws of
state in which it sits. In re Anselmi (1985, BC DC Wyo) 52 BR 479, 13 BCD 573.
Individual Chapter 7 debtor's entireties property is not exempt under 11 USCS § 522(b)(2)(B)
because Rhode Island Supreme Court has held creditors may attach, but not levy upon, entireties
property, and thus Rhode Island does not shield entireties property from all "process." In re Gibbons
(1985, BC DC RI) 52 BR 861, 13 BCD 705, 13 CBC2d 759, CCH Bankr L Rptr P 70745.
New Jersey purchase money mortgage naming debtor and his non-debtor spouse as grantees
may not be exempt under 11 USCS § 522 as estate by entirety because, at its inception, mortgage
could not and did not create or constitute estate by entirety under New Jersey law. In re Spatola
(1986, BC SD Fla) 65 BR 49.
In addition to Florida opt-out exemptions, Chapter 7 debtor may exempt under 11 USCS §
522(b)(2)(B) following entireties property which cannot be reached under Florida law to satisfy in-
dividual debt of one spouse: joint checking account, loan receivable from homeowner's association,
and profit sharing plan; since no entireties estate was created in household furnishings, these are not
exemptible. In re Golub (1987, BC MD Fla) 80 BR 230, 16 BCD 1016.
Chapter 7 trustee's objection to Chapter 7 debtors' claimed exemption of two Agricultural Stabi-
lization and Conservation Service crop insurance payments is overruled where Bankruptcy Court
finds that payments are property that is exempt pursuant to Federal Crop Insurance Act (7 USCS
Chapter 36) and therefore may be exempted by debtors from bankruptcy estate under 11 USCS §
522(b)2)(A). In re Clark (1995, BC WD Mo) 186 BR 249, 34 CBC2d 169.
Although Florida does recognize exemption for personal property held by tenancy by entireties,
debtor was not entitled to it, where he failed to rebut state's presumption against tenancy by entire-
ties with sufficient documentary evidence; i.e., even though three of six furniture receipts were
made out to debtor and his spouse, specific intent to create tenancy by entireties did not clearly ap-
pear on receipts. In re Howe (1999, BC MD Fla) 241 BR 242, 13 FLW Fed B 30.
Florida constitutional and statutory exemptions are not mutually exclusive so that debtor can
utilize constitutional personal property exemption to exempt equity remaining in truck after exhaus-
tion of amount available under motor vehicle exemption. In re Rutter (2000, BC MD Fla) 247 BR
334, 13 FLW Fed B 139.
Indiana statute creating bankruptcy exemption for entireties property is invalidated by Suprem-
acy Clause since statute frustrates full effectiveness of federal bankruptcy law in two ways: (1) stat-
ute changes way Congress allocated consequences of bankruptcy between debtors and creditors and
(2) statute specifically conflicts with statutory framework Congress created for dealing with entire-
ties property in bankruptcy proceedings involving only one spouse. In re Cross (2000, BC ND Ind)
255 BR 25.
Debtor properly claimed real property as exempt pursuant to 11 USCS § 522(b)(2)(B) and laws
of North Carolina pertaining to property held as tenants by the entirety, and property was not avail-
able to trustee to satisfy general unsecured debt that was held solely in name of debtor. In re Knapp
(2002, BC MD NC) 285 BR 176.
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11 USCS § 522
Given continued recognition of states' right to recognize property held as tenancy by entireties,
unique abilities of federal tax collector, longstanding North Carolina law based upon doctrine of
unity of person protecting entireties property, and clear language of 11 USCS § 522, U.S. Supreme
Court's ruling in Craft should not be extended beyond its application to federal tax liens. In re
Knapp (2002, BC MD NC) 285 BR 176.
Where all debt of Chapter 7 debtor qualified as necessaries, debtor could nonetheless claim ex-
emption in her personal residence, which was owned with her husband as tenants by entirety, be-
cause under applicable state law, 23 Pa. Cons. Stat. Ann. § 4102, creditor could not execute on
property. Zebley v Olexa (In re Olexa) (2004, BC WD Pa) 317 BR 290.
Where debtor assigned property he acquired before his marriage to debtor and his wife as ten-
ants by entireties subsequent to marriage pursuant to prenuptial agreement, property was exempt
under 11 USCS § 522(b)(2)(B) as tenancy by entireties because all unities of entireties estate were
in existence at time assignment was executed. In re Kossow (2005, BC SD Fla) 325 BR 478, 18
FLW Fed B 229.
Joint income tax refund constitutes personal property that satisfies unities of possession, inter-
est, title, and time with right of survivorship subject to rebuttable presumption; presumption can be
rebutted based upon extrinsic evidence such as prenuptial agreement; where debtor claimed that
federal income tax refund from joint tax return was exempt under 11 USCS § 522(b)(2)(B) as ten-
ancy by entireties, debtor was denied summary judgment because couple's prenuptial agreement
could be interpreted so as to treat tax refunds as separate property. In re Kossow (2005, BC SD Fla)
325 BR 478, 18 FLW Fed B 229.
Where Chapter 7 debtor sought to exempt personal injury action under Mass. Gen. Laws ch.
223, § 42, because it was non-assignable under state common law, trustee's objection was sustained
because non-assignability did not equate to exemption; 11 USCS § 541 effectuated transfer of assets
from debtor to estate by operation of law rather than by assignment. In re MacDonald (2005, BC
DC Mass) 326 BR 6.
Proceeds of settlement of personal injury action received by bankruptcy debtor and non-debtor
spouse were not exempt in debtor's bankruptcy under 11 USCS § 522(b)(2)(B) as property held in
tenancy by entirety, since there was no unity of interest in debtor's personal injury claim and
spouse's distinct loss of consortium claim. In re Pereau (2007, BC MD Fla) 20 FLW Fed B 371.
Chapter 7 debtor was not permitted to exempt household goods and furnishings as owned with
his non-filing spouse as tenants by entireties because debtor produced no written instrument, as re-
quired by N.J. Stat. Ann. § 46:3-17.2, to show that debtor and his non-filing spouse acquired per-
sonal property as tenants by entireties. Dzikowski v Kirshner (In re Kirshner) (2007, BC SD Fla) 58
CBC2d 1472, 21 FLW Fed B 148.
Remedies of 11 USCS § 523(a)(5) judgment creditor must be pursued in accordance with state
law because 11 USCS § 522(c) is not execution statute and does not confer any rights greater than
that which existed outside of bankruptcy; that is, § 522(c) leaves exempt property exposed to post-
bankruptcy liability only to extent it would have been exposed if bankruptcy had not occurred. Rupp
v Elmasri (In re Elmasri) (2007, BC ED NY) 369 BR 96.
Where Chapter 7 debtor and his wife for their entire 35-year marriage always filed joint tax re-
turns, proceeds from three separate tax refund checks, made payable to both of them and either de-
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posited into bank account designated as tenancy by entireties account or used to purchase jointly-
titled certificate of deposit, were exempt as tenants by entireties property pursuant to state law and
11 USCS § 522(b)(3)(B). Dillworth v Hinton (In re Hinton) (2007, BC MD Fla) 378 BR 371, 21
FLW Fed B 40.
Chapter 7 debtor was entitled under 11 USCS § 522(b)(2)(B) to exemption for $ 2 million resi-
dence held as tenant by entirety with ex-wife since (1) under Hawaiian law, estate by entireties may
not, without consent of both spouses, be levied upon for separate debts of either spouse, (2) creditor
was unable to show fraudulent bankruptcy planning, and (3) equitable considerations should not be
used to disregard clear mandates of Bankruptcy Code and Hawaiian law. Coughlin v Cataldo (In re
Cataldo) (1998, BAP9 Hawaii) 224 BR 426, 98 CDOS 7054, 98 Daily Journal DAR 9889, CCH
In 11 USCS § 522 exemption matter bankruptcy appellate panel found that, under Utah's home-
stead law, joint owners need not be married but were not considered members of "household" unless
they were related by blood or marriage. Carlson v Diaz (In re Carlson) (2004, BAP10) 303 BR 478.
C.Homestead
Homestead exemption in Illinois entitles debtor to remain in his home rent free until he receives
cash value of exemption. In re Szekely (1991, CA7 Ill) 936 F2d 897, 24 CBC2d 2028, CCH Bankr
L Rptr P 74070.
Homestead exemption set forth in 11 USCS § 522 protects debtor and debtor's dependents by
helping them to preserve interest in their home. David Dorsey Distrib. v Sanders (In re Sanders)
(1994, CA10 Utah) 39 F3d 258, 32 CBC2d 582, CCH Bankr L Rptr P 76187 (superseded by statute
as stated in Pepper v Public Serv. Emples. Credit Union (In re Pepper) (1997, BC DC Colo) 210 BR
480, 14 Colo Bankr Ct Rep 205, 38 CBC2d 596) and (superseded by statute as stated in In re
Richardson (1998, BC ND Okla) 224 BR 804, 40 CBC2d 980, CCH Bankr L Rptr P 77815) and
(superseded by statute as stated in Parsons v Investment Co. (In re Parsons) (1999, BAP10 NM) 16
Colo Bankr Ct Rep 55).
Federal exemptions are not applicable where state has specifically vetoed exemptions under op-
tion given by 11 USCS § 522 to each state, and under such circumstances issue of whether property
is exempt homestead is to be decided under state law; value and status of exempt property in bank-
ruptcy is determined as of date petition is filed, and where debtors arrange to retain possession of
homestead until day after bankruptcy petition was filed, at which time they moved into leased prem-
ises, under applicable state homestead exemption, state court case holding that property remains
homestead exemption until sale is closed, is dispositive. In re Crump (1980, BC SD Fla) 2 BR 222,
Amount and method of calculation of state homestead exemption is to be determined by state
nonbankruptcy law. In re Miles (1983, BC ED Cal) 35 BR 52 (criticized in Wiget v Nielsen (In re
Nielsen) (1996, BAP9 Cal) 197 BR 665, 96 CDOS 5516, 96 Daily Journal DAR 8807, CCH Bankr
L Rptr P 77052).
Bankruptcy Court must resort to state law for interpretation of nature of state exemption rights
in homesteads under 11 USCS § 522; state law defines nature and extent of debtor's interest in prop-
erty. In re Evans (1985, BC DC Vt) 51 BR 47.
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Exemption in 11 USCS § 522(d)(11) for personal injury awards is supplemental to other exemp-
tions, not limit on them; thus fact that debtor claims more than § 522(d)(11) allows has no effect on
availability of homestead exemption to debtor. In re Wheeling (1986, BC WD Pa) 68 BR 388.
Although homestead exemptions vary widely from state to state, there are 3 general principles
underlying all: (1) homestead, being creature of statute, must be interpreted in light of statute in
question; (2) homestead statutes are to be liberally construed; and (3) sine qua non of homestead is
ownership plus occupancy; as very broad generalization, it can be stated that if owner intends struc-
ture to be his homestead and actually lives in it, then it can be his homestead, no matter what its
form, appearance, or original use; thus, bar located in middle of block building in which debtor has
made his home for years constitutes exempt homestead under 11 USCS § 522 and will not be parti-
tioned absent sufficient evidence how partition could be practicably accomplished. In re Robinson
(1987, BC WD Mo) 75 BR 985.
Bankruptcy Court must presume that Chapter 7 debtor's property designated as homestead is in
fact being used by debtor as his homestead, thus only that property may be treated as exempt under
Texas homestead exemption and no claim of homestead exemption can be made as to other parcels.
In re Montgomery (1987, BC WD Tex) 80 BR 385, 16 BCD 1351.
Where Chapter 7 debtor properly claimed homestead exemption under 11 USCS § 522(b), such
exempt homestead never became property of estate. In re Spain (1988, BC ND Ala) 83 BR 61.
Under 11 USCS § 522(l), where Chapter 7 debtor properly claimed homestead as exempt and no
objections were filed, homestead is exempt. In re Spain (1988, BC ND Ala) 83 BR 61.
Purpose of 11 USCS § 522(d)(1) is to provide those debtors eligible to select federal exemptions
with homestead exemption, and term "residence" must be interpreted in that light; whether real
property constitutes residence is dependent upon facts of case but vacation homes which involve
seasonal, sporadic occupancy generally do not fall within protection of state homestead laws. In re
Tomko (1988, BC ED Pa) 87 BR 372, 19 CBC2d 16, CCH Bankr L Rptr P 72376.
Debtor's right to claim homestead exemption under 11 USCS § 522 is generally determined by
facts as they exist on date bankruptcy is filed. Martinson v Michael (In re Michael) (1995, BC DC
Mont) 183 BR 230.
11 USCS § 522(p) is applicable to debtors in opt-out states that do not allow choice of federal
exemptions. In re Virissimo (2005, BC DC Nev) 332 BR 201, CCH Bankr L Rptr &p&t80385.
Although there may be ambiguity in 11 USCS § 522(p)(1), since debtors in opt-out states have
very limited right of election, courts should adhere to legislative intent which clearly reflects that
Congress intended cap of $ 125,000 to be applied to all debtors under circumstances mentioned in
section; accordingly, Bankruptcy Court concludes that state debtors are subject to provisions of 11
USCS § 522(p). In re Summers (2006, BC DC Ariz) 344 BR 108.
Debtor's claim of homestead, even though post-bankruptcy, made pursuant to state law prevails
over that of trustee under 11 USCS § 522. In re Martin (1982, BAP9 Cal) 20 BR 235, 9 BCD 164,
Bankruptcy court properly applied tenants by entirety election under Massachusetts law, Mass.
Gen. Laws Ann. ch. 209 § 1, when calculating debtor's homestead exemption, 11 USCS §
522(d)(1)(5), to determine whether debtor could avoid judicial lien pursuant to 11 USCS § 522(f);
record clearly showed that in 1992, debtor recorded in proper county registry of deeds debtor's Elec-
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11 USCS § 522
tion of Treatment for post-February 1980 tenancy by entirety, so debtor had right to whole property
and value of debtor's interest exceeded total amount of liens against property. Maloni v Fairway
Wholesale Corp. (In re Maloni) (2002, BAP1) 282 BR 727, 40 BCD 32, 49 CBC2d 571.
Bankruptcy court correctly applied Oklahoma's homestead exemption to facts of debtor's case,
pursuant to Okla. Stat. Ann. tit. 31, § 1(A)(1) (1991 & Supp. 2000); trustees carried their burden and
proved that debtor did not intend, as of date of bankruptcy petition, to make property her principal
residence and homestead. Robinson v Sanchez (In re Robinson) (2003, BAP10) 295 BR 147.
92. Qualifications for exemption
State's exclusion from scope of its homestead exemption of liens that attached before property in
question qualified for homestead status does not prevent such liens from being avoided under 11
USCS § 522(f). Owen v Owen (1991) 500 US 305, 114 L Ed 2d 350, 111 S Ct 1833, 91 CDOS
3710, 91 Daily Journal DAR 6043, 21 BCD 1164, 24 CBC2d 850, CCH Bankr L Rptr P 73963 (su-
perseded by statute as stated in In re Parrish (1995, BC WD Wis) 186 BR 246, CCH Bankr L Rptr P
76786).
Under former law, right to homestead exemption is privilege given by state statute which by its
terms requires timely execution, acknowledgment, and recordation of declaration of homestead, and
if declaration is not properly acknowledged, it is ineffective; therefore, bankrupts are disallowed
homestead exemption where prior to bankruptcy they (1) execute and record declaration of home-
stead; (2) discover at first meeting of creditors that declaration is void because commission of no-
tary public who took acknowledgment has expired; and (3) then record new declaration. Coopman
v Citizens State Bank (1936, CA9 Wash) 83 F2d 815, cert den (1937) 300 US 655, 81 L Ed 865, 57
S Ct 431 and reh den (1936, CA9 Wash) 85 F2d 799.
Failure to comply with state homestead exemption statute will preclude debtor from claiming
that exemption for bankruptcy purposes; 11 USCS § 522(b)(2)(A) provides that for property to be
exempt under state or local law, it must be claimed as exempt in manner prescribed by those laws;
exemption conferred presupposes compliance with pertinent state and local laws. Zimmerman v
Morgan (1982, CA4 Va) 689 F2d 471, 9 BCD 992, 7 CBC2d 859, CCH Bankr L Rptr P 68794.
Bankruptcy Court cannot impose either constructive trust or equitable lien on Chapter 13
debtor's homestead for unsecured home improvement funds creditor bank advanced to debtor
merely because of oral promise by debtor to comply with Texas statutory requirements for placing
lien on homestead property; Texas constitutional and statutory prerequisites must be strictly com-
plied with before there is any attachment to homestead property; neither will court imply vendor's
lien on homestead since none of funds were used to purchase homestead. In re Daves (1985, CA5
Tex) 770 F2d 1363.
Debtors' failure to comply strictly with opt-out state statutory requirement that both spouses sign
homestead declaration precludes them from claiming their residence as exempt under 11 USCS §
522 where debtors could not establish that it was impossible to obtain both spouses' signatures on
such declaration. In re Renner (1987, CA9) 822 F2d 878, CCH Bankr L Rptr P 71913.
Under Texas law, in order to establish homestead rights, proof must show combination of both
overt acts of homestead usage and intention on part of owner to claim land as homestead; Chapter 7
debtor's actual and continuous use of homestead property since purchase is most satisfactory and
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convincing evidence of intention. In re Niland (1987, CA5 Tex) 825 F2d 801, CCH Bankr L Rptr P
71664.
Debtors could exempt their entireties property (their home) under 11 USCS § 522(b)(2)(B) to
extent of their equity, where none of unsecured creditors was joint creditor of husband and wife,
each of creditors was individual creditor with claim against either husband or wife, and state law
shielded entireties property from claims of individual creditors of either spouse. Bunker v Peyton (In
re Bunker) (2002, CA4 Va) 312 F3d 145, 49 CBC2d 1157, CCH Bankr L Rptr P 78750.
Debtors could exempt their entireties property (their home) under 11 USCS § 522(b)(2)(B) be-
cause their innocent practice of commingling their finances did not convert their individual creditors
into joint creditors under Virginia entireties law. Bunker v Peyton (In re Bunker) (2002, CA4 Va)
312 F3d 145, 49 CBC2d 1157, CCH Bankr L Rptr P 78750.
Where appellee debtor acquired title to Texas property prior to marriage and prior to statutory
period of 11 USCS § 522(p)(1)(D), she was entitled to her full homestead exemption notwithstand-
ing divorce decree's later awarding it to her; district court's affirmance of denying appellant credi-
tor's objection to exemption was affirmed. Wallace v Rogers (In re Rogers) (2008, CA5 Tex) 513
F3d 212, CCH Bankr L Rptr P 81081.
Liquidating Chapter 11 plan allowing homestead exemption cannot be confirmed where no
prepetition homestead deed was filed as required under state's opt-out statute. In re Smith (1987,
WD Va) 75 BR 365.
Bankruptcy Courts must follow state law interpretation of state exemption rights in homesteads
under 11 USCS § 522(b)(2)(A); determinations whether homestead land has urban or rural character
and whether Chapter 11 debtor has abandoned homestead by temporary absences for health reasons
or by transfer of property to holding corporation are questions of state law; under Texas law,
debtor's right to homestead exemption is unaffected by fact that debtor dishonestly engages in mul-
tiple sham conveyances of homestead property in effort to protect home from judgment creditor,
and thus trustee and judgment creditor may not set aside conveyance of debtor's exempt homestead
property since such conduct is not fraudulent as to creditors. In re Moody (1987, SD Tex) 77 BR
580, affd (1989, CA5 Tex) 862 F2d 1194, CCH Bankr L Rptr P 72633, reh den (1989, CA5) 1989
US App LEXIS 3526 and cert den (1992) 503 US 960, 118 L Ed 2d 209, 112 S Ct 1562.
Debtors who have properly and timely filed homestead deed may claim homestead exemption
under 11 USCS § 522(f) even after discharge has been granted, where debtors have engaged in no
inequitable conduct. In re Webb (1984, BC ED Va) 49 BR 646.
Debtors cannot exempt Kansas homestead when filing petition in Virginia because they failed to
comply with Virginia's requirement that homestead deed be filed in county where property is lo-
cated. In re Calhoun (1985, BC ED Va) 47 BR 119.
Chapter 7 debtor may properly claim homestead, under South Dakota law, in parcel on which
house is located in which she and her husband have resided and in which she has owned interest
since 1975 and regarding which debtor has filed affidavit of homestead claim evidencing intent by
debtor to make property her home. In re Corbly (1986, BC DC SD) 61 BR 843.
Chapter 7 debtors who failed to record Declaration of Homestead as required by Montana law to
establish their right to homestead exemption by bankruptcy petition date could not amend their
schedules postpetition to claim exemption, where Montana law provided no automatic homestead
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11 USCS § 522
exemption by possession alone and required compliance with recordation statutes for there to be
valid exemption, thereby making debtors' homestead property of estate on petition date by operation
of 11 USCS § 541. Martinson v Michael (In re Michael) (1995, BC DC Mont) 185 BR 830.
While subsequent mortgage could subordinate prior Massachusetts homestead to mortgage, un-
der Mass. Gen. Laws ch. 188, § 7, such mortgage did not extinguish debtor's homestead claimed as
to all subsequent creditors, and thus, bankruptcy court overruled judicial lien creditors' objection to
debtor's homestead exemption claimed under Mass. Gen. Laws ch. 188, § 1, and granted debtor's
motion to avoid judicial liens under 11 USCS § 522(f)(2)(A). In re Heretakis (2003, BC DC Mass)
293 BR 82.
Chapter 7 trustee could bring fraudulent property transfer suit against transferee though trustee
failed to timely object to debtor's claimed homestead property exemption for land transferred pre-
petition, as land claimed as exempt was never part of bankruptcy estate. Novak v Woodin (In re
Woodin) (2003, BC DC Conn) 294 BR 436, 50 CBC2d 1109.
With no joint debts, debtor was entitled to exempt his entire interest in homestead real estate
that he owned with his wife as tenants by entirety; since he was entitled to full exemption, debtor
could avoid fixing of creditor's judicial lien, on his interest in homestead real estate pursuant to 11
USCS § 522(f)(1)(A), to extent that lien impaired exemption. lien was considered to impair exemp-
tion to extent of $ 143,613.40, amount of creditor's lien, and was therefore fully avoidable. In re
Tolson (2005, BC CD Ill) 338 BR 359.
Where unmarried bankruptcy debtor lived with debtor's non-dependent sibling, debtor nonethe-
less qualified as head of household for purposes of homestead exemption since debtor's dependent
parent lived with debtor prior to parent's death and there was no showing that homestead was termi-
nated; it was irrelevant that parent was only partially supported by debtor, that debtor might not
have been legally obligated to support parent, and that parent died prior to debtor's bankruptcy. In re
Morris (2006, BC WD Ark) 340 BR 78.
Where debtors claimed blanket exemption against their home and 30-acre noncontiguous parcel
of land under Ohio Rev. Code Ann. § 2329.66(A)(1)(b), 30-acre parcel of land could not be claimed
as exempt under § 2329.66(A)(1)(b) because homestead exemption was limited to just one parcel of
property. In re Williams (2006, BC ND Ohio) 345 BR 853.
Where mortgage on debtors' property was defective because it lacked acknowledgment, debtors'
Chapter 13 plan could not be confirmed pursuant to 11 USCS § 1325(a)(4) because if case were one
under Chapter 7, mortgage could have been avoided and creditors would have fared better under
Chapter 7 than under debtors' Chapter 13 plan; debtors' argument that they could amend schedules
and claim their homestead as exempt was no answer to Trustee's objection because once debtor had
voluntarily transferred lien in property to creditor and lien was successfully avoided, debtor could
not subsequently exempt property that was subject to lien. In re Beene (2006, BC WD Ark) 354 BR
856.
Bankruptcy court disallowed debtor's claim to homestead exemption under Fla. Const. art. X, §
4(a)(1) on house he owned with his ex-wife in New York because Florida courts limited exemption
to homesteads that were located in Florida. In re Schlakman (2007, BC SD Fla) 20 FLW Fed B 384.
Bankruptcy court's denial of debtor's claimed homestead exemption under Mass. Gen. Laws ch.
188, § 1 to tract of vacant land connected to his residence was vacated because bankruptcy court did
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11 USCS § 522
not conduct fact specific inquiry into nature and use, or intended use, of vacant land by debtor. Fiffy
v Nickless (In re Fiffy) (2003, BAP1) 293 BR 550.
Unpublished: When debtor's property was abandoned pursuant to 11 USCS § 554, it reverted to
debtor and was no longer part of estate, and because it was not "property of estate," residence was
no longer protected under automatic stay provision of 11 USCS § 362(a), so creditor did not violate
§ 362(a) when he foreclosed on debtor's property; further, because residence was not part of estate
at time of creditor's foreclosure, Homestead Exemption was not applicable. Fields v Bleiman (2007,
DC NJ) 2007 US Dist LEXIS 75543.
93. Marshaling
Debtor's exempt homestead property is not subject to marshaling; state-legislated homestead ex-
emption is superior equity which prevents marshaling of bankrupt's assets. Gibson v Farmers &
Merchants Bank (1986, ND Fla) 81 BR 84.
Chapter 7 debtors' entitlement to homestead exemption under Iowa opt-out provisions depends
on whether judgment creditor with lien on homestead has exhausted other property of debtors liable
to execution, where Iowa exemption provides that homestead may be sold to satisfy debts con-
tracted prior to acquisition, but only after exhaustion of other property. In re Mosher (1987, SD
Iowa) 79 BR 840.
Debtor's homestead exemption is superior, or at least equal, to right of junior lienor to have asset
marshaled, and thus, senior lien claimant may not be required first to satisfy its claim from exempt
property which has been specifically pledged to such senior creditor in order to leave resort to other
nonexempt property by junior lienor who has recourse only against such nonexempt property.
Farmers & Merchants Bank v Gibson (1984, BC ND Fla) 81 BR 81, vacated (1984, BC ND Fla) 81
BR 83, affd (1986, ND Fla) 81 BR 84.
Bankruptcy trustee could not require bank to foreclose on debtor's homestead before resorting to
nonhomestead property, although surplus apparently would exist in nonhomestead property if bank
first satisfied remainder of its claim from homestead, because first resort to homestead property
should not be required in view of superior rights of homestead claimant that nonexempt property be
looked to first. Farmers & Merchants Bank v Gibson (1984, BC ND Fla) 81 BR 83, affd (1986, ND
Fla) 81 BR 84.
Where debtors' home and separate parcel were encumbered by one mortgage, debtors could not
claim exemption in home under Ohio Rev. Code Ann. § 2329.66(A)(1)(b) because trustee had dis-
cretion to marshal debtors' assets and first allocate mortgage as encumbrance against home, leaving
no equity in home as result. In re Williams (2006, BC ND Ohio) 345 BR 853.
94. Appreciation since filing date
Chapter 7 debtors' argument that they are entitled to $ 45,000 homestead exemption plus home's
appreciation since filing of bankruptcy petition is premature, but in any event is without merit be-
cause California statute gives debtor $ 45,000 exemption as of time of sale, not $ 45,000 equity in-
terest in property; only in bankruptcy context, where appreciable time period passes between filing
of petition and sale of property, can property rise or fall in value, but there is no basis for treating
sale by bankruptcy trustee any different from sale by judgment lienholder as debtor's right to use
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11 USCS § 522
exemption comes into plan not upon filing of bankruptcy petition, but only if and when trustee at-
tempts to sell property, and at that point, and not before, debtor first faces possibility of being dis-
possessed of his home and grim prospect of having to use exemption money to find alternative
housing. In re Hyman (1992, CA9) 967 F2d 1316, 92 CDOS 5323, 92 Daily Journal DAR 8504, 23
Although Utah debtor asserts that he is entitled to "baseline hypothetical state of affairs" of
homestead, which includes right to continued enjoyment of his home and appreciated value, if any,
postpetition, nothing contained in Utah statute suggests legislature intended to establish baseline
hypothetical state of affairs as part of property owner's homestead rights; moreover, Utah home-
stead exemption is strictly limited to finite dollar values; further, allowing 11 USCS § 522(f) to ex-
tend to postpetition increases in value of secured property is contrary to concept of protecting credi-
tor's surviving secured interests. David Dorsey Distrib. v Sanders (In re Sanders) (1994, CA10
Utah) 39 F3d 258, 32 CBC2d 582, CCH Bankr L Rptr P 76187 (superseded by statute as stated in
Pepper v Public Serv. Emples. Credit Union (In re Pepper) (1997, BC DC Colo) 210 BR 480, 14
Colo Bankr Ct Rep 205, 38 CBC2d 596) and (superseded by statute as stated in In re Richardson
(1998, BC ND Okla) 224 BR 804, 40 CBC2d 980, CCH Bankr L Rptr P 77815) and (superseded by
statute as stated in Parsons v Investment Co. (In re Parsons) (1999, BAP10 NM) 16 Colo Bankr Ct
Rep 55).
When debtor's original Chapter 11 petition was filed, debtor's interest in his residence passed to
bankruptcy estate and estate held that interest at all times after petition was filed; thus, when resi-
dence was sold, proceeds of sale vested in bankruptcy estate and any postpetition appreciation in
value of residence accrued to estate, thereby entitling debtor to only $ 45,000 California homestead
exemption in proceeds from sale of residence. Alsberg v Robertson (In re Alsberg) (1995, CA9) 68
F3d 312, 95 CDOS 7988, 95 Daily Journal DAR 13733, CCH Bankr L Rptr P 76676, cert den
(1996) 517 US 1168, 134 L Ed 2d 667, 116 S Ct 1568.
Under literal application of term "all other liens" in statutory formula under 11 USCS §
522(f)(2)(A), debtors' homestead exemption was impaired by judicial lien, two mortgage liens, and
homestead exemption, total of which exceeded debtors' interest in property, and BAP properly
avoided hospital's lien in its entirety. Kolich v Antioch Laurel Veterinary Hosp. (In re Kolich)
(2003, CA8 Mo) 328 F3d 406, 41 BCD 75, 49 CBC2d 1896, CCH Bankr L Rptr P 78840.
Debtors should be ones to benefit from any appreciation of their property after filing of petition
for relief and value of debtor's property for purposes of deciding whether lien is avoidable under 11
USCS § 522(f) should be determined as of date of filing of debtor's petition and, accordingly, where
there is only approximately $ 13,000 in equity after deducting first and second mortgage balances
and debtors were entitled to $ 15,000 as an exemption, creditor's judgment lien impairs debtors'
claimed exemption in residence so as to permit them to avoid that lien pursuant to 11 USCS §
522(f)(1). In re Rappaport (1982, BC ED Pa) 19 BR 971, 6 CBC2d 749, CCH Bankr L Rptr P
68734 (criticized in Wood v LA Bank (In re Wood) (1996, BC MD Pa) 190 BR 788, 28 BCD 570, 35
CBC2d 275).
Bankruptcy court sustained trustee's objection to claimed homestead exemption due to debtor's
failure to file his homestead deed in compliance with Va. Code Ann. § 34-6 (Michie Supp. 2002). In
re McWilliams (2002, BC ED Va) 296 BR 424.
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11 USCS § 522
Creditor's objection to homestead exemption under Fla. Const. art. X, § 4(a)(1), Fla. Stat.
222.01, 222.02, and 222.05 was overruled because $ 125,000 exemption cap of 11 USCS § 522(p)
did not apply to property in which debtor obtained ownership interest more than 1,215 days before
petition date, even if property's equity increased during 1,215-day pre-petition period. In re Sainlar
(2006, BC MD Fla) 344 BR 669.
Debtors were entitled to recover their claimed exemption for their residence in amount asserted
on their schedules for claimed amount of $ 21,511, plus joint entitlement of $ 36,900; however re-
mainder of post-petition appreciation in residence belonged to estate, even if trustee had not ob-
jected to exemption within time required under Fed. R. Bankr. P. 4003, and homestead was still re-
quired to be administered through estate. Klein v Chappell (In re Chappell) (2007, BAP9) 373 BR
73.
95. Residency
Debtor was entitled to take homestead exemption in family home in which he held one-half re-
mainder interest as tenant in common with his brother, even though at time of filing he did not live
in house and would not be able to until termination of his octogenarian aunt's life estate. In re De-
Masi (1998, DC RI) 227 BR 586.
Debtor who in petition recites that he is resident of Florida, entitled to homestead exemption
under Florida law for Florida house, is bound by such law, which provides homestead exemption
can only be claimed for one property, and may not claim second exemption for house in Puerto
Rico notwithstanding fact he could have established residence in Puerto Rico and then claimed
dwelling as exempt under Puerto Rican law, since exemptions are determined as of date petition
was filed. In re Velez-Velez (1980, BC SD Fla) 6 BR 373, 1 CBC2d 822.
For purposes of claiming South Dakota homestead exemptions pursuant to 11 USCS § 522
debtor is not required to actually reside within state at time of claim; however court must find that
debtor who has left South Dakota for business, health, or personal reasons for indefinite period has
continued to consider himself as South Dakota resident and intends to return to state to live. In re
Wood (1981, BC DC SD) 8 BR 882.
Debtors who shipped their furniture and furnishings to other state prior to filing homestead deed
and departed shortly after filing deed to other state where furnishings were sent are entitled to ex-
emptions under either state law if deemed to still be resident at time of filing of homestead deed or
under 11 USCS § 522(d) if not deemed to still be resident of state. In re Chaffins (1982, BC ED Va)
16 BR 686.
South Dakota restricts availability of real property or homestead exemptions to residents of
South Dakota who are not in process of permanently removing family from state and therefore
debtors who had moved to Wyoming were ineligible to claim South Dakota homestead exemption;
South Dakota has also "opted out" prohibiting residents of South Dakota from claiming federal ex-
emptions and therefore operative effect of South Dakota exemption law, coupled with 180-day do-
miciliary requirement of Bankruptcy Code, would have effect of denying debtors right to homestead
exemption; however, as debtors are not residents of South Dakota entitled to claim South Dakota
exemptions, it follows that debtors are not residents for purposes of state's prohibiting availability of
federal exemptions; therefore, debtors may claim federal exemptions. In re Volk (1983, BC DC SD)
26 BR 457, 9 BCD 1382, 7 CBC2d 1096.
Page 189
11 USCS § 522
Debtor cannot claim homestead exemption under 11 USCS § 522 in property that is not his resi-
dence. In re Mason (1984, BC MD Ala) 48 BR 382.
Chapter 7 debtor Canadian citizen who has lost her right to remain permanently in United States
cannot form intent to remain legally and permanently in United States and therefore cannot claim
her residence as exempt homestead under Florida law; rejection of debtor's homestead exemption
does not treat debtor differently than any other alien whose presence in United States is temporary
as matter of law and who, under controlling provisions of immigration laws, is legally unable to
form intent to reside permanently in U.S. In re Boone (1991, BC MD Fla) 134 BR 979.
Chapter 7 debtor was Canadian citizen in residence in United States pursuant to nonimmigrant
visa for purposes of employment "on a temporary basis," and objection to debtor's claims of home-
stead and personal property exemptions under Florida law is sustained under 11 USCS § 522(b), as
lack of domicile in any state within 180-day period immediately preceding filing of petition is fatal
to any right of exemption under state law. Atty. Gen. v Levy (In re Levy) (1998, BC SD Fla) 221 BR
559.
Chapter 13 debtor is not entitled to exemption under 11 USCS § 522(d)(1) where debtor resides
in one of two parcels of real property which form res of trust, as debtor does not reside in his one-
third interest in trust. In re Bowers (1998, BC DC Mass) 222 BR 191.
Bankruptcy debtor was not entitled to homestead exemption where it was undisputed that debtor
abandoned homestead property without filing notice of intention to preserve homestead interest. In
re Holman (2002, BC DC Minn) 286 BR 882.
Effectively, for purposes of 11 USCS § 522(d)(1), terms "residence" and "homestead" are
equivalent and interchangeable. In re Brown (2003, BC ND Tex) 299 BR 425.
State debtor who met legal requirements for claiming homestead exemption for his state con-
dominium, pursuant to Fla. Const. art. X, § 4, and 11 USCS § 522, was entitled to that protection
and Chapter 7 discharge, pursuant to 11 USCS § 727, even though property was purchased with his
proceeds from what was eventually found to be Ponzi scheme; debtor had established residence for
purposes of state law. Neilson v Laing (In re Laing) (2005, BC MD Fla) 329 BR 761, 18 FLW Fed B
352.
Pursuant to 11 USCS § 522(b)(2), Wisconsin (WI) was debtor's domicile for greater portion of
180 days preceding filing of bankruptcy petition because WI was place of his residence and em-
ployment and location of his fiance and children on petition date; he testified that he intended to
remain there permanently; and he procured WI driver's license and bank account; therefore, under
WI homestead statute, Wis. Stat. § 815.20, debtor's WI homestead was exempt to extent of debtor's
equity in property up to $ 40,000. In re Stone (2005, BC ND Iowa) 329 BR 860.
Bank's objection to debtors' claim of exemption of their residence in Florida was properly sus-
tained because residence was not debtors' domicile for longer portion of 180 days immediately pre-
ceding "the date of filing of petition." Tanzi v Comerica Bank-California (In re Tanzi) (2003,
BAP9) 297 BR 607, 2003 CDOS 7643, 41 BCD 212.
96. Ownership
Louisiana law does not exempt from seizure Chapter 7 debtor's real property occupied by debtor
as her home and owned by her in indivision with another who is not debtor's spouse. Brocato v
Traina (In re Brocato) (1994, CA5 La) 30 F3d 641, CCH Bankr L Rptr P 76070.
Page 190
11 USCS § 522
In proceeding by trustee for authorization to sell property owned jointly with nondebtor spouse
under 11 USCS § 363(h), Bankruptcy Court erred in allocating $ 7,500 homestead exemption to
Chapter 7 debtor's nondebtor co-owner spouse because, unless case involves joint debtors, only 1
homestead exemption may be claimed under 11 USCS § 522(d)(2) and upon sale of property, full
value of her interest will be paid to her, after outstanding mortgage is satisfied. In re Spain (1988,
ND Ala) 103 BR 286.
South Dakota homestead exemption does not include preservation loan servicing rights because
only former owner can be eligible for preservation rights and only present owner can have home-
stead rights. In re Nelson (1992, DC SD) 143 BR 722, affd (1992, CA8 SD) 969 F2d 626, 23 BCD
Where transfer of property from debtor to debtor's children was considered to be sham transac-
tion, debtor still had fee simple interest in property and, thus, had homestead exemption as to that
fee simple interest. Snyder v Zayler (2004, ED Tex) 309 BR 272, 52 CBC2d 520, affd (2005, CA5
Tex) 125 Fed Appx 573.
Denial of debtor's homestead exemption claim under 11 USCS § 522 was affirmed because
property that had been conveyed to her husband prior to her bankruptcy filing was not within
debtor's bankruptcy estate under 11 USCS § 541 since Wyo. Const. art. 19, § 9 and Wyo. Stat. Ann.
§ 1-20-101 did not create legal or equitable interest in property sufficient to independently support
bankruptcy exemption, and because neither debtor nor her husband owned or were entitled to own
claimed homestead property when debtor filed for bankruptcy protection, Wyo. Stat. Ann. 1-20-
102(a) did not allow homestead exemption for property, since § 1-20-102(a) allows homestead to be
exempt only when it is occupied by (1) owner or member of owner's family, or (2) person entitled to
ownership or member of that person's family. Hart v Crawford (In re Hart) (2005, DC Wyo) 332
BR 439.
Under 11 USCS § 522, debtors may exempt property only after it becomes property of estate,
and property which is not property of estate, such as real estate held by debtors as tenants by entire-
ties, may not be claimed as exempt. In re Jeffers (1980, BC ND Ind) 3 BR 49, 8 BCD 85, 1 CBC2d
559.
Debtor must have interest in property in order to use exemption in property, and debtor in joint
bankruptcy may not claim homestead exemption beyond $ 7,500 exemption which his wife is enti-
tled to, regardless of whether he terms such exemption residential exemption under 11 USCS §
522(d)(1), or exemption in other property in lieu of residential exemption under 11 USCS §
522(d)(5), where debtor has no interest in residence to exempt, because ownership of residence is in
wife's name only. In re Cunningham (1980, BC DC Mass) 5 BR 709, 6 BCD 863, 2 CBC2d 1095.
South Dakota debtors are entitled to claim homestead exemption even though they hold property
only by license since under South Dakota law right to homestead is not estate in land but mere
privilege granted by legislature in fulfilling constitutional mandate. In re Wood (1981, BC DC SD)
8 BR 882.
Husband, as joint debtor with wife, does not have such interest in real property titled only in
wife's name as to permit him to claim exemptions under 11 USCS § 522(d)(1) and (5), where, de-
spite fact that husband has right of use and occupancy therein, is obligated on mortgage note, and
has contributed substantially to downpayment on property and monthly mortgage payments, and
that under applicable state law, even though title to property lies in one spouse, where payments are
Page 191
11 USCS § 522
made by other spouse, resulting trust may be found in latter's favor, at date of filing trustee of hus-
band's estate acquired lien creditor's and bona fide purchaser's right in property, pursuant to 11
USCS § 544, which would be superior to right of husband to seek reconveyance of his unrecorded
equitable claim to one-half interest in property. In re Trotta (1981, BC DC Conn) 12 BR 843, 8
BCD 187.
Each spouse is entitled to claim exemption for homestead where property is owned as tenancy
by entirety. In re Korff (1981, BC ED Mich) 14 BR 189, 8 BCD 287, 5 CBC2d 174, CCH Bankr L
Rptr P 68433.
Fact that debtor's interest in property changes after commencement of bankruptcy case from
tenant by entirety to that of tenant in common does not deprive debtor of his exemption in that
property under 11 USCS § 522(b)(2)(B). In re Flagg (1982, BC ED Pa) 17 BR 677, CCH Bankr L
Rptr P 68627.
11 USCS § 363(h)(2) is available to Chapter 7 trustee seeking to sell home owned as tenants by
the entirety by debtor and debtor's husband, who is not debtor, free and clear of husband's interest in
home, debtor having elected federal exemptions under 11 USCS § 522(b)(1) and asserted $ 5,000
exemption in home, where specific exemption of entirety property provided in § 522(b)(2)(B) for
debtors electing state exemptions does not appear in federal exemption scheme under § 522(b)(1),
and absent § 522(b)(2)(B), debtor's complete "undivided" interest in entirety property, including
possessory rights, becomes and remains part of bankruptcy estate, subject only to exemption under
applicable subsections of § 522(d). In re Hamilton (1983, BC MD Tenn) 32 BR 337, 10 BCD 1251,
Creditor's objection under 11 USCS § 522(b)(1) to Chapter 11 debtor's claim of homestead ex-
emption in home owned by corporation in which debtor owned all stock was sustainable since stock
ownership in corporation which holds title to co-operative apartment, together with clear right of
exclusive possession, does not constitute homestead for purposes of forced sale. In re Duque (1983,
BC SD Fla) 33 BR 201.
Debtor was entitled to $ 5,000 homestead exemption in her undivided interest in residence since
legislative intent of new Tennessee statute appears to have been to include within purview of statute
property held by tenancy in common and joint tenancy as well as tenancy by entireties; since
debtor's exemptions are determined as of date of filing of petition, debtor's right to exemption is un-
affected by her having ceased to live in house approximately 3 months after filing petition. In re
Young (1984, BC ED Tenn) 42 BR 892.
Debtors cannot exempt homestead under Wisconsin law after they assigned their interest as
vendees in land sale contract in exchange for agricultural loan, because assignment was in effect
mortgage and mortgages are excepted from homestead exemption; thus, bank is relieved from effect
of stay. In re Kienol (1984, BC WD Wis) 44 BR 959.
Where debtor did not establish new homestead since his divorce and professed desire to pur-
chase his former wife's interest in event she decides to sell, trustee did not meet his burden of proof
that exemption was not properly claimed and therefore homestead exemption applies. In re Crain
(1985, BC ED Mo) 3 BAMSL 1777.
Under Illinois homestead exemption, by way of 11 USCS § 522(b)(1), individual debtor without
ownership interest in marital residence may nevertheless claim $ 7,500 homestead exemption be-
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11 USCS § 522
cause title is in spouse and statute provides for exemption of property "rightly possessed" by lease
or "otherwise," which includes by marriage. In re Reuter (1985, BC ND Ill) 56 BR 39 (criticized in
In re Hartman (1997, BC CD Ill) 211 BR 899) and (criticized in In re Popa (1998, BC ND Ill) 218
BR 420, 98-1 USTC P 50276, 81 AFTR 2d 1282) and (criticized in In re Carver (2003, BC SD Ill)
50 CBC2d 336).
Debtors cannot use 11 USCS § 522(f)(1) to avoid prepetition equitable lien, which is judicial
lien, imposed by way of constructive trust on property claimed as exempt under state homestead
exemption, because section applies only to extent of debtor's interest in property; where debtor
holds only legal title, and equitable title is held by another because of debtors' fraud, property to ex-
tent of equitable interest does not enter into estate. In re Dudley (1986, BC SD Fla) 68 BR 426, 15
BCD 654.
Homestead exemption under 11 USCS § 522(d) is not available to property whose title is solely
in codebtor wife, notwithstanding that debtor and wife resided in property, where applicable state
law makes homestead exemption an estate in land which depends completely on claimant's title. In
re Owen (1987, BC CD Ill) 74 BR 697.
Debtor husband's filing of Chapter 7 bankruptcy did not sever wife's right of survivorship in
homestead and trustee did not become co-owner with wife. In re Spain (1988, BC ND Ala) 83 BR
61.
Chapter 11 debtors may claim homestead exemption in proceeds from sale of their residence
even if their title prior to sale was subject to dispute due to prepetition foreclosure which debtors
allege was defective; possibility that foreclosure was defective means that there was possibility that
debtors were still owners of property, and in any event, they retained possessory interest. In re
Donaldson (1993, BC ND Cal) 156 BR 51, CCH Bankr L Rptr P 75371.
Chapter 7 debtor's alleged lack of equity interest in property subject to lien which debtor is seek-
ing to avoid under 11 USCS § 522(f)(1) is not fatal defect to debtor's motion, where such liens
might impair debtor's right to achieve equity position in future. In re Citrone (1993, BC SD NY)
Installment contract for warranty deed constitutes financing device vesting equitable title in
Chapter 13 debtors to which creditor's judicial liens have affixed, and liens impair debtors' home-
stead exemption and are avoided under 11 USCS § 522(f)(2)(A). In re Groff (1998, BC SD Ill) 223
BR 697.
Debtor was denied exemption in her former residence under O.C.G.A. § 44-13-100(a)(1), where
she had sold property and moved from it, retaining security interest and receiving monthly pay-
ments, as it was no longer her residence. In re Page (2003, BC SD Ga) 289 BR 484.
Chapter 7 debtors' motion to avoid judicial lien as impairing their homestead exemption was de-
nied where debtors retained no ownership interest in their residence on date of bankruptcy petition
because, prior to filing, they had transferred title to residence to their daughter. In re Sbriglio (2004,
BC DC Conn) 306 BR 445, 51 CBC2d 1252.
Where bankruptcy debtors claimed homestead exemption in parcel of real property which in-
cluded mobile home where debtors resided, property was not subject to exemption under 11 USCS §
522(b) since it was not owned by debtors; although property was owned by limited liability com-
pany of which debtors were majority owners, and property was leased to corporation of which debt-
Page 193
11 USCS § 522
ors were sole principals, property was not in fact property of debtors. In re LaVelle (2005, BC DC
Idaho) 350 BR 505.
Chapter 7 debtor was entitled to claim homestead exemption per 11 USCS § 522(b) in house de-
vised to her and her sisters under her mother's will; debtor's possessory interest, along with equita-
ble interest in house and acreage under her mother's will, was sufficient to constitute "ownership"
for purposes of Idaho Code § 55-1004(1). In re Dougan (2006, BC DC Idaho) 350 BR 892.
Bankruptcy debtors were precluded from claiming state homestead exemption in property,
where debtors owned total interest in limited partnership which owned real property where debtors
resided, because partnership interest was personal property under state law and exemption could
only be claimed for interest in real property. In re Christian (2006, BC DC Ariz) 355 BR 161.
Judgment lien that attached to real property prior to time debtor made property dwelling place
could be avoided under 11 USCS § 522(f) as impairing debtor's automatic homestead exemption
under California law, even though judgment lien would have priority to homestead exemption under
state law, where debtor owned property prior to recording and fixing of lien and lien therefore im-
paired exemption to which debtor would have been entitled, to extent that sufficient equity did not
exist to satisfy both lien and debtor's homestead exemption. Hastings v Holmes (In re Hastings)
(1995, BAP9 Cal) 185 BR 811, 95 Daily Journal DAR 12277.
Bankruptcy court correctly ruled that spouse of Chapter 7 debtor was not entitled to claim
homestead exemption in property in which she resided, but had no ownership interest, on date bank-
ruptcy case was filed; under Wyoming law, ownership interest was prerequisite to claim of home-
stead exemption, pursuant to Wyo. Stat. Ann. § 1-20-102(b) (2002). Duncan v Zubrod (In re Dun-
can) (2003, BAP10) 294 BR 339.
Bankruptcy court did not err in disallowing Chapter 7 debtor's homestead exemption in property
he transferred pre-petition because debtor was not entitled to homestead exemption in property
which he did not own. Eagle v Bank of Am. (In re Eagle) (2007, BAP8) 373 BR 609.
97. Divorce or property settlements
Judgment lien against family residence awarded by state court to husband in divorce degree,
which also awarded ownership of residence to wife, could not be subject of Oregon homestead ex-
emption upon husband's subsequent petition in bankruptcy; however, under Oregon law, husband's
interest could qualify for exemption as proceeds of homestead; in order for "proceeds" exemption to
apply, it must be shown that Oregon law permits tolling of fixed five-year period for reinvestment
of proceeds where delay is not caused through fault of party claiming exemption, inasmuch as hus-
band-debtor in present case has no right under lien to receive payment for 5 years unless wife sells
residence. In re White (1984, CA9 Or) 727 F2d 884.
11 USCS § 522(d)(10)(D) is not intended to embrace payments or transfers made simply to
equalize division of spouses' existing property; where unimpeached relevant documents unambigu-
ously reflect that particular payment is part of division of existing property and that separate provi-
sion is made for nontrivial alimony payments, former obligation may not be post-hoc recharacter-
ized in bankruptcy as alimony or support under § 522(d)(10)(D) simply on basis of finding that ob-
ligee spouse also had need of former payments for support. Milligan v Evert (In re Evert) (2003,
CA5 Tex) 342 F3d 358, 50 CBC2d 1150, CCH Bankr L Rptr P 78897.
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11 USCS § 522
Bankruptcy court made error of law in prematurely resorting to Nunnally factors in determining
that promissory note payable to debtor and executed by debtor's former husband constituted ali-
mony, support, or separate maintenance and, therefore, could be shielded from creditors under 11
USCS § 522(d)(10)(D); although Nunnally factors were binding law at least as to 11 USCS §
523(a)(5), they should not have been applied to 11 USCS § 522(d)(10)(D) where written agreement
and divorce decree clearly established nature of obligation and where there were distinct provisions
for nontrivial alimony and for property settlement, and, because both labels given to obligation in
agreement and substantive characteristics of obligation clearly reflected that it was part of property
settlement, note was not exempt under 11 USCS § 522(d)(10)(D). Milligan v Evert (In re Evert)
(2003, CA5 Tex) 342 F3d 358, 50 CBC2d 1150, CCH Bankr L Rptr P 78897.
Divorced noncustodial parent is entitled to homestead exemption where he has made child sup-
port payments, and substantially but not completely compiled with his alimony and property settle-
ment obligations. In re Cummings (1983, DC Kan) 40 BR 208.
Even though former husband held legal title to marital home, final judgment in divorce action
clearly delineated Chapter 7 debtor's legal interest in marital home in which she resided with her
children and pursuant to 11 USCS § 522(d)(1) debtor is entitled to claim as exempt $ 15,000 of
amount awarded in judgment. Hoffman & Schreiber v Medina (1998, DC NJ) 224 BR 556 (criti-
cized in Tannenbaum v Smith (In re Smith) (2001, BC DC NJ) 263 BR 71, 37 BCD 281, 46 CBC2d
666) and (criticized in In re Gallagher (2002, BC MD Fla) 283 BR 608, 15 FLW Fed B 248).
Property settlement in divorce judgment is not excepted from discharge in bankruptcy but equi-
table lien is created upon homestead property of bankrupt and can be enforced in court where lien
was created. In re Thumm (1976, BC ED Wis) 2 BCD 1347, 11 CBC 524, CCH Bankr L Rptr P
66172.
Bankrupt is entitled to homestead exemption in amount of portion of proceeds from sale of
home, owned by bankrupt and non-bankrupt ex-wife as tenants by entirety, allocated to bankrupt as
result of divorce property settlement provisions. In re Klein (1978, BC WD Mich) 5 BCD 697.
Although state of Ohio, which does not authorize debtors domiciled in Ohio to exempt property
specified in 11 USCS § 522, gives every person domiciled in Ohio $ 5,000 exemption in real or per-
sonal property that he, she, or one of dependents uses as residence, debtor may not claim such ex-
emption in residence in which dependent child by former wife lives where, as part of property set-
tlement, debtor has transferred such property to former wife, who has agreed to assume outstanding
mortgages on such premises, since debtor does not have interest in such property. In re Hicks
(1980, BC ND Ohio) 3 BR 459, 1 CBC2d 963.
Debtor is entitled under 11 USCS § 522(b)(2)(B) to homestead exemption to which she was enti-
tled at time of filing of bankruptcy petition; her right to exemption is fixed at time of filing and is
not affected by changes brought about by her divorce, even though it brought another, different in-
terest into bankruptcy estate. In re Sivley (1981, BC ED Tenn) 14 BR 905, 5 CBC2d 565, CCH
Lien was created by property settlement in divorce decree for relinquishment of wife's joint ten-
ancy interest on payment of $ 25,000 is not avoidable under 11 USCS § 522(f) because lien pro-
tected wife's pre-existing property interest and did not attach to any interest of debtor in property;
court rejects debtor's argument that $ 25,000 is not value of lien, because divorce settlement is fixed
Page 195
11 USCS § 522
value; lien extends only to real estate, however, not to crops grown on it. In re Seablom (1984, BC
DC ND) 45 BR 445.
Automatic stay is lifted to allow Kentucky court to clarify whether its judgment setting aside
original property settlement agreement between Chapter 7 debtor and former wife and awarding
wife $ 71,233.75 plus interest from date of original decree was intended to be retroactive, which
ruling will be dispositive of trustee's complaint objecting to debtor's homestead exemption, since
under Kentucky law if award is deemed to have arisen at time of original decree then liability arose
prior to construction of debtor's former residence and he is not entitled to exemption; however, if
award was not made retroactive, then debt arose after homestead was built and debtor may properly
claim exemption. In re Kincaid (1985, BC WD Ky) 55 BR 652.
Chapter 7 debtor husband, whose only interest in property titled solely in name of his former
wife is marital interest available to him under equitable distribution rights pursuant to state law, and
who was awarded one-half interest in property by state divorce court postpetition, is entitled to
claim his exemption in property under 11 USCS § 522(d)(1) up to amount of $ 7,500 but distribu-
tion can only be made to him as unsecured claimant pursuant to liquidation and distribution of as-
sets of debtor former wife and, to extent that fund created by liquidation of debtor's wife's assets is
insufficient to pay all unsecured creditors, claims of unsecured creditors, including debtor husband,
shall abate in accordance with Code; since debtors' cases are being jointly administered but are not
consolidated, husband's claim against property owned by ex-wife rises no higher than claims of
wife's other creditors since trustee in wife's bankruptcy case retains rights pursuant to 11 USCS §
544 that would inherently be superior to husband's rights; husband has right to be compensated
from wife's estate for value of his share of marital property which is not necessarily any specific
property. In re McCulley (1993, BC MD Pa) 150 BR 358, 28 CBC2d 698, CCH Bankr L Rptr P
75153 (criticized in Simeone v Simeone (In re Simeone) (1997, BC ED Pa) 214 BR 537) and (criti-
cized in Scholl v Scholl (In re Scholl) (1999, BC ED Pa) 234 BR 636, 42 CBC2d 613).
Chapter 13 debtor could not avoid valid judicial lien of wife's attorneys on his residence for
debtor's nonpayment of attorney fees that were in nature of support, since lien constituted nondis-
chargeable debt under 11 USCS § 523 (a)(5) and did not impair any exemption under 11 USCS §
522(c). In re Slater (1995, BC ED Wash) 188 BR 852.
In 11 USCS § 522 exemption matter, pursuant to Wash. Rev. Code. § 6.13.080, bankruptcy
court found that, in order to prime homestead exemption, lien granted was required to be compensa-
tion for interest in real property that was transferred, or at minimum, divorce court must have re-
ferred to judgment as lien against specific real property. In re Goodale (2003, BC WD Wash) 298
BR 886, 51 CBC2d 35.
Where Chapter 7 debtor executed agreement whereby debtor, in return for lump sum payment,
agreed to remit to defendant remaining monthly alimony payments she was scheduled to receive
from her former husband, alimony payments were not exempt under 11 USCS § 522(d)(10)(D) be-
cause, as of petition date, debtor had no right, legal or equitable, to retain alimony payments. Dean
v Telegadis (In re Dean) (2004, BC WD Pa) 317 BR 482.
Commencement of debtor's divorce action did not sever his interest in property held with his
wife in tenancy by entirety; such interest was severed only upon entry of divorce decree and accord-
ingly, tenancy by entirety existed as of date of bankruptcy filing, and thus constituted entireties
Page 196
11 USCS § 522
property that debtor could exempt via 11 USCS § 522(b)(3)(B). Zebley v Davis (In re Davis) (2006,
BC WD Pa) 356 BR 385.
Commencement of debtor's divorce action did not sever his interest in property held with his
wife in tenancy by entirety; fact that debtor, by virtue of his right to equitable distribution via pend-
ing divorce action, may ultimately receive distribution of residence titled in fashion that would have
been other than by tenancy by entirety would not have operated to negate debtor's present exemp-
tion. Zebley v Davis (In re Davis) (2006, BC WD Pa) 356 BR 385.
Committee's objection under 11 USCS § 522(p)(1) to homestead exemption was sustained be-
cause debtor actively participated in negotiation of divorce decree that occurred in 1215-day period
and acquired his ex-wife's community property interest in certain property, which interest had dis-
tinct monetary value and was not protected by 11 USCS § 522(p)(2)(B); however, debtor's own
community property half acquired prior to beginning of 1215-day period was exempt. In re Presto
(2007, BC SD Tex) 376 BR 554.
Congress' intent to close mansion loophole does not preclude or contradict holding that applies
11 USCS § 522(p) to acquisition of new value in homestead through divorce decree; even if 11
USCS § 522(p) is deemed ambiguous and legislative history is relevant, applying 11 USCS § 522(p)
to divorce decree does not contradict statute's general intent of limiting abuse of generous state
homestead exemptions. In re Presto (2007, BC SD Tex) 376 BR 554.
98. Determination of exemption
Chapter 7 debtors, by listing "homestead" instead of "homestead exemption" on their schedule
of exempt property, could not claim entire homestead as exempt rather than $ 45,000 allowed under
California law, where debtors listed homestead as exemption under state law and valued that ex-
emption at $ 45,000; debtors did not sufficiently notify others that they were claiming entire home-
stead as exempt, but rather their schedule only gave notice that they claimed $ 45,000 as exempt. In
re Hyman (1992, CA9) 967 F2d 1316, 92 CDOS 5323, 92 Daily Journal DAR 8504, 23 BCD 153,
Bankruptcy Court carefully adhered to prescriptions of Bankruptcy Code and did not overstep
bounds of its very considerable equitable powers when it allowed Chapter 7 debtor to exempt 3 of
her 113 acres upon which she could build residence, and authorized simple change in zoning in at-
tempt to grant debtor adequate homestead and at same time give consideration to interest of credi-
tors by exempting only enough property to meet debtor's entitlement, despite amicus's contention
that because Bankruptcy Court and trustee did not have authority to have exempt property rezoned,
court should have given debtor 35 acres, which is amount necessary to build home on property as
zoned, where Bankruptcy Court balanced need to comply with Wisconsin's homestead exemption
statute against requirement to make estate avoidable to creditors; court could have ordered sale of
entire parcel and awarded debtor certain proceeds of sale, but, instead, allowed her to stay on land.
In re Lloyd (1994, CA7 Wis) 37 F3d 271, 31 CBC2d 1786, CCH Bankr L Rptr P 76125.
Portion of debtor's equity in residence was not avoidable against amount owed for judgment
lien; when debtor owned property with non-related person who was not party to bankruptcy and
who was also liable for mortgage, debtor was only allowed to apply one-half of amount due for
mortgage against debtor's one-half ownership interest in property. Miller v Okmi Sul (In re Miller)
(2002, CA3 Pa) 299 F3d 183, 39 BCD 257, 48 CBC2d 937.
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11 USCS § 522
Where state court has found debtor was criminally liable for negligent homicide, such finding
triggers federal statutory cap on state homestead exemptions under Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005, Pub. L. No. 109-8, § 322(a), 119 Stat. 23, 97 (codified at 11
USCS § 522(q)(1)(B)(iv). Larson v Howell (In re Larson) (2008, CA1 Mass) 513 F3d 325.
Under California law determination of value of equity subject to sale by trustee is made by de-
ducting homestead exemption from debtor's interest in value of property less encumbrances since 11
USCS § 522(b)(2)(B) requires exemption calculation to be determined in accordance with state non-
bankruptcy law. In re Schneider (1981, ND Cal) 9 BR 488, 7 BCD 502 (criticized in Wiget v Niel-
sen (In re Nielsen) (1996, BAP9 Cal) 197 BR 665, 96 CDOS 5516, 96 Daily Journal DAR 8807,
CCH Bankr L Rptr P 77052).
In proceeding under 11 USCS § 522(f), court incorrectly applied rule of comity to conclude that
debtor is not entitled to automatic homestead exemption, as law is clear that question of exemption
must be determined as of date of filing petition in bankruptcy and court was required to make inde-
pendent determination as to validity of the exemption. In re Hsia (1995, ND Cal) 183 BR 201.
Debtors are entitled to exemption of approximately $ 6,700 in home having fair market value of
$ 17,500 which is subject to mortgage in total amount due and owing of approximately $ 10,700;
since such equity does not exceed claimed exemption of $ 15,000, so that judicial liens against resi-
dents amounting to approximately $ 2,900, if executed upon property, would reduce debtors' ex-
emptions by such amount, such judicial liens impair debtors' exemption to their full extent, and
therefore are voidable in their entirety. In re Butler (1980, BC DC Md) 5 BR 360, 6 BCD 768, CCH
Debtor was entitled to avoid prepetition judgment lien entered against both debtor and his non-
debtor spouse as tenants in entirety of debtor's homestead property since value of debtor's interest in
property was equal to amount of exemption debtor could claim if there were no liens on property.
Lashley v Fuhrer (In re Lashley) (1997, BC ED Mo) 206 BR 950.
Trustee's objection to Chapter 7 debtor's homestead exemption is sustained where debtor sought,
following conversion of case from Chapter 13 to Chapter 7, to claim property other than home listed
on original Chapter 13 petition as exempt homestead; bankruptcy court determined in Chapter 13
case property could not claimed as homestead and right to claim homestead exemption is based on
debtor's homestead at time original bankruptcy petition was filed under 11 USCS § 522(b) and 11
USCS § 348(a), not at time of conversion. In re Alexander (1999, BC DC Minn) 236 BR 679, 42
CBC2d 817, affd (1999, BAP8) 239 BR 911, CCH Bankr L Rptr P 78014 (criticized in In re Wegner
(2000, BC DC Neb) 243 BR 731) and affd (2001, CA8) 236 F3d 431, 37 BCD 56, CCH Bankr L
Rptr P 78343 (criticized in In re Fonke (2005, BC SD Tex) 321 BR 199) and (criticized in In re
Fonke (2005, BC SD Tex) 2005 Bankr LEXIS 595).
Debtors, husband and wife, rebutted the presumption that they had abandoned the home because
their absence from the home was temporary and was done for the purpose of renovating the home
and avoiding the close proximity with the husband's former spouse. In re Patterson (2002, BC DC
Colo) 275 BR 578.
Debtors' right to amend homestead exemption created under Mass. Gen. Laws ch. 188, § 2, ter-
minated on bankruptcy filing date because under 11 USCS § 522(b)(2)(A), facts and law as they ex-
isted on petition date determined extent of claimed exemption, and thus, debtors could not amend
declaration of homestead exemption or bankruptcy schedule of exemptions to to add second lot to
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11 USCS § 522
homestead exemption and thus, could not avoid creditor's judgment lien under 11 USCS § 522(f). In
re Govoni (2002, BC DC Mass) 289 BR 500.
Limitation of homestead exemption to $ 125,000 set forth in 11 USCS § 522(p)(1) applied to
claimed residential exemptions in state even though Fla. Const. art. 10, § 4 allowed for homestead
exemption for full amount of residence; because property was held by debtor and non-debtor spouse
in tenancy by entirety, trustee could only use non-exempt interest in residence to satisfy any claims
that were owed by debtor and her spouse. In re Wagstaff (2006, BC SD Fla) 19 FLW Fed B 192.
Although Chapter 7 debtor's admitted facts in state charge of motor vehicular homicide by neg-
ligent operation was sufficient to constitute criminal act under 11 USCS § 522(q)(1)(B)(iv), she was
allowed to present evidence as to whether difference between her claimed and capped state home-
stead exemption was necessary for her support. In re Larson (2006, BC DC Mass) 340 BR 444.
Even though bankruptcy debtor could not elect federal homestead exemption in Florida, limita-
tion on recently acquired homestead exemptions under 11 USCS § 522(p) applied to debtor's ex-
emption despite statutory language indicating that statute only applied as result of electing; exclud-
ing states which opted out of federal exemptions from operation of § 522(p) was contrary to legisla-
tive intent to close loophole by which millionaires shielded mansions in bankruptcy by relocating to
states with substantial or unlimited homestead exemptions. In re Buonopane (2006, BC MD Fla)
344 BR 675, 19 FLW Fed B 326.
Because only one person could claim under state law to be head of same family for purposes of
claiming homestead exemption, bankruptcy assumed that, because debtor one had income and
debtor two did not, debtor one provided support for family and was thus entitled to homestead ex-
emption under 11 USCS § 522(f). In re Uhrich (2006, BC DC Neb) 355 BR 783.
Bankruptcy debtor's accumulation of equity in homestead by paying down homestead mortgage
during 1,215-day look-back period of 11 USCS § 522(p) was not excludable from debtor's home-
stead exemption under § 522(p), since equity acquired by debtor during look-back period was not
ownership interest, and debtor acquired ownership interest prior to look-back period; 11 USCS §
522(p)(1) is inapplicable to bankruptcy debtor who purchases homestead outside 1,215-day look-
back period; accumulation of equity during look-back period by paying down homestead mortgage
is instead limited by operation of § 522(o). In re Anderson (2007, BC DC Kan) 374 BR 848.
Where debtor obtained satisfaction of his claim for exemption in real property, he could no
longer assert that claim with respect to any equity that remained. Braunstein v Leung (In re Leung)
(2008, BC DC Mass) 385 BR 489.
Bankruptcy Court's ruling under 11 USCS § 522(f) that Chapter 7 debtors' homestead exemption
was not impaired by two judicial liens is affirmed; determination of a homestead exemption based
on undisputed facts is legal conclusion interpreting statutory construction which is reviewed de
novo by the appellate court. Ball v Payco-General Am. Credits (In re Ball) (1995, BAP9 Cal) 185
BR 595, 95 CDOS 7046, 95 Daily Journal DAR 11731.
Court will not adopt procedure for actuarially analyzing debtor's interest in tenancy by entirety
because it does not fit into mold of quick and binding resolution, and court will therefore reject
debtor's argument that court should have considered his gender, age, and life expectancy. Snyder v
Rockland Trust Co. (In re Snyder) (2000, BAP1) 249 BR 40, affd (2001, CA1) 248 F3d 1127, re-
ported in full (2001, CA1) 2 Fed Appx 46.
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11 USCS § 522
Chapter 7 debtors who had registered as domestic partners under state's Domestic Partner Rights
and Responsibilities Act of 2003 were limited to single homestead exemption under Cal. Code Civ.
Proc. § 703.110 in house they owned together because homestead exemption rights of domestic
partners were identical to those of people who were married. Rabin v Schoenmann (In re Rabin)
(2006, BAP9) 359 BR 242, CCH Bankr L Rptr P 80822.
99. Miscellaneous
Debtor was not barred from using homestead exemption as defense against making payment to
former spouse's attorney for fees awarded in divorce from proceeds from sale of homestead prop-
erty where payments are not to be made to former spouse but to her attorney. Graziadei v Graziadei
(In re Graziadei) (1994, CA9 Cal) 32 F3d 1408, 94 CDOS 6312, 94 Daily Journal DAR 11525, 31
CBC2d 1025, CCH Bankr L Rptr P 76043.
"Interest," as used in 11 USCS § 522(p)(1), refers to some vested economic interest in property
acquired during statutory period, not homestead interest, thus, homestead interest established within
statutory period, without more, does not fall within purview of § 522(p)(1). Wallace v Rogers (In re
Rogers) (2008, CA5 Tex) 513 F3d 212, CCH Bankr L Rptr P 81081.
Following conversion of case from Chapter 13 to Chapter 7, debtors are permitted to change
homestead exemption from house that was originally claimed as exemption but subsequently fore-
closed upon and sold, to different property owned by debtors; exemptions which may be claimed
are determined as of date of conversion to Chapter 7, not as of date of original filing of Chapter 13
case. In re Patterson (1995, SD Tex) 190 BR 84 (criticized in Lowe v Sandoval (In re Sandoval)
(1997, CA5 Tex) 103 F3d 20, CCH Bankr L Rptr P 77238).
Even if escrowed funds were held under valid wage attachment, because creditors have not ob-
tained writ of execution or court order of disbursement, attached funds must be considered property
of estate which may be exempted under 11 USCS §§ 522(d)(1) and (5). In re Hodgkins (1986, BC
DC RI) 61 BR 922.
Lien of judgment against debtor individually is avoided to extent it would bind debtor's interest
in residential portion of real property owned by debtor and his nondebtor wife, which includes their
principal residence, where equity allocated to debtor after deduction of mortgage lien is less than
state homestead exemption recognized under 11 USCS § 522(b)(1); judgment lien, however, at-
taches to property to extent of equity interest allocated to debtor for portion of property dedicated to
business purposes. In re Hager (1987, BC ND NY) 74 BR 198, affd (1988, ND NY) 90 BR 584.
When case is converted from Chapter 13 to Chapter 7, funds in hands of trustee under 11 USCS
§ 1326 that debtor claims as exempt under 11 USCS § 522(d)(1) shall be paid to debtor. In re
Rutenbeck (1987, BC ED Wis) 78 BR 912.
Florida homestead exemption is creation of state law and may be superseded by Bankruptcy
Code should facts of case warrant it; thus, while citations to decisions of Florida's Supreme and Dis-
trict Courts are useful in determining whether exemption applies, these cases are not authoritative as
to the application of 11 USCS §§ 544, 546 or 548. Forman v Jeffrey Matthews Fin. Group, LLC (In
re Halpert & Co.) (1999, BC DC NJ) 254 BR 104.
Issue of whether Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAP-
CPA) amendments to 11 USCS § 522(p), which limits amount of homestead available to those who
have owned their homestead less than 1215 days, applied to debtors was certified to court of ap-
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11 USCS § 522
peals, pursuant to 28 USCS § 158, because it involved matter of first impression and statutory con-
struction of hotly contested BAPCPA provision and would recur in state, which had extremely lib-
eral homestead exemption and had experienced unprecedented growth in population and real estate
appreciation, and in other districts in Ninth Circuit. In re Virissimo (2005, BC DC Nev) 332 BR 208.
Debtor's claimed exemption for homestead under State law was not capped at $ 125,000 under
new provisions added by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, as
set forth in 11 USCS § 522(b) and (p), because "safe harbor" provision of § 522(p)(2) applied when
debtor had purchased his first residence in State outside of 1251-day period and debtor claimed ex-
empt equity in current residence from that first purchase; fact that second intervening residence was
purchased and sold within 1251-day look back period did not preclude debtor from claiming that $
125,000 cap under § 522(p)(1) did not apply to him because of ownership of that first principal
residence. In re Wayrynen (2005, BC SD Fla) 332 BR 479, CCH Bankr L Rptr P 80391.
Increase in value of equity in Chapter 7 debtors' homestead was not subject to $ 125,000 cap in
11 USCS § 522(p) where property had been purchased more than two and half years prior to start of
1,215-day period. In re Blair (2005, BC ND Tex) 334 BR 374, CCH Bankr L Rptr P 80415.
Although 11 USCS § 522(p) provides that cap on homestead exemption comes into effect as re-
sult of bankruptcy debtor's election to exempt property under state law, express statutory require-
ment for election of state exemption to trigger cap is clearly contrary to congressional intent since it
excludes debtors in states that opted out of federal exemption scheme and thus precluded any elec-
tion; section 522(p) was intended to close "mansion loophole" whereby wealthy individuals, prior to
declaring bankruptcy, shielded money from creditors by converting assets into expensive home-
steads in states with substantial or unlimited exemptions, but statute as written only applied to hand-
ful of jurisdictions that allowed debtors to choose between state and federal exemptions. In re Kane
(2006, BC DC Nev) 336 BR 477.
Where bankruptcy debtors contended that, since State opted out of bankruptcy exemption
scheme and debtors were thus required to claim their homestead exemption under state law, exemp-
tion cap under 11 USCS § 522(p) did not apply because debtors did not elect state exemption, ex-
press statutory requirement for election of state exemption to trigger cap was clearly contrary to
congressional intent and, applying statute as intended, cap applied to debtors' claimed exemption. In
re Kane (2006, BC DC Nev) 336 BR 477.
Trustee's objection to debtor's claimed homestead was sustained to extent that debtor's claimed
homestead exceeded $ 125,000 because homestead was acquired by debtor within 1215 days pre-
ceding bankruptcy filing; new provision set forth in 11 USCS § 522(p) applied to homestead exemp-
tions made under state "opt out" provisions such as those set forth under state law. In re Landahl
(2006, BC MD Fla) 338 BR 920.
U.S. Bankruptcy Court for District of Massachusetts, Eastern Division, concluded that term
"criminal act" as used in 11 USCS § 522(q)(1)(B)(iv) is sufficiently clear, statute's application does
not lead to absurd result, and language does not have or require descriptive culpability. In re Larson
(2006, BC DC Mass) 340 BR 444.
To extent that equity in homestead at time of petition resulted from appreciation, such apprecia-
tion did not constitute interest that was acquired by debtor within meaning of 11 USCS § 522(p);
because Trustee's objection depended on construction of § 522(p) that would have included appre-
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11 USCS § 522
ciation as part of interest acquired within 1,215-day period, objection was overruled on that ground.
In re Rasmussen (2006, BC MD Fla) 349 BR 747, 19 FLW Fed B 395.
Condemnation proceeds received by Chapter 7 debtors from county highway district were not
exempt under state law and thus were property of bankruptcy estate; none of statutes cited by debt-
ors, Idaho Code §§ 55-1001, 55-1002, and 55-1003, purported to cover cash proceeds from sale,
voluntary or otherwise of homestead, or any part thereof. In re Wiley (2006, BC DC Idaho) 352 BR
716.
11 USCS § 522(o) is not invoked by recording of homestead exemption declaration within 1,215
days of filing for bankruptcy protection because such conduct does not constitute acquisition of in-
terest in property; homestead is classification of property under state law and is not quantifiable in-
terest in property. In re Lyons (2006, BC DC Mass) 355 BR 387.
Trustee's objection to debtor's claim to homestead exemption that exceeded $ 125,000 cap estab-
lished by 11 USCS § 522(p) was sustained by bankruptcy court over his claim that his interest pre-
dated bankruptcy by more than 1215 days based on his having had equitable interest in property
when it was owned solely by his wife; because purely equitable ownership of property was not cog-
nizable for purposes of 11 USCS § 522(p), debtor "acquired" his interest for purposes of § 522 by
accepting delivery of deed from his wife, which delivery occurred only six months before he filed
for bankruptcy relief. In re Leung (2006, BC DC Mass) 356 BR 317, CCH Bankr L Rptr P 80821.
Equity passively resulting from market appreciation was not to be counted against $ 125,000
cap of 11 USCS § 522(p); accordingly, where there was nothing in record to have indicated that
debtors actively increased their equity by anything other than scheduled amortization payments, that
passive equity did not count towards cap. In re Chouinard (2006, BC MD Fla) 358 BR 814.
State law exemptions provided in 11 USCS § 522(b)(3)(A) such as Fla. Const. art. X, § 4 are
separate and distinct from those provided in 11 USCS § 522(b)(3)(B) such as exemption for tenan-
cies by entireties; that is, debtor may use tenancy by entireties exemption on debtor's home without
using Florida constitutional homestead exemption. In re Fyock (2008, BC MD Fla) 391 BR 882.
Appellate panel reversed bankruptcy court's entry of summary judgment in favor of creditor,
who sought to judicially estop debtors from asserting objection to value of secured claim they made
while acting as debtors in possession and performing trustee's fiduciary duty to object under 11
USCS § 704, which debtors had, when filing their motion to avoid judicial lien while acting on their
own account under 11 USCS § 522(f)(2) to protect their homestead right, asserted was of greater
value; bankruptcy court abused its discretion and applied incorrect legal standard by not considering
implications of different capacities in which inconsistent positions were taken. Cheng v K&S Diver-
sified Invs., Inc. (In re Cheng) (2004, BAP9) 308 BR 448, 51 CBC2d 1808.
Bankruptcy court erred in ruling that Chapter 7 debtor's homestead exemption had to be capped
at $ 125,000 pursuant to 11 USCS § 522(p) because debtor's bankruptcy petition was filed approxi-
mately two weeks before § 522(p) became effective. Stornawaye Fin. Corp. v Hill (In re Hill)
(2008, BAP1) 387 BR 339.
2.Proceeds of Sale of Homestead 100. Generally
Under Mississippi opt-out provisions, Chapter 11 debtor may claim homestead exemption in
proceeds from sale of real property used as residence even though debtor continues to maintain
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11 USCS § 522
leasehold interest in portion of property. In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH
Under Mississippi opt-out provisions, Chapter 11 debtor may claim homestead exemption in
proceeds from sale of real property used as residence, even though at time debtor filed petition,
property was subject to executory contract for sale of land, where, under Mississippi law, vendor
under such contract holds land in trust for purchaser and creditor can execute against such interest.
In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH Bankr L Rptr P 72303.
Under Mississippi exemption statutes, Chapter 11 debtor householder need not own, and thus
need not sell, both land and buildings to qualify for homestead exemption in proceeds so long as
property sold has been used for homestead purposes. In re Williamson (1988, CA5 Miss) 844 F2d
Object of Texas statute exempting proceeds from sale of homestead was solely to allow claim-
ant to invest proceeds in another homestead, not to protect proceeds in and of themselves. In re
England (1992, CA5 Tex) 975 F2d 1168, CCH Bankr L Rptr P 74979.
Chapter 7 debtors' available exemptions under 11 USCS § 522 are determined at time of filing
bankruptcy petition and, once exemptions are determined, debtors will not lose them by subsequent
sale of exempt assets; therefore, where at time of filing debtors had available exemption, debtors did
not lose that exemption by subsequent sale of it because it is value of debtors' equity in tools of
trade as opposed to physical items themselves which may be claimed as exempt. In re Patterson
(1986, WD Wis) 64 BR 120, 14 BCD 1276, remanded on other grounds (1987, CA7 Wis) 825 F2d
1140, 16 BCD 607, CCH Bankr L Rptr P 71935 (superseded by statute as stated in In re Stallsworth
(1991, BC SD Ind) 133 BR 470).
Debtor who sells homestead and purchases new home during pendency of Chapter 11 case be-
fore conversion of case to Chapter 7 is not entitled to claim homestead exemption under state law
pursuant to 11 USCS § 522(b) for new home where (1) none of proceeds from sale of original
homestead are used to pay antecedent debt and there is no other property available from which such
debts can be paid and (2) debtor violated 11 USCS § 363(b) by purchasing new home without Bank-
ruptcy Court authorization, thus making such purchase avoidable by trustee under 11 USCS §
549(a). In re Wooten (1986, ND Iowa) 82 BR 84.
Post-petition conduct, including voluntary sale of homesteaded property and consequent conver-
sion into proceeds that may not have been exempt under state law, specifically homestead exemp-
tion of Mass. Gen. Laws ch. 188, § 1, could not remove previously exempted property from protec-
tions of 11 USCS § 522(c). Pasquina v Cunningham (In re Cunningham) (2006, DC Mass) 354 BR
547.
State court decision holding that debtor's property remains homestead until sale is closed, is con-
trolling on issue of whether debtors are entitled to homestead exemption under 11 USCS § 522
where state has specifically vetoed federal exemptions under option to do so given by 11 USCS §
522 to each state and will be applicable to grant homestead exemption to debtors who arrange to
retain possession of home until day after bankruptcy petition was filed, at which time they moved
into other leased premises. In re Crump (1980, BC SD Fla) 2 BR 222, 5 BCD 1235, 1 CBC2d 378,
Page 203
11 USCS § 522
Debtor is not entitled to recover dollar amount of homestead exemption from sale of debtor's
right of survivorship in property owned by debtor and his wife as tenants by entirety; better ap-
proach is to sell survivorship interest subject to debtor's right to homestead exemption if and when
he is survivor. In re Elsea (1985, BC ED Tenn) 47 BR 142.
11 USCS § 522(d)(1) protects value of debtor's equity in residence, as opposed to physical prop-
erty; thus, although Chapter 7 debtor's residence has been sold free and clear of liens under 11
USCS § 363(f), debtor is entitled to claim homestead exemption in sale proceeds. In re Sajkowski
(1985, BC DC RI) 49 BR 37, CCH Bankr L Rptr P 70538.
Chapter 7 debtor's homestead exemption should be determined at time of filing of bankruptcy
petition and not at time of original homestead sale; therefore proceeds of contract for deed yet to be
paid at time petition was filed are properly includable as part of homestead exemption under state
opt-out legislation pursuant to 11 USCS § 522. In re Pierce (1985, BC DC SD) 50 BR 718.
Under Kansas law, involuntary transfer of debtor's homestead pursuant to divorce decree does
not terminate homestead status of proceeds if debtor intends to use proceeds to purchase another
homestead; Chapter 7 debtor may exempt such proceeds where his uncontradicted testimony is that
he intends to use proceeds to invest in another homestead. In re Daniels (1986, BC DC Kan) 65 BR
703.
If Chapter 7 debtor should sell homestead, proceeds from sale would be subject to execution by
claimant only to extent provided under state law, while 11 USCS § 522(c) would require that pro-
ceeds obtained from sale of entire property be set aside as exempt in bankruptcy despite fact that
homestead claim may exceed that allowed by state law. In re Karrer (1994, BC ND Iowa) 183 BR
177.
Debtor was not entitled to Illinois homestead exemption in proceeds received on refinancing
home, court finding Illinois statute providing exemption for proceeds of "conveyance" only extends
to proceeds received upon sale of homestead, not refinancing, where statute was encaptioned by
Legislature with words "Proceeds of Sale." In re Lowder (1995, BC CD Ill) 188 BR 573 (criticized
in In re Ziegler (1999, BC CD Ill) 239 BR 375).
11 USCS § 522(c)(1) and (2), read together with 11 USCS § 522(f)(1)(A)(i), lead to conclusion
that where properly perfected lien against debtor's homestead supports judgment under 11 USCS §
523(a)(5), such judgment lien should be paid out of proceeds of trustee's sale in same priority as it
would have been paid under state law; this is so even if it means that debtor's homestead exemption
would be impaired. Rupp v Elmasri (In re Elmasri) (2007, BC ED NY) 369 BR 96.
Unpublished: Debtors had no exemptible interest in balance of proceeds of sale of that property
held by trustee because trustee stepped into shoes of debtor's father who financed second mortgage
and trustee held father's lien clam against sale proceeds of property; therefore, 11 USCS § 551 pre-
served preferential transfer avoided in adversary proceeding for benefit of estate and there was no
equity in property or proceeds of its sale that debtors could exempt. In re Brown (2004, BC ND Ga)
2004 Bankr LEXIS 1807.
101. Foreclosure sales
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11 USCS § 522
Creditor's argument, that debtor's right to homestead exemption under 11 USCS § 522(f) is ex-
tinguished when homestead is foreclosed on and sold, is meritless, since homestead exemption sim-
ply attaches to proceeds of sale. In re Webb (1984, BC ED Va) 49 BR 646.
Where foreclosure sale occurred with respect to portion of debtors' homestead on which their
residence was located, no homestead rights survive foreclosure as to balance of land because focus
of New York exemption statute is upon residence and exemption ceases with termination of occu-
pancy; trustee is not precluded from claiming proceeds of sale by virtue of his failure to object to
debtors' original claim of exemption because at outset of case claim appeared perfectly proper and
when nature of estate's interest materially changed upon foreclosure it was incumbent upon debtors
to amend their claim of exemption if they believed remaining land was exempt. In re Ellerstein
(1989, BC WD NY) 105 BR 214.
Purpose of New York's homestead exemption statute is to protect homeowner from seizure of
his or her home to satisfy money judgment and to protect debtor's home in event of bankruptcy;
however, in event of mortgage foreclosure action, exemption does not apply because it is suit in eq-
uity not resulting in money judgment within meaning of statute; surplus monies realized in mort-
gage foreclosure action are personalty and, hence, not within ambit of statute. In re Ellerstein
(1989, BC WD NY) 105 BR 214.
Where foreclosure sale occurred with respect to portion of debtors' homestead on which their
residence was located, no homestead rights survive foreclosure as to balance of land because focus
of New York exemption statute is upon residence and exemption ceases with termination of occu-
pancy; trustee is not precluded from claiming proceeds of sale by virtue of his failure to object to
debtors' original claim of exemption because at outset of case claim appeared perfectly proper and
when nature of estate's interest materially changed upon foreclosure it was incumbent upon debtors
to amend their claim of exemption if they believed remaining land was exempt. In re Ellerstein
(1989, BC WD NY) 105 BR 214.
Bank's deficiency judgment after foreclosure impaired exemption of debtors, and debtor may
avoid that judgment under authority of 11 USCS § 522(f)(1), subject to provisions of 11 USCS §
349(b)(1) for automatic reinstatement of lien if case should be dismissed without provision for dif-
ferent result. In re Smith (2001, BC WD NY) 270 BR 557, 38 BCD 212, 47 CBC2d 953 (criticized in
Banknorth, N.A. v Hart (In re Hart) (2003, CA1) 328 F3d 45, 41 BCD 79, CCH Bankr L Rptr P
78845).
While exception of 11 USCS § 522(f)(2)(C) was inapplicable to debtor's motion to partially
avoid judgment creditor's lien because lien did not arise out of foreclosure judgment, which merely
adjudicated it as valid and junior, because debtor had waited 17 months to file his motion to par-
tially avoid lien to assert his homestead exemption, and appeared to have side deal with foreclosure
sale buyer to detriment of creditor, motion was denied as precluded by laches. In re Kelly (2006, BC
ND Ill) 350 BR 778.
102. Particular proceeds of other sales
Under opt-out provision of 11 USCS § 522(b)(1), Indiana real property exemption does not ap-
ply to Chapter 7 debtor's interest in proceeds from sale of real estate, even though, at time of filing,
not all amounts had been paid and debtor still retained some equity in property; rather, debtor's in-
terest in contract of sale becomes part of bankruptcy estate under 11 USCS § 541 as personalty, be-
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11 USCS § 522
cause Indiana has adopted doctrine of equitable conversion and lien theory for conditional contracts
of sale. In re Jones (1985, CA7 Ind) 768 F2d 923.
Under California homestead exemption, when Chapter 7 debtor fails to reinvest homestead pro-
ceeds within period of 6 months in which debtor has control of those proceeds, proceeds revert to
Chapter 7 trustee; because debtor had full control of proceeds from time of sale of his residence un-
til trustee commenced action, which was longer than 6-month period exemption period was not
tolled from time debtor filed his petition. In re Golden (1986, CA9 Cal) 789 F2d 698, CCH Bankr
L Rptr P 71125.
Under Mississippi opt-out provisions, Chapter 11 debtor has not waived homestead exemption
in proceeds from sale of homestead property by failing to claim exemption until after sale where,
under both Mississippi law and automatic stay, creditor with lien on homestead property is fore-
closed from asserting lien. In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH Bankr L Rptr P
72303.
Under Mississippi opt-out provisions, where debtor is entitled to exempt as homestead maxi-
mum of 160 acres to maximum value of $ 30,000, debtor waives possible advantage he might have
gained by specifying which 160 acres of total 854-acre lot he wished to exempt, and, upon sale of
lot, debtor may only exempt figure resulting from dividing 160 by 854, multiplied by dollar value of
debtor's total equity interest. In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH Bankr L Rptr
P 72303.
Chapter 7 debtor's inability to recover land sold to good- faith purchaser does not render entire
appeal moot, where Wisconsin homestead exemption applies and follows proceeds of sale, and
where proceeds from sale of land remaining after severance of "homestead" have not been distrib-
uted and are being held pending outcome of case, and, therefore, debtor's assertion that she can re-
cover from proceeds value of land that she claims was improperly sold is not moot. In re Lloyd
(1994, CA7 Wis) 37 F3d 271, 31 CBC2d 1786, CCH Bankr L Rptr P 76125.
Chapter 7 debtors are not entitled to $ 7,500 of proceeds from sale of property back to secured
creditor, on basis of claim to 1988 rent on their schedule of exemptions, despite contention that un-
der North Dakota law debtor is entitled to rents from property during redemption and their claim for
1988 rent was evidence that they had expectancy interest in these redemption period rents, because
petition was filed in 1987, and, as of that date, value of 1988 rent was zero; therefore, no property
existed in estate for debtors to exempt, and 11 USCS § 541(a)(6) applies only to rents to or from
property of estate, not mere expectancy of rents to be collected in future; furthermore, under North
Dakota law, no foreclosure took place, no redemption period therefore arose, and no right to rents
arose; however, debtors may amend their exemption schedules pursuant to Bankruptcy Rule 1009 to
claim exemption in proceeds of sale because, as matter of course, debtor should be allowed to
amend his exemption claims to include newly found property if case has not been closed; debtors
claimed rental income on schedules at time when it was reasonable to assume that no equity existed
in property, but when property was sold back to creditor, surplus was realized which became prop-
erty of estate and qualifies as newly found property. Armstrong v Hursman (1988, DC ND) 106 BR
625, 19 BCD 1495.
Proceeds from involuntary sale of debtor's homestead pursuant to division of marital property in
Michigan do not fall within Kansas homestead exemption when debtor moves to Kansas. In re
Sipka (1992, DC Kan) 149 BR 181 (criticized in In re Stratton (2001, BC DC Or) 269 BR 716) and
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11 USCS § 522
(criticized in Drenttel v Jensen-Carter (In re Drenttel) (2005, CA8) 403 F3d 611, CCH Bankr L
Rptr P 80259).
Where debtors at commencement of case have contingent interest in earnest money deposit in
escrow account maintained by real estate broker, this contingent interest becomes property of estate
under 11 USCS § 541(a)(1) when debtors file their petition; when purchaser forfeited deposit after
petition was filed, broker should have turned over debtors' share to trustee under 11 USCS §
543(b)(1) rather than to debtors; because debtors received and retained $ 1,500, they have received
part of homestead exemption, and trustee is entitled to keep $ 1,500 of proceeds from sale of home,
and remainder should be turned over to debtors as part of their homestead exemption. In re Turner
(1983, BC DC Me) 29 BR 628, 10 BCD 1039.
Debtor's claimed homestead exemption in proceeds from sale of marital home which were being
held in escrow by real estate company is sustained where real company's first contract is rescinded
and no listing contract existed between parties at time house was sold. In re Morris (1984, BC WD
Ky) 42 BR 305.
While Idaho state law extends 6 months' protection to proceeds of sale of debtor's homestead
exempt under 11 USCS § 522, purpose of extension is to enable debtor to purchase another resi-
dence; where debtor has converted majority of proceeds into automobile and ruby ring, and debtor
has shown no effort to use cash remainder to establish another homestead, both items and cash re-
mainder are subject to trustee's turnover motion. In re Deglopper (1985, BC DC Idaho) 53 BR 95.
Chapter 7 debtor may still claim homestead exemption in property despite fact that during pe-
riod between notice of lis pendens and petition filing, debtor twice sold and repurchased interest in
property to family members where: (1) debtor had either joint tenancy or tenancy in common on
appropriate dates; and (2) she owned interest in property both before legal troubles began and over
2 years before filing bankruptcy; because debtor had interest in property on date notice of lis
pendens was filed, subsequent judgment did not attach to homestead property and thus it was not
pre-existing debt and homestead exemption may properly be claimed. In re Johnson (1986, BC DC
SD) 61 BR 858.
Debtor is entitled to claim homestead exemption under New Hampshire law, even though he
was ordered to abandon property during pendency of divorce proceedings and had no intent to re-
possess property, where parties had agreed that property would be sold and debtor would receive his
1/2 interest out of proceeds. In re Eckols (1986, BC DC NH) 63 BR 523.
Under Kansas law, involuntary transfer of debtor's homestead pursuant to divorce decree does
not terminate homestead status of proceeds if debtor intends to use proceeds to purchase another
homestead; Chapter 7 debtor may exempt such proceeds where his uncontradicted testimony is that
he intends to use proceeds to invest in another homestead. In re Daniels (1986, BC DC Kan) 65 BR
703.
Trustee does not possess valid charging lien against Chapter 7 debtor's exemption in proceeds
from sale of homestead, for his services rendered in selling residence, that is entitled to priority over
nondischargeable claim of IRS for unpaid trust fund taxes where: (1) no attorney-client relationship
exists between trustee and debtor; (2) trustee has ample opportunity to receive compensation
through appropriate procedures; and (3) trustee has tried to remove compensation from court's scru-
tiny and simultaneously cause IRS to bear costs of sale of debtor's residence. In re Clate (1987, BC
WD Pa) 69 BR 506.
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11 USCS § 522
Chapter 7 debtor may deduct entire $ 45,000 homestead exemption from 50 percent joint ten-
ancy interest in net proceeds from sale of property that is property of bankruptcy estate. In re Reed
(1988, BC CD Cal) 89 BR 100, 19 CBC2d 378.
Chapter 13 debtor may not rely on 11 USCS § 522 homestead exemption to avoid transfer of
part of proceeds of sale of house and judicial lien on those proceeds where debtor is not trying to
recover house nor does he allege that money from sale is used as residence and thus, because nei-
ther debtor nor dependent uses proceeds as residence, homestead exemption is not available; debtor
may claim exemption of $ 3,849 from proceeds of sale of residence by applying unused homestead
exemption and wild card exemption and he is entitled to prejudgment interest from date of action at
state legal rate of interest. In re Hoffman (1988, BC WD Pa) 96 BR 46.
Upon sale of Chapter 13 debtors' property, debtors are not immediately entitled to receive their
applicable real estate exemption from proceeds of closing but, rather, funds shall be retained by
trustee and debtors' entitlement to receive cash representing their exemptible interest in real estate
will be deferred until debtors successfully complete their plans. In re Deeble (1994, BC SD Ga) 169
BR 240.
If debtor had accepted offer for purchase and sale of her homestead property during her Chapter
13 case, and she or Chapter 13 trustee had moved for order approving sale, or Chapter 7 trustee had
moved to sell property after conversion to Chapter 7, order approving sale would have provided for
payment to debtor of her $ 10,000 homestead exemption out of sale proceeds, and remaining pro-
ceeds would then be used to pay creditors with any further balance being paid to debtor, even
though payment of homestead exemption from proceeds of voluntary sales is not provided for under
New York law; here, debtor made proper claim to homestead exemption in property of estate where,
even at time of sale of property at postpetition mortgage foreclosure sale, there was sufficient equity
in property, over and above valid liens, including judgment liens, to support claimed $ 10,000 ex-
emption; to allow debtor's previously unobjected to claim of homestead exemption in property to be
cut off by postpetition foreclosure sale and then to allow Chapter 7 trustee to distribute resulting
surplus money to prepetition creditors would frustrate fresh start policy of Bankruptcy Code and
render meaningless provisions of 11 USCS § 522(c), which provide that properly exempted property
is no longer available for payment of prepetition debt; if this issue had been raised at time relief
from stay order was entered, which provided for any surplus money to be paid to trustee, court, in
furtherance of § 522 and fresh start policy, and pursuant to 11 USCS § 105, would have required
provision in order that any surplus money would first be used to pay debtor her claimed homestead
exemption. In re Bedell (1994, BC WD NY) 173 BR 463.
Fact that Chapter 11 debtor subsequently converted to Chapter 7 did not allow creditors to at-
tack homestead claim where new homestead was purchased within six months of sale of old home-
stead with proceeds from that sale and had thus, under Texas law, never entered bankruptcy estate.
In re Reed (1994, BC WD Tex) 178 BR 707, op withdrawn, reported at (1994, BC WD Tex) 8 Tex
Bankr Ct Rep 283.
Although new homestead acquired with proceeds from sale of old homestead within six months
did not enter bankruptcy estate under Texas law, proceeds received by debtor, including note, lost
their exempt status insofar as debtor had not reinvested them after six months and debtor's pledge of
note to secure his obligations arising from new homestead did not amount to reinvestment sufficient
to exempt note. In re Reed (1994, BC WD Tex) 178 BR 707, op withdrawn, reported at (1994, BC
WD Tex) 8 Tex Bankr Ct Rep 283.
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11 USCS § 522
Condominium which was valued in Chapter 7 debtor spouses' schedules at $ 120,000 but subse-
quently sold for $ 158,000 was not entirely exempted so as to entitle debtors to increase in value
where debtors had only claimed $ 15,000 exemption each (reflecting difference between $ 120,000
scheduled value and creditor's $ 90,000 mortgage); trustee had no reason to object to claimed ex-
emptions and no reason to believe that exemption claims would deprive estate of any more than
amount claimed. In re Bregni (1997, BC ED Mich) 215 BR 850.
Divorce court's order that home owned by Chapter 7 debtor and her spouse be sold was forced
sale of property to satisfy money judgment and, therefore, debtor, who filed bankruptcy after home
was sold, was entitled to homestead exemption in sale proceeds under Cal. Code Civ. Proc. §
704.720. In re Cumberbatch (2003, BC CD Cal) 302 BR 675.
Chapter 7 debtors' $ 15,000 homestead exemption in their residential property could not take
priority over payment of secured encumbered loans and expenses associated with liquidating prop-
erty, which took priority pursuant to 11 USCS § 724(b), and federal tax lien filed by IRS, which
took priority after payment of secured obligations, pursuant to 11 USCS § 522(c)(2)(B). Grochocin-
ski v Laredo (In re Laredo) (2005, BC ND Ill) 334 BR 401, 96 AFTR 2d 7448.
Attorneys could recover post-petition attorney's fees from proceeds that debtor received from
sale of real estate that had been subject to homestead exemption under Mass. Gen. Laws ch. 188, §
1 because property was no longer property of estate, based on homestead exemption and Chapter 7
trustee's decision to abandon any interest in property, and property had reverted back to debtor. In
re Hermosilla (2007, BC DC Mass) 375 BR 20.
Under Ariz. Rev. Stat. § 33-1101(C), debtors were required to reinvest sale proceeds in new
homestead within 18 months in order to maintain exempt status; fact that proceeds lost their exempt
status post-petition did not change this result because, although exemptions were generally deter-
mined as of bankruptcy petition date, if applicable state law required certain conditions to be met as
of petition date, such as reinvestment, debtors were required to meet these conditions to maintain
exempt status. Gaughan v Smith (In re Smith) (2006, BAP9) 342 BR 801.
Proceeds from refinancing of debtors' home did not qualify for exemption pursuant to Colo.
Rev. Stat. § 38-41-207 (2000); plain reading of statute indicated that it required actual transfer of
ownership and possession of home for "sale" to have occurred and for statute to have applied.
Polimino v Peters (In re Polimino) (2006, BAP10) 345 BR 708.
In Chapter 7 bankruptcy proceeding, debtor was allowed to trace $ 22,000 in proceeds from sale
of debtor's home when debtor had not filed homestead declaration prior to selling home if home-
stead was otherwise eligible for exemption pursuant to Mont. Code Ann. § 70-32-216. In re Snyder
(2006) 2006 MT 308, 335 Mont 11, 149 P3d 26.
3.Use or Occupancy 103. Generally
Although debtor's right to homestead exemption is determined by state law since state legisla-
ture has denied debtor's use of exemptions provided in 11 USCS § 522, essence of right to home-
stead exemption under state law as well as federal law is based on debtor's designation and occu-
pancy of real or personal property as residence. In re Orwig (1980, BC SD Ohio) 6 BR 725.
Since exemption right is interpreted liberally to afford debtors and families benefits of such al-
lowances, truly constructive occupancy qualifies for § 522 exemption so that if debtors demonstrate
present intention to occupy premises as homestead at definite future time, accompanied by actual
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11 USCS § 522
ongoing preparations for occupancy thereof, temporarily unoccupied premises qualifies for home-
stead exemption, although intention to occupy at definite future date must be substantiated by de-
monstrative, tangible, physical evidence in addition to any expressed subjective intent. In re
Cottingim (1980, BC SD Ohio) 7 BR 56, CCH Bankr L Rptr P 67698.
Alabama homestead statute pre-empts 11 USCS § 522(d) and under that statute essential ele-
ment of right of homestead is actual occupancy at time property is claimed as exempt; therefore
when at date of filing debtors were no longer living in house but had abandoned it since they knew
they would have to sell it in order to pay debts and had established new residence they are not enti-
tled to homestead exemption for original home. In re Brasington (1981, BC MD Ala) 10 BR 76.
Debtors were entitled to use state homestead exemption for home debtors were occupying as
residents for family unit on date when bankruptcy petition was filed, home which they continued to
use as dwelling house, and home which they had no intention of abandoning as homestead perma-
nently even though on temporary basis debtors did rent homestead premises. In re White (1982, BC
DC Vt) 18 BR 95.
Finding that debtors actually occupied homestead on filing date is neither necessary nor suffi-
cient to qualify for exemption; occupation may be constructive as well as actual; primary factor is
debtor's intention on filing date. In re Grindal (1983, BC DC Me) 30 BR 651.
Under both 11 USCS § 522(d)(1) and homestead exemption provided under Hawaii law, debtor
in bankruptcy may claim as exempt only residence wherein he resides at time of petition, and fact
that debtor moves to property several months after filing petition does not enable him to claim the
property as exempt. In re Tevaga (1983, BC DC Hawaii) 35 BR 157.
Under Ohio homestead exemption statute, debtor is only entitled to claim exemption for interest
in real estate if debtor or debtor's dependent occupies residence as principle dwelling and, although
actual occupancy is not necessarily required, it is well established that where debtor leaves resi-
dence, he must retain active intent to return to property in order to be entitled to exemption; there-
fore, Chapter 7 debtor wife, who has left residence because of marital discord and who has ex-
pressed no interest in reconciling marriage or in returning home, is not entitled to claim exemption
in property which both parties have expressed their intention to sell. In re Shinners (1986, BC ND
Ohio) 60 BR 139.
Under New Hampshire law, "occupancy" which must be actual and physical in nature, is essen-
tial to existence of homestead right; once homestead is validly established, however, homestead
right may be continued in some circumstances by constructive possession or temporary absence
with no intent to abandon homestead permanently. In re Eckols (1986, BC DC NH) 63 BR 523.
Under certain circumstances, debtor may validly claim residence as exempt homestead even if
she or he does not physically occupy property on petition date; while occupancy may be construc-
tive as well as actual, precedent indicates debtor must have actually resided on property at one time
and must demonstrate intention to return. In re Cole (1995, BC DC Me) 185 BR 95.
Bankruptcy court noted that debtor elected bankruptcy exemptions under state law rather than
11 USCS § 522 and court found that debtor's claimed interest was abandoned by debtor; property
Page 210
11 USCS § 522
was no longer impressed with homestead character sufficient to allow debtor to claim right to
homestead exemption in property pursuant to Ark. Code Ann. § 16-66-217, 218; Ark. Const. art. 9, §
4, when debtor's only tie to property in which he claimed right of homestead was camping and,
more likely, pasture and not use as residence. In re Hunter (2003, BC WD Ark) 295 BR 882.
Objection to bankruptcy debtor's claim of homestead exemption in real property, which debtor
did not presently live in and had rented out but in which debtor intended to reside in future, was
overruled, but objections to exemptions unsupported by statute were sustained; debtor was not
shown to have abandoned homestead. In re Marrama (2004, BC DC Mass) 307 BR 332, 52 CBC2d
234.
104. Dependents
Debtor who is single man living with his mother, sister, her husband and her child is head of
household and since part of premises occupied by sister's family is not divisible as practicable mat-
ter entire home enjoys homestead status. In re Geijo (1981, BC SD Fla) 9 BR 75.
In order to properly effectuate purpose and function of state homestead exemption, and to pre-
vent inequitable injury to debtor and his family, exemption claimed by debtor will be allowed, even
though property claimed as exempt has not been occupied by debtor as his principal residence, but
has been occupied by his wife and daughter, as state homestead exemption extends to protect real
property owned by debtor and occupied as principal residence by debtor or members of debtor's
immediate family. In re Warren (1984, BC ND NY) 38 BR 290.
State constitutional provisions regarding homestead exemptions are liberally construed in favor
of person asserting exemption and once homestead attaches it is not lost if debtor's family subse-
quently departs from homestead because of death, divorce, or arrival of children at age of majority;
thus debtor is entitled to exemption in property on which she resided with her husband even though
prior to filing petition debtor divorced her husband and at time of petition she lived on property
alone and unmarried. In re McCraw (1985, BC WD Ark) 58 BR 175.
Language in 11 USCS § 522(a), which provides that "dependent" may include spouse whether
or not actually dependent, does not apply to Ohio homestead exemption which requires occupancy
of residence by debtor or debtor's dependent because language of § 522 does not appear to contem-
plate that definition will be employed in interpretation of state exemption statutes, particularly in
light of fact that Ohio has opted out of federal scheme. In re Shinners (1986, BC ND Ohio) 60 BR
139.
Where debtors in Chapter 7 bankruptcy proceeding claimed homestead exemption in duplex in
which they resided in one unit and mother of one debtor resided in other, trustee's objection to
homestead exemption was overruled; because debtors provided financial and personnel support to
mother, and debtors purchased duplex for purpose of allowing mother to live under same roof in
order to facilitate her care, it was undisputed that debtors and mother lived together as family within
meaning of N.H. Rev. Statnn. § 480:1. In re Myers (2005, BC DC NH) 323 BR 11.
Debtor was entitled to homestead exemption where debtor was to receive $ 16,000 when he
conveyed his one-half interest in marital property to his former spouse, marriage dissolution judg-
ment came after filing of bankruptcy petition, and debtor's former spouse, at time of filing of bank-
ruptcy petition, qualified as debtor's dependent residing in property. In re Reed (2005, BC DC
Conn) 331 BR 44.
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11 USCS § 522
105. Property inherited postpetition

Debtor who inherited property from mother within 180 days from filing of petition is not enti-
tled to claim homestead exemption in property under 11 USCS § 522 because debtor did not reside
there permanently, only on occasion to take care of his mother, he intended to sell or rent property
at his mother's death, and at time of filing debtor had no interest in home; debtor's claim for reim-
bursement of expenses is also denied because payments for repair and upkeep were not made by
him in anticipation of living in home but were made to protect mother's home before her death. In
re Smith (1985, BC MD Ala) 48 BR 435.
Where, within 180 days of filing petition, debtor's father died, leaving him one-half interest in
apartment building in which he resided, court will exempt, as homestead, ratio that apartment
square footage of entire premises. In re Tsoupas (2000, BC DC NH) 2000 BNH 26, 250 BR 466.
106. Unimproved property
Debtor may not exempt as homestead property lot upon which she does not reside and upon
which there is no house, even though she intends to use property in future as place to retire, because
Tennessee homestead exemption statute has residency requirement. In re Huffines (1985, MD
Tenn) 57 BR 740.
Debtor will not be permitted to claim exemption under state statute in property which is unde-
veloped but on which she claims she will build home where court is convinced on record as whole
that intention to make unimproved real estate homestead did not exist at bankruptcy and there was
not then and there is not at time of decision reasonable possibility that debtor will convert land to
permanent residence. In re Crippen (1983, BC ED Mo) 36 BR 7, 2 BAMSL 577.
Law of Vermont is that homestead of debtor is exempt from attachment upon debts contracted
after filing of deed of homestead for record and before occupation of premises by debtor as home-
stead, and thus, where Chapter 11 debtor filed deed prior to commencement of construction of resi-
dence but did not move in until after completion of residence, she is not precluded from asserting
homestead as against contractor's lien where debtor clearly intended premises to be her homestead;
further, debtor moved into residence prior to time when contractor perfected his lien thus debtor's
homestead was established before contractor's lien attached. In re Bernstein (1986, BC DC Vt) 62
BR 545.
Chapter 7 debtors may exempt as homestead property vacant lot located directly across road
from parcel on which their residence is located where parcel was purchased with intention of being
used in conjunction with residence, parcel has been used to supplement inadequate storage and
parking at their residence, and parcel is used for residential gardening purposes; parcel of real prop-
erty used by debtor in conjunction with residential parcel, that would be contiguous with same but
for presence of road separating them, should not be precluded from acquiring nature of homestead
property simply on that basis alone. In re Flatt (1993, BC ND NY) 160 BR 497, 29 CBC2d 1253.
107. Rental of property
Debtor does not abandon homestead under Missouri law when debtor rents homestead in order
to meet payments on homestead. In re Turner (1984, BC WD Mo) 44 BR 118.
Leasing part of homestead does not constitute abandonment of homestead rights as to that part
leased where (1) leasing is not intended as abandonment and (2) purpose for which it is leased is not
inconsistent with assertion of right of homestead therein; however, where debtor who owns 2 build-
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11 USCS § 522
ings which are situated on one lot rents one and resides in other, rented building cannot be deemed
exempt from claim of creditors. In re Evans (1985, BC DC Vt) 51 BR 47.
Under Florida law, debtors' homestead exemption is limited to that portion of property occupied
by debtors as residence on date of bankruptcy and cannot include that portion of property which
was rented to and occupied by third party. In re Rodriguez (1985, BC SD Fla) 55 BR 519.
Under Florida constitution, Chapter 7 debtors are entitled to exempt only their residence as
homestead and not 3 other units in their apartment building that are rented to tenants. In re Aliotta
(1986, BC MD Fla) 68 BR 281.
For purposes of determining what portion of debtor's residence, which has attached rental unit,
may be exempt under Florida homestead exemption, susceptibility to division by perpendicular
lines, horizontal lines, or both, and to conveyance as independent parcel under existing law should
be criteria for divisibility; since duplex, although susceptible to division by vertical or horizontal
line, is not lawfully sellable under existing zoning laws, entire duplex is exempt. In re Kuver (1986,
BC SD Fla) 70 BR 190, 15 BCD 826 (criticized in Englander v Mills (In re Englander) (1996, CA11
Fla) 95 F3d 1028, 10 FLW Fed C 399) and (criticized in In re Nofsinger (1998, BC SD Fla) 221 BR
1018, 11 FLW Fed B 322) and (criticized in In re Blocker (1999, BC MD Fla) 242 BR 75, 13 FLW
Fed B 64).
For purposes of determining what portion of debtor's residence, which has attached rental unit,
may be exempt under Florida homestead exemption, susceptibility to division by perpendicular
lines, horizontal lines, or both, and to conveyance as independent parcel under existing law should
be criteria for divisibility; since duplex, although susceptible to division by vertical or horizontal
line, is not lawfully sellable under existing zoning laws, entire duplex is exempt. In re Kuver (1986,
BC SD Fla) 70 BR 190, 15 BCD 826 (criticized in Englander v Mills (In re Englander) (1996, CA11
Fla) 95 F3d 1028, 10 FLW Fed C 399) and (criticized in In re Nofsinger (1998, BC SD Fla) 221 BR
1018, 11 FLW Fed B 322) and (criticized in In re Blocker (1999, BC MD Fla) 242 BR 75, 13 FLW
Fed B 64).
North Dakota Chapter 7 debtor has homestead exemption of up to $ 80,000 of property on
which debtor lives, including portion that is rented to commercial establishment. In re Patten
(1987, BC DC ND) 71 BR 574, 15 BCD 1023.
Chapter 7 debtor may claim homestead in residence which he vacated subsequent to bankruptcy
and has since rented, and he may avoid prejudgment writ of attachment on said property under 11
USCS § 522(f), where objecting creditor has not produced any evidence indicating that debtor in-
tended to abandon his homestead or had recorded subsequent homestead on another real property,
which would constitute abandonment of first declared homestead by operation of California law;
although residency is required to declare homestead, continued residency is not required under Cali-
fornia law and moving away does not destroy exemption status. In re Figy (1989, BC SD Cal) 102
BR 785.
Chapter 7 debtors are not entitled to declared homestead exemption under California law, even
though debtor husband filed declaration prior to bankruptcy at time when he resided in home, where
debtors vacated property and leased it prior to bankruptcy filing. In re Yau (1990, BC CD Cal) 115
BR 245.
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11 USCS § 522
Debtor does not necessarily abandon his homestead simply because he may rent or lease por-
tions thereof; rather, debtor's property should be subject to divisibility test, criteria for which in-
clude not only whether unit or parcel is susceptible to division by perpendicular and/or horizontal
lines, but also whether such unit or parcel is lawfully conveyable as independent parcel under exist-
ing law; in present case, 2-story garage of single-family structure containing 2 rental rooms is ex-
empt where property is zoned as single-family residence with no possibility legally to sever and
convey rented portions of garage. In re Makarewicz (1991, BC SD Fla) 130 BR 620.
Chapter 7 debtors' claimed homestead exemption in real property consisting of 2 free-standing
structures on real property which contain 5 rental units, one of which serves as debtors' residence, is
limited under Florida law to portion of net proceeds that square footage of debtors' residential unit
bears to total square footage of 2 structures; because property is indivisible, trustee will sell entire
real property and divide proceeds, after satisfying mortgage and other liens of record and paying
ordinary and necessary costs and expenses of sale and closing, between estate and debtors. In re
Wierschem (1993, BC MD Fla) 152 BR 345, 7 FLW Fed B 44.
Judicial lien may be avoided in its entirety under 11 USCS § 522(f), despite lienholder's argu-
ment that only portion of Chapter 7 debtor's property is entitled to exemption since she resides in
only one of 4 units in apartment building, where, under New York exemption law, homestead ex-
emption applies to all real property which consists of lot of land with dwelling thereon owned by
debtor and occupied by debtor as principal residence. In re Vizentinis (1994, BC ED NY) 175 BR
824, 32 CBC2d 1496.
108. Debtor's move or sale postpetition
Under Mississippi law, debtor who abandons homestead rights by voluntarily moving out of
property cannot later convey to his wife homestead exemption in such property under 11 USCS §
522. Joe T. Dehmer Distributors, Inc. v Temple (1987, CA5 Miss) 826 F2d 1463.
Debtor wife may claim Colorado homestead exemption in home, even though debtor husband
had already moved to Texas with couple's children, had new job there, enrolled children in school,
and had leased house with option to buy, where debtor wife remained in Colorado and lived in
home while she arranged for moving company to pack their belongings, and she moved to Texas 10
days after bankruptcy petition was filed; although house was listed for sale, debtor wife occupied
residence on day of filing and for 10 days thereafter and her intention to move in immediate future
does not disqualify her homestead right; further, actions of debtor husband in leasing house with
option to buy evidences intent to purchase another home, and Colorado homestead statute allows
debtors to exempt proceeds of sale of homestead for one year if debtor uses proceeds for acquisition
of another home. In re Raymond (1993, CA10 Colo) 987 F2d 675, CCH Bankr L Rptr P 75179.
Under Mississippi homestead exemption, debtor may claim $ 30,000 from proceeds of sale of
homestead even though debtor agreed to sale of homestead prior to filling. In re Williamson (1985,
BC SD Miss) 49 BR 675.
Objection to Chapter 7 debtor's claim of homestead exemption filed by bank which holds judg-
ment lien on property cannot be sustained where, at time of commencement of case, debtor was
resident owner of property and bank has failed to present evidence that debtor did not intend to es-
tablish property as her homestead or that she effectively abandoned it as her homestead by moving
into apartment located elsewhere. In re Russell (1986, BC MD Fla) 60 BR 190.
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11 USCS § 522
Chapter 11 debtor's clear intent to sell her homestead in future cannot establish present aban-
donment of homestead where, at time of filing, debtor still resided at homestead. In re Bernstein
(1986, BC DC Vt) 62 BR 545.
Chapter 7 debtors' move from property after filing petition, but before court hearing on exemp-
tion, is not fatal to their California homestead exemption; changes occurring after filing are not
relevant. In re Knudsen (1987, BC CD Cal) 80 BR 193.
Fact that Chapter 7 debtor seeks to sell her homestead, and probably intended to do so when she
filed for bankruptcy, does not impair her exemption claim; however, when debtor executed her
homestead declaration, in which she stated that she intended to use residence as her homestead, she
clearly did not intend to continue living at residence because next day, and before homestead decla-
ration was recorded, she vacated residence and granted prospective purchaser license to use resi-
dence until sale could be completed, thereby bringing into question veracity of statements made in
declaration, and thus further evidentiary hearing is necessary to determine whether debtor's state-
ments in declaration are accurate. In re Zohner (1993, BC DC Nev) 156 BR 288.
Where property was debtors' homestead at time they filed their Chapter 7 petition, they did not
abandon their exemption by entering into purchase and sale agreement while still occupying prem-
ises and then subsequently moving from premises prior to closing; thus, debtors complied with pro-
visions of 11 USCS § 522(f) and were entitled to avoid creditor's judicial lien. In re May (2005, BC
DC NH) 329 BR 789.
109. Abandonment
Former homestead loses its homestead character when its owner abandons its, and likewise,
proceeds of sale of that former homestead lose their homestead character and become proceeds of
former homestead; Texas law does not afford owners of former homestead rights of homestead
claimants; owners of abandoned homesteads have no rights in their former homesteads, and there
are no hindrances to seizure thereof. In re England (1992, CA5 Tex) 975 F2d 1168, CCH Bankr L
Rptr P 74979.
Texas court's sanctions order declaring that debtor had abandoned homestead claim to certain
property was entitled to res judicata treatment for bankruptcy purposes since it constituted valid
judgment under Texas law rather than unconstitutional forced sale. McDaniel v Camp (In re Camp)
(1995, CA5 Tex) 59 F3d 548.
Debtors have not lost their claimed bankruptcy exemption in any equity that may result from
contract for deed because they may have abandoned real property; trustee's objection to exemption
claim based upon abandonment or upon lack of adequate description in schedules is denied where
debtors were parties to contract for deed to house and had moved from house after filing. In re
Karns (1981, BC ED Mo) 1 BAMSL 460.
Both spouses have valid homestead interest in property where only one spouse filed bankruptcy
petition and only declaration of homestead recorded was recorded by other spouse during previous
marriage; under state law homestead rights continue until abandoned and dissolution of registered
spouse's previous marriage and her remarriage to present spouse did not terminate these rights;
homestead exemptions extend to entire interest of both spouses in property and is to be ratably ap-
portioned between community property interests and separate property interests. In re Halub (1982,
BC CD Cal) 25 BR 617.
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11 USCS § 522
Under Texas law governing homestead exemption, there is no requirement of occupancy of

property which debtor claims as homestead, and when homestead rights are once shown to exist in
property, anyone asserting abandonment has burden of pleading and proving it by competent evi-
dence; acquiring of new home is not sufficient to show abandonment of original homestead absent
evidence of total abandonment with intent not to return to claim exemption. In re Byrd (1984, BC
WD La) 39 BR 374.
Defendant's judgment lien which impaired homestead exemption was subject to avoidance de-
spite contention that debtors had abandoned property and property therefore was not "homestead"
under Missouri law where evidence indicated debtors' intent to retain property in question as home
base. In re Farris (1984, BC ED Mo) 42 BR 388, 2 BAMSL 896.
Deciding consideration in determining whether Chapter 7 debtor's absence represents abandon-
ment of homestead is whether debtor has intention to return; debtor's intent must be determined in
relation to surrounding exigencies. In re Brent (1987, BC DC Vt) 68 BR 893.
Debtor may claim homestead exemption under state law despite fact that he abandoned house 3
days after filing for bankruptcy where debtor has lived in house for number of years prior to filing
of petition, thereby establishing residency, and thus, without concurrence of both act of abandon-
ment and intent to abandon, debtor's occupancy of house continued his residence status during time
petition was filed. In re Cope (1987, BC ND Ohio) 80 BR 426.
Under provisions of homestead exemption in state that had opted out of federal exemptions pur-
suant to 11 USCS § 522(b)(1), Chapter 7 debtor permanently abandoned claimed homestead in
property where he did not occupy property at time of filing of bankruptcy petition and failed to
demonstrate that he intended to return and occupy that property as homestead. In re Moneer (1995,
BC ND Ill) 188 BR 25.
Debtors did not abandon their home located in Bismarck, North Dakota (Bismarck home) sim-
ply by relocating to Medora, North Dakota, where relocation was temporary and necessary for
debtors to manage their business which was located in that city; in addition, it was reasonable for
debtors to have purchased mobile home in Medora because they were away for extended period of
time while tending to their business and needed temporary or second dwelling; accordingly, debtors
could claim as exempt under N.D. Cent. Code § 47-18-16 proceeds from sale of Bismarck home. In
re Morlock (2006, BC DC ND) 364 BR 684.
110. Absence due to marital difficulties
Debtor's former wife voluntarily and permanently abandoned her occupancy of marital resi-
dence and therefore is not entitled to claim homestead exemption in property under New Hampshire
law where debtor testified that wife told him at time she left that she intended to leave permanently
and she took children, furniture, clothing and toys with her when she left. In re Cilley (1986, DC
NH) 64 BR 32.
Debtor abandoned his homestead when he voluntarily gave his ex-wife exclusive possession of
house pursuant to property settlement agreement, moved out of house, and ceased to make any
payments toward mortgage and taxes due on house; therefore, he may not exempt his one-half in-
terest in house. Konrad v Stephenson (1986, ED Ark) 67 BR 457.
Where Chapter 7 debtor vacates his residence prior to filing bankruptcy petition pursuant to
court order granting spouse exclusive occupancy rights to property pending resolution of marital
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11 USCS § 522
dispute, Bankruptcy Court will not apply literal interpretation of state law requirement of "occu-
pancy" and allow debtor's claim for 11 USCS § 522 homestead exemption. In re Smith (1985, BC
WD NY) 57 BR 81, 13 BCD 1290.
Absence from marital abode pending final resolution of property rights by New York divorce
court does not constitute abandonment of rights in homestead under New York law. In re Smith
(1985, BC WD NY) 57 BR 81, 13 BCD 1290.
Under Ohio homestead exemption statute, debtor is only entitled to claim exemption for interest
in real estate if debtor or debtor's dependent occupies residence as principle dwelling and, although
actual occupancy is not necessarily required, it is well established that where debtor leaves resi-
dence, he must retain active intent to return to property in order to be entitled to exemption; there-
fore, Chapter 7 debtor wife, who has left residence because of marital discord and who has ex-
pressed no interest in reconciling marriage or in returning home, is not entitled to claim exemption
in property which both parties have expressed their intention to sell. In re Shinners (1986, BC ND
Ohio) 60 BR 139.
Debtor may, under New Hampshire law, claim homestead exemption in marital property even
though he temporarily was ordered out of home during pendency of divorce proceedings where
debtor had consistent intent to return to residence upon obtaining custody of children. In re Eckols
(1986, BC DC NH) 63 BR 523.
Debtor is entitled to claim homestead exemption under New Hampshire law, even though he
was ordered to abandon property during pendency of divorce proceedings and had no intent to re-
possess property, where parties had agreed that property would be sold and debtor would receive his
1/2 interest out of proceeds. In re Eckols (1986, BC DC NH) 63 BR 523.
Chapter 7 debtor did not abandon his homestead merely because he misinterpreted state divorce
court's order to sell homestead as implicitly prohibiting him from occupying it where he maintained
intention to return. In re Brent (1987, BC DC Vt) 68 BR 893.
Chapter 7 debtor continued to utilize property as residence on date debtor filed voluntary peti-
tion and debtor may exempt proceeds from post-petition sale of property under 11 USCS §
522(d)(1) where debtor purchased and physically occupied premises for 7 years prior to bankruptcy
filing, debtor did not abandon premises when he physically vacated premises weeks before filing
because absence was involuntary and compelled by state court order following separation from
wife, and debtor continued to occupy premises constructively on date debtor filed petition. Makoroff
v Buick (In re Buick) (1999, BC WD Pa) 237 BR 607, 42 CBC2d 1151, CCH Bankr L Rptr P 77980.
Bankruptcy court held that pursuant to state law, any indication of husband's abandonment of
homestead property did not allow both debtors' homestead to become subject to judgment lien
where lien did not arise from: (1) pre-acquisition debt; (2) contractual agreement expressly stipulat-
ing that homestead shall be liable; or (3) work furnished exclusively on debtors' homestead. In re
Powers (2002, BC ND Iowa) 286 BR 726.
111. Absence due to extreme circumstances
Debtor is entitled to claim homestead exemption for marital residence under New York law
notwithstanding her nonoccupancy of premises because of extreme conditions under which she was
forced to vacate premises whereby debtor's husband had physically thrown debtor of house and be-
cause premises are still occupied by debtor's family. In re Thomas (1983, BC SD NY) 27 BR 367.
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11 USCS § 522
Debtor can reinstate homestead exemption upon filing of petition, even though under Minnesota
law debtor had abandoned homestead prior to petition, and debtor will be deemed to have construc-
tive occupancy of homestead when he claims intent to live there and that his absence is caused by
fear of violence from relatives. In re Lehman (1984, BC DC Minn) 44 BR 946.
112. Other particular circumstances
Remarried debtor cannot claim homestead exemption for residence she occupied as single adult,
because, under Texas law, actual use and occupancy is most significant, and debtor moved to new
husband's house prior to time lien on former homestead was created. In re Claflin (1985, CA5 Tex)
761 F2d 1088.
Under Texas law, once debtor establishes initial homestead character of property, homestead
status is presumed to continue, and burden of proof shifts to person relying on affirmative defense
of abandonment; evidence that Chapter 7 debtor was temporarily absent twice from homestead
property for several months during 10-month period and rented all but one bedroom of property by
written lease on another occasion was insufficient to establish abandonment. In re Niland (1987,
CA5 Tex) 825 F2d 801, CCH Bankr L Rptr P 71664.
Under Texas law homestead claimant is clearly not estopped to assert his homestead rights in
property notwithstanding fact he made numerous sworn misrepresentations to effect that other
property was his homestead, if, at time of such declarations, claimant was in actual use and posses-
sion of his homestead property. In re Niland (1987, CA5 Tex) 825 F2d 801, CCH Bankr L Rptr P
71664.
Bankruptcy Court's finding that Chapter 11 debtor lacked intent to make 190-acre tract his
homestead is clearly erroneous where Bankruptcy Court, as basis for its factual finding, relied on
factually-inaccurate homestead designation and disclaimer, which did not include land on which
house in which debtor lived was located and did not contain land that had already been encumbered
to another creditor and tract of land that had already been deeded to debtor's son, and where debtor's
occupancy and use of his home and surrounding acreage were unquestioned; under Texas home-
stead law investigation of intention need not be made when land is actually put to homestead uses as
in present case. In re Kennard (1992, CA5 Tex) 970 F2d 1455.
Bankrupt was not entitled to claim farm as homestead under former 11 USCS § 24 where such
farm was not used as home, but had merely been claimed as homestead in past years for tax pur-
poses. In re Neale (1967, ND Tex) 274 F Supp 969.
Debtor's property was subject to homestead exemption where debtor owned property, had con-
structed residence on it, and was moving personal items into it and intermittently occupying it at
time judgment lien on debtor's non-exempt real property was recorded, subsequently received cer-
tificate of occupancy, and, it was undisputed that property was debtor's homestead when he filed
bankruptcy petition approximately one year later. Gibson Group v Cooper (In re Cooper) (1996,
MD Fla) 197 BR 698, 10 FLW Fed D 26.
To establish Florida homestead exemption, it must be established bankrupt intended to make
property in question his or his family's permanent place of residence, and Canadian tourist who does
not hold permanent visa cannot be permanent resident of Florida; regardless of what his intent is to
do in future, he is incapable of declaring home as permanent residence and therefore cannot avail
himself of state homestead benefits. In re Cooke (1979, BC ND Fla) 1 BR 537.
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11 USCS § 522
Notwithstanding that debtor wife, who together with husband filed voluntary joint petition,
never resided in house which debtors seek to claim as exempt, she may apply $ 400 exemption plus
spillover from unused residential exemption to claim exemption in home. In re Phelmetta (1980,
BC DC Conn) 7 BR 461.
Under provision of South Dakota homestead exemption which precludes conveyance or encum-
brance of homestead by its owner without spouse's concurrence, since debtor and his wife did not
intend realty to be their homestead at time debtor encumbered property to bank, intending instead
for property to be used in debtor's construction business, realty was not attached with character of
homestead when it was encumbered and bank's lien is valid. In re Lemme (1984, BC DC SD) 41 BR
829.
Chapter 7 debtor may still claim homestead exemption despite her residing in nursing home be-
cause, under South Dakota law, mere absence from her home due to health reasons, even for long
period of time, is not itself sufficient to establish that debtor has never acquired homestead or has
subsequently abandoned it in absence of proof that debtor did not intend to return to her home. In
re Johnson (1986, BC DC SD) 61 BR 858.
Where Chapter 7 debtor's residence in another town was temporary accommodation to exigen-
cies of his employment, it did not create new homestead. In re Brent (1987, BC DC Vt) 68 BR 893.
Chapter 7 debtor is not entitled to homestead exemption for certain property under Ohio opt out
provisions where trustee has shown that debtor is living on property other than that claimed as
homestead. In re Hollar (1987, BC SD Ohio) 79 BR 294.
Chapter 7 debtors are not entitled to California automatic dwelling exemption upon forced or
involuntary sale where they vacated property prior to bankruptcy filing because they could not af-
ford payments, they are currently living with parents, and they have provided no evidence of how
much time might elapse before they would return to property, or that they would ever return. In re
Yau (1990, BC CD Cal) 115 BR 245.
Under California law, judgment creditor who obtains attachment lien and then later records
judgment lien while attachment lien is in effect has lien against debtor's dwelling, for priority pur-
poses, from date attachment was created; therefore, if debtor voluntarily sells dwelling subject to
attachment lien and judgment lien of same creditor, debtor's exemption should have priority over
judgment lien only if debtor or his spouse resided uninterrupted at dwelling from date attachment
lien arose to date dwelling is found exempt. In re Yau (1990, BC CD Cal) 115 BR 245.
Debtor airline pilot who purchased property and prepared it for immediate occupancy by his son
and friend and who, although not physically occupying property on continued basis, financed prop-
erty and paid taxes and general maintenance thereon established that property as homestead under
11 USCS § 522. Teasdale v Frederick (In re Frederick) (1995, BC MD Fla) 183 BR 968, 33 CBC2d
962, 9 FLW Fed B 42.
Where debtor established property as homestead in 1983, maintained it as such until placing it
on market in 1987, and property was being leased to another until September 1993, debtor had
abandoned homestead so that lien for April 1993 judgment validly attached to non-exempt property
prior to debtor's bankruptcy filing later in September and was not subject to avoidance. Teasdale v
Frederick (In re Frederick) (1995, BC MD Fla) 183 BR 968, 33 CBC2d 962, 9 FLW Fed B 42.
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11 USCS § 522
Chapter 11 debtors who owned residences in Florida and Kentucky abandoned their Florida
homestead and were therefore not entitled to claim homestead exemption under Florida law, not-
withstanding debtors' testimony that they intended to sell Kentucky property and that they consid-
ered Florida their "domicile," in light of evidence that debtors had attempted to sell Florida property
substantially furnished, indicating that their most important belongings were not in Florida home
but elsewhere; debtors purchased very expensive home in Kentucky at which debtors spent bulk of
their time in months prior to filing for bankruptcy; debtors terminated employment and income in
Florida and were associated with racetrack in Kentucky; and debtors had title to Kentucky home
and merely land contract interest in Florida home. In re Vaughan (1995, BC ED Ky) 188 BR 234.
Chapter 7 Trustee's objection to debtor's claimed exemption for residential real estate is sus-
tained and exemption denied as Indiana exemption statute applies only to property where debtor or
dependents actually reside and debtor did not live at property on date of petition and had not for at
least three years, two of debtor's daughters occupied property but there was no evidence they were
dependents of debtor, the relevant point of inquiry was as of three years ago and the evidence pre-
sented related to debtor's current condition, and even if debtor needed around the clock attention,
there was no compelling reason why debtor had to receive it at daughter's home rather than his own
home. In re Burns (1998, BC ND Ind) 218 BR 897.
Chapter 13 debtor was not entitled to Texas rural homestead in tracts of land near adjacent land
on which debtor lived with his mother where, although he stated that he had always planned to build
home on particular portion of land in question, he had made no preparations toward such actual oc-
cupancy and use. In re Brooks (1999, BC ND Tex) 233 BR 696.
Even though debtor was member in armed forces and not residing at property debtor sought to
exempt as homestead, debtor is allowed exemption under 11 USCS § 522(d)(1) where debtor re-
sided at property continuously prior to transfer, debtor has not attempted to purchase any other
homestead, property is rented by debtor to third party to defray expenses, debtor intends to return to
property upon leaving military, and debtor's absence from property is involuntary and compelled. In
re Anderson (1999, BC WD Tex) 240 BR 254.
11 USCS § 522(d)(1)'s plain language unambiguously requires actual occupancy at point prior to
bankruptcy filing; therefore, debtor was not allowed to use exemption for land that he was preparing
to live on in future. In re Gandy (2005, BC SD Tex) 327 BR 807.
Debtor could not claim exemption pursuant to 11 USCS § 522(d)(1) in proceeds from sale of her
former residence pursuant to divorce proceedings where she had not lived in residence for eight
months prior to petition date, and she had transferred her interest in former residence, and it had
been sold almost two months before petition date. In re Boward (2005, BC DC Mass) 334 BR 350.
Debtor's adverse possession cause of action which arose pre-petition was non-exempt property
of bankruptcy estate under 11 USCS § 541; only trustee, as representative of estate, had standing to
sue on claim, not debtor whose title and homestead exemption under N.Y. Debt & Cred. Law § 282
had been cut off by foreclosure sale. Hopkins v Foothill Mt., Inc. (In re Hopkins) (2006, BC ED NY)
346 BR 294.
Chapter 7 debtor was entitled to avoid, under 11 USCS § 522(f), creditor's entire judicial lien on
debtor's one-half interest in three-family residential property of which debtor resided in one unit and
rented other two floors because Conn. Gen. Stat. § 52-352b(t) did not require homestead, as defined
under Conn. Gen. Stat. § 52-352a, to be used exclusively as debtor's residence and did not require
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11 USCS § 522
pro-ration of exemption if some portion of property was utilized for other purposes. Majewski v
Conn. Natural Gas (In re Majewski) (2007, BC DC Conn) 362 BR 67.
4.Particular Homestead Property 113. Adjacent or appurtenant property
Chapter 7 debtor may not claim homestead exemption, under South Dakota law, in pasture or
storage building because properties are not "appurtenant" to debtor's home and have not been inte-
gral part of use of debtor's home where (1) pasture and storage barn were neither purchased as part
of nor on same date as house purchase, (2) properties are all separately located within city, and (3)
horses which are reared on property are not connected to use of home. In re Corbly (1986, BC DC
SD) 61 BR 843.
Debtors may, pursuant to 11 USCS § 522(b)(2) and Wisconsin law, claim as homestead exemp-
tion parcel of land on which pole shed is located, which adjoins parcel on which residence is lo-
cated, even though parcel was formerly used for business purposes and debtors allegedly have no
need for additional storage space provided by shed, where it is both implied and expressed intent of
debtors to treat and consider parcel as homestead property. In re Mann (1986, BC WD Wis) 82 BR
981.
Fact that parcel of land was acquired at different time than parcel on which residence was lo-
cated and for a business purpose does not preclude it from subsequently acquiring nature of home-
stead property under 11 USCS § 522. In re Mann (1986, BC WD Wis) 82 BR 981.
Chapter 7 debtors may exempt as homestead 2 contiguous lots which measure less than one-half
acre, even though second lot, which is vacant, was acquired in separate transaction, is assessed
separately from lot on which residence is located for tax purposes, and was never granted home-
stead status for tax purposes; where debtor owns 2 contiguous lots meeting area limitation, one used
for residential purposes and other vacant, debtor is entitled to declare both lots exempt unless there
is evidence that separate lot is being used for business purposes. In re Dudeney (1993, BC SD Fla)
159 BR 1003, 7 FLW Fed B 275.
Chapter 7 debtors may not exempt home in which they live as well as home they own across
street in which debtor husband's father resides under Texas homestead law, although lots are both
urban in nature and taken together do not exceed one acre, and even though debtor and father qual-
ify as family for purposes of homestead exemption, because homestead is meant to be comprised of
only one residence and is not intended to included 2 separate residences located on different lots;
debtors offer no authority for proposition that improvements to urban homestead may include sec-
ond residence located on separate lot. In re Cate (1994, BC ND Tex) 170 BR 582.
Chapter 7 debtors may not exempt 2 tracts of real property and 2 separate homes located adja-
cent to each other under Texas law, although both properties are urban in nature, are located on 2
separate, adjacent lots, were purchased at separate times, and, taken together, do not exceed one
acre, and even though debtors find that their marriage is better facilitated by maintaining separate
residences, because homestead is intended to be comprised of only one residence; debtors offer no
authority for proposition that improvements to urban homestead may include second residence lo-
cated on separate lot. In re Nerios (1994, BC ND Tex) 171 BR 224.
114. Burial plot
Release of lis pendens in which parties agreed for allowance of debtor's homestead exemption
did not prevent debtor from claiming exemption in burial plot on ground that debtor had previously
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used homestead exemption, because property which was subject of lis pendens is not real property
or personal property that debtor used as residence as required by homestead statute. In re McCoy
(1985, BC DC SC) 54 BR 189.
In calculating value of real property for purposes of 11 USCS § 522, mobile home was included
in value of real property because, under Tennessee law, it had become fixture, where debtors had
maintained mobile home as their primary residence, they connected mobile home to necessary util-
ity services, they landscaped property, and any attempt to remove mobile home would have dam-
aged it and real property. In re Northern (2003, BC ED Tenn) 294 BR 821.
115. Cooperative
Debtor may claim homestead exemption with respect to cooperative apartment which he left one
month before bankruptcy due to marital difficulties, which he believed had detrimental effect on
children, but which is occupied by his wife and 2 children. In re Pearlman (1985, BC SD NY) 54
BR 455.
Debtor's interest in cooperative apartment is exempt as homestead under 11 USCS § 522 and
Florida law, where apartment is debtor's principal and exclusive residence, debtor's right to use and
occupy premises exists in perpetuity, debtor's driver's license and voter's registration list apartment
as his permanent address, debtor does not own any other residential property, and State of Florida
has expressly defined cooperative apartments as homesteads for ad valorem tax purposes. In re
Dean (1995, BC SD Fla) 177 BR 727, 8 FLW Fed B 339.
Chapter 7 debtor's net rental income from six-plex where debtor resided was exempt property
under Alaska Stat. § 09.38.030(b) and Alaska Admin. Code tit. 8, § 95.030(d)(2) where bankruptcy
court considered income to be liquid asset and amount of income totaled less than amount allowed
under statute. In re Shell (2003, BC DC Alaska) 295 BR 129.
116. Farmland
State homestead exemption law, as made applicable by provisions of former 11 USCS § 24, ex-
empts only one acre of 13.2 acre tract which had been used as family home and farm when prop-
erty, jointly owned by bankrupt and wife, was incorporated in municipality and portions of property
used for industrial purposes consistent with zoning of property for heavy industry, despite fact that
only major visible use was farming, in view of expert testimony that area gives complexion of in-
dustrial area rather than farm. Stafos v Jarvis (1973, CA10 Kan) 477 F2d 369, cert den (1973) 414
US 944, 38 L Ed 2d 168, 94 S Ct 230.
Debtors' farmland became property of estate upon their filing of Chapter 11 petition and land
remained property of estate after conversion of case to Chapter 7 without confirmation of reorgani-
zation plan; redemption rights that attached to farmland postpetition are property of estate pursuant
to 11 USCS § 541(a)(6) as are rental proceeds stemming from those redemption rights; however, 11
USCS § 522(b)(2)(A) does not permit debtors to withdraw postpetition, postconversion farmland
rental proceeds from property of estate as exempt property because debtors had no right to rental
proceeds under state redemption law at either date of Chapter 11 filing or date of conversion to
Chapter 7, regardless of which date controls exemption eligibility, where foreclosure sale took place
after Chapter 11 filing and conversion to Chapter 7 and redemption right did not arise until that
time; although debtors could properly amend their schedule of exemption, that does not require that
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newly claimed exemption in rental proceeds be allowed. In re Harris (1989, CA8 ND) 886 F2d
Chapter 11 debtor may properly claim all 129.47 acres of property as rural homestead under
Texas law where debtor and her family live in house on property and have used entire farm to grow
hay and raise livestock, and debtor is not limited to 15 acres despite Bankruptcy Court's finding that
debtor and her husband intended to use only 15 acres, holding rest open for investment and devel-
opment and having executed homestead disclaimer that purported to release all of their homestead
claims to 114.47 acres, because debtor and her husband never realized their intentions to develop
that portion of property. In re Bradley (1992, CA5 Tex) 960 F2d 502, reh, en banc, den (1992, CA5
Tex) 966 F2d 1450 and cert den (1993) 507 US 971, 122 L Ed 2d 783, 113 S Ct 1412 and (criticized
in Perry v Dearing (In re Perry) (2002, WD Tex) 289 BR 860) and (criticized in Perry v Dearing (In
re Perry) (2003, CA5 Tex) 345 F3d 303, CCH Bankr L Rptr P 78909).
Chapter 11 debtor may claim rural homestead in property under Texas law even though property
is located within city limits where, at time debtor began to use her homestead, farm received no util-
ity or other municipal services from city. In re Bradley (1992, CA5 Tex) 960 F2d 502, reh, en banc,
den (1992, CA5 Tex) 966 F2d 1450 and cert den (1993) 507 US 971, 122 L Ed 2d 783, 113 S Ct
1412 and (criticized in Perry v Dearing (In re Perry) (2002, WD Tex) 289 BR 860) and (criticized in
Perry v Dearing (In re Perry) (2003, CA5 Tex) 345 F3d 303, CCH Bankr L Rptr P 78909).
For purposes of Chapter 7 debtor's objection to Bankruptcy Court's limiting homestead exemp-
tion to 3 acres and ordering change in zoning from "agricultural" to "residential" to allow her to
build residence, which change prevents her from engaging in farm-like activities, once Bankruptcy
Court determined that Chapter 7 debtor was not farmer, for purposes of determining how much of
her 113 acres she is entitled to exempt, Bankruptcy Court was not required to consider extent to
which debtor would be able to continue farming activity. In re Lloyd (1994, CA7 Wis) 37 F3d 271,
Wisconsin homestead statute, expressing strong public policy, is liberally construed in favor of
debtors. In re Lloyd (1994, CA7 Wis) 37 F3d 271, 31 CBC2d 1786, CCH Bankr L Rptr P 76125.
Asphalt plant, no longer used as such, and shop building, currently used for agricultural pur-
poses, are entitled to be classified as farm land. In re Cummings (1983, DC Kan) 40 BR 208.
Tract leased to radio station for transmitter which is located so that partition or severance from
farm is impractical is entitled to be classified as farm land. In re Cummings (1983, DC Kan) 40 BR
208.
Protection of Chapter 7 debtor's family and purpose of homestead exemption statutes, both
Vermont statute and 11 USCS § 522, are well served by allowing debtor as homestead exemption
grist mill building in which family resided, stable, and storage barns with land upon which they
stand and used in connection therewith, but house and land which debtor rented cannot be claimed
as part of homestead despite debtor's contention that state law prohibited subdivision of property
because subdivision is to crucial to protection of homestead exemption; homestead exemption is
purely statutory and gives no greater right than statute itself creates and it signifies dwelling house
in which family resides. In re Evans (1985, BC DC Vt) 51 BR 47.
Chapter 11 debtor farmers may not claim as homestead 80 acres of land not contiguous to land
on which dwelling is located, even though Minnesota statutory limitation that acreage must consist
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11 USCS § 522
of land upon which dwelling is situated in order to qualify for homestead exemption seems to bear
little present reasonable relationship to legislative purpose of protecting livelihood of family farm-
ing. In re Priebe (1987, BC DC Minn) 69 BR 100.
Chapter 11 debtors could not claim 2 tracts of land as exempt under Texas homestead law,
where debtors were not farming or using either tract for purpose of home at time of filing petition,
but instead had leased tracts to third parties. In re Brown (1987, BC ND Tex) 78 BR 486.
Peanut quota allotment assigned to Chapter 7 debtor's farm is not part of real property and is not
entitled to protection of homestead laws; improvements to real property are limited to physical addi-
tions or alterations to that property and do not include intangibles such as peanut allotments; while
peanut quotas by law run with real property to which quotas are allocated, this does not necessarily
make them part of real estate or improvements thereon since peanut allotments are benefit created
by federal government and can be taken away by same government which created them, and they
can be freely sold or raised, subject to compliance with regulations which govern them. In re Jack-
son (1994, BC ND Fla) 169 BR 742, 8 FLW Fed B 125.
117. Houseboat
Chapter 7 debtors are entitled to claim houseboat and dock slips as homestead under Kentucky
law because: (1) debtors live on houseboat and have no other residence; (2) boat dock slips are real
estate to which debtors have properly recorded title; and (3) boat dock slips are integral part of
maintaining residence on houseboat by providing necessary utility hookups. In re McMahon (1986,
BC WD Ky) 60 BR 632.
Chapter 7 debtors may not exempt 34-foot motorboat on which they reside as homestead ex-
emption, where it would be totally unwarranted extension of homestead provision of Florida consti-
tution to include boat which was certainly not designed to serve as permanent dwelling for anybody,
which is movable chattel but, in this case, not moveable only because Chapter 7 debtors do not have
funds to repair motor, since Florida homestead exemption was originally designed to protect family
homesite house and realty on which dwelling was situated. In re Major (1994, BC MD Fla) 166 BR
457, 8 FLW Fed B 30 (criticized in In re Mead (2000, BC SD Fla) 255 BR 80, 36 BCD 262, 14
FLW Fed B 11).
Fact that Chapter 7 debtor's use of boat as residence while in dry dock is in violation of state-
court order and clearly unlawful under state and local laws does not warrant denial of homestead
exemption claimed by debtor pursuant to 11 USCS § 522, where debtor has used boat as residence
continuously since 1991, and when, during year preceding bankruptcy filing, debtor by legal proc-
ess and involuntarily was required to place boat in dry dock, his homestead rights were not extin-
guished, and where allowing debtor exemption based upon his past use of boat will not have effect
of encouraging unlawful activity; if there were no state-court order, debtor would lawfully have
been entitled to continue to live on boat while afloat from April through November of this year, and
in succeeding years. In re Herd (1994, BC DC Conn) 176 BR 312.
34 foot boat berthed at rented dock space qualified for Florida homestead exemption as dwelling
house located on land that was not debtor's own but which debtor might lawfully possess. In re
Mead (2000, BC SD Fla) 255 BR 80, 36 BCD 262, 14 FLW Fed B 11 (criticized in In re Christie
(2003, BC MD Fla) 2003 Bankr LEXIS 26).
118. Mobile home
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11 USCS § 522
Under Mississippi opt-out provisions, permanent structure on property used for residential pur-
poses is not necessary precondition of valid homestead exemption in proceeds of sale of such prop-
erty; as general rule, house trailer is type of property sufficient to support homestead where it is af-
fixed to ground. In re Williamson (1988, CA5 Miss) 844 F2d 1166, CCH Bankr L Rptr P 72303.
Under opt-out legislation enacted pursuant to 11 USCS § 522, purpose of Illinois homestead ex-
emption is to protect and provide shelter for debtor's family and thus mobile home may be within
homestead exemption if debtor intended to affix permanently mobile home to realty; where Chapter
7 debtor had resided in mobile home for 14 years and utilities had been connected to home, mobile
home is within homestead exemption even if home's wheels had not been removed and home placed
on permanent foundation. In re Matthews (1984, ND Ill) 43 BR 466.
Debtor cannot place mobile home within state homestead exemption statute and automobile
within state motor vehicle exemption statute for purposes of claiming large exemptions and addi-
tionally, for purposes of avoiding nonpossessory, nonpurchase money lien, try to fit these items
within purview of 11 USCS § 522 by claiming they are held primarily for personal or family use;
neither debtor's mobile home nor automobile are types of exempt property subject to avoidance un-
der § 522 and creditor's liens on debtor's mobile home and automobile are good and valid liens to
extent that they do not impair debtor's interest in property as provided by § 522. In re Moore (1980,
BC SD Ohio) 5 BR 669.
Chapter 7 debtors' mobile home is "building" for homestead exemption purposes under former
Illinois homestead law where it has been in place for 7 years and is functionally attached to land by
utility connections and other means and this is true despite contract language specifically stating
that it is to be personal property, not real property, because that provision is, in reality, device de-
signed to waive debtors' homestead exemption rights and clause is invalid as waiver of real property
homestead exemption under Illinois law because debtors did not sign any document waiving their
homestead rights. In re Hockinson (1986, BC ND Ill) 60 BR 250.
Mobile home may qualify as homestead even though it has not been converted to real property
under state law. In re Melvin (1986, BC WD Mo) 64 BR 104.
Even though complaint seeking avoidance of preferential transfer of mobile home from Chapter
7 debtor to father seeks judgment in amount of $ 5,500, judgment will be entered for $ 6,500 where
fair market value of mobile home is $ 7,000 and father credited debtor's account in amount of $
6,500 as result of transfer. In re Albers (1986, BC ND Ohio) 67 BR 530.
Where mobile home is permanently affixed to Chapter 13 debtor's real property, which itself is
secured by mortgage, mobile home becomes part of real property, and question under Alabama
homestead exemption is whether or not debtor properly alienated homestead in mortgage, which
debtor did do, not whether or not debtor waived homestead exemption as to mobile home as per-
sonal property; thus mortgagee finance company is secured to value of real property and mobile
home by terms of mortgage on real property. In re Carroll (1986, BC ND Ala) 67 BR 1020.
Chapter 7 debtor cannot claim exemption in mobile home and property on which it is situated
under Oregon opt out exemption statute where statute allows such exemption only if mobile home
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11 USCS § 522
was situated on property at time of filing, and in this case, mobile home was not situated on prop-
erty at time of original Chapter 11 filing, but only at time of conversion to Chapter 7; nevertheless,
debtor will be able to claim exemption in property under separate exemption statute allowing ex-
emption in real property that is sole abode of debtor or debtor's child, even if such is not case at time
of filing, provided that no other homestead exemption is available. In re Thurmond (1987, BC DC
Or) 71 BR 596, CCH Bankr L Rptr P 71736.
Under Missouri opt-out exemptions, Chapter 7 debtor may exempt $ 1,000 of value of mobile
home used as principal residence, even though debtor owns no real estate and rents pad upon which
home is situated. In re Kelly (1988, BC ED Mo) 85 BR 832, 4 BAMSL 4146.
Under Missouri opt-out exemptions, Chapter 7 debtor may not exempt mobile home as home-
stead property where (1) home has not been converted to realty; and (2) debtor owns no real estate
and rents pad upon which home is situated. In re Kelly (1988, BC ED Mo) 85 BR 832, 4 BAMSL
4146.
Chapter 7 debtors motor home is in effect "mobile home" which may be exempted as their
homestead under Florida law, although physical design better fits within definition of "motor
home," rather than "mobile home," where debtors are using motor home as their residence, they pay
rent to park in which it sits and park provides it with electricity, water, and sanitary waste removal,
debtors do not drive motor home and could not drive it since it has no current license plate or regis-
tration, and in effect debtors use it as "mobile home," not "motor home." In re Mangano (1993, BC
SD Fla) 158 BR 532, 29 CBC2d 1389, CCH Bankr L Rptr P 75479, 7 FLW Fed B 246.
Chapter 7 debtor's motor home may be claimed as exempt under Florida's homestead exemp-
tion, where motor home has characteristics of permanency, including permanent hookup for sewer,
electric, cable TV, and telephone; purpose of homestead exemption is to preserve dwelling place or
residence of citizens from forced sale to satisfy claims of creditors. In re Bubnak (1994, BC MD
Fla) 176 BR 601, 8 FLW Fed B 322.
Where bankruptcy court determined that debtors did not abandon their home that was located in
Bismarck, North Dakota (Bismarck home) simply by relocating to Medora, North Dakota, where
relocation was temporary and necessary for debtors to manage their business which was located in
that city, debtors could not also claim as exempt under N.D. Cent. Code § 28-22-02(10) mobile
home in which they lived while managing their business; debtors own testimony confirmed that
they never intended to change their residence from Bismarck to Medora and moreover, mobile
home was not winterized and could not have been inhabited during winter months. In re Morlock
(2006, BC DC ND) 364 BR 684.
In 11 USCS § 522 exemption matter, bankruptcy appellate panel agreed with Chapter 7 debtor
and found that Utah's homestead statute did not require owner of mobile home to own land in order
to claim exemption in mobile home; reversal was warranted. Carlson v Diaz (In re Carlson) (2004,
BAP10) 303 BR 478.
119. Miscellaneous
Debtor may not transfer homestead exemption of 11 USCS § 522 from one parcel of land to an-
other where creditor filed judgment lien on second parcel of property prior to debtor's bankruptcy
action and transfer would prejudice creditor's secured interest. Chariton Feed & Grain, Inc. v Kin-
ser (1986, CA8 Iowa) 794 F2d 1329, CCH Bankr L Rptr P 71228.
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11 USCS § 522
Chapter 7 debtors' designation of ranch as homestead automatically terminated his right to ex-
empt proceeds from sale of previous homestead and triggered his right to exempt new homestead.
In re England (1992, CA5 Tex) 975 F2d 1168, CCH Bankr L Rptr P 74979.
California homestead exemption includes proceeds of malpractice claim for attorney negligence
resulting in loss of homestead rights as "indemnification for damage or destruction" of homestead.
Haaland v Corporate Management (1989, SD Cal) 172 BR 74.
Homestead exemption applies to Chapter 7 debtor's home after remarriage, not to house occu-
pied by debtor and his former spouse, whose lien debtor seeks to avoid. In re Robinson (1990, DC
Colo) 114 BR 716.
Usage of rural homestead for purpose of shelter and comfort is sufficient usage to support rural
homestead claim under Texas law, and there is no requirement in either Texas Constitution or rele-
vant statutes which obligate rural homestead claimant to derive economic support from land
claimed as homestead; rural homestead claimant must merely prove that land is rural in character
and that claimant intends to use it as home. In re McCain (1993, ED Tex) 160 BR 933.
If surface land is exempt homestead under Kansas law, surface landowner's mineral interest
ownership and surface landowner or lessor's unaccrued royalty interest in unsevered oil and gas
pursuant to oil and gas lease is part of homestead and is also exemptable in bankruptcy proceeding
under 11 USCS § 522. In re Thexton (1984, BC DC Kan) 39 BR 367.
Under Texas state exemption provisions, Chapter 7 debtor cannot claim homestead exemption
in oil, gas, and other minerals in which he has 1/2 interest, where minerals are under land adjoining
property that debtor owns in fee, but are not in property that debtor owns. In re Poer (1987, BC ND
Tex) 76 BR 98.
Chapter 11 debtors' beach house which they occupied only sporadically during summer months
is not their "residence" and thus their interest in property cannot be claimed as exempt under 11
USCS § 522(d)(1). In re Tomko (1988, BC ED Pa) 87 BR 372, 19 CBC2d 16, CCH Bankr L Rptr P
72376.
Purpose of 11 USCS § 522(d)(1) is to provide those debtors eligible to select federal exemptions
with homestead exemption, and term "residence" must be interpreted in that light; whether real
property constitutes residence is dependent upon facts of case but vacation homes which involve
seasonal, sporadic occupancy generally do not fall within protection of state homestead laws. In re
Tomko (1988, BC ED Pa) 87 BR 372, 19 CBC2d 16, CCH Bankr L Rptr P 72376.
Chapter 7 debtor's leasehold interest in residence pursuant to long-term ground lease of public
land is ownership interest sufficient to satisfy requirements of Florida's homestead exemption from
forced sale and therefore objection to exemption as homestead property is denied, despite creditor's
argument that because debtor has only leasehold interest in his residence he can claim homestead
exemption of only $ 1,000 for personal property, where both Florida supreme court and legislature
have characterized long-term leasehold interests as real property interests rather than personal prop-
erty interests. In re McAtee (1993, BC ND Fla) 154 BR 346, 7 FLW Fed B 113.
Chapter 7 debtor's motor home may be claimed as exempt under Florida's homestead exemp-
tion, where motor home has characteristics of permanency, including permanent hookup for sewer,
electric, cable TV, and telephone; purpose of homestead exemption is to preserve dwelling place or
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11 USCS § 522
residence of citizens from forced sale to satisfy claims of creditors. In re Bubnak (1994, BC MD
Fla) 176 BR 601, 8 FLW Fed B 322.
Where involuntary Chapter 7 debtors exercise their rights pursuant to 11 USCS § 303(f) during
gap period between filing of involuntary petitions and order for relief and commence improvements
to homestead, they are entitled to claim as exempt for purposes of 11 USCS § 522(b)(2)(A) im-
provements commenced during gap period, and funds deposited with builder for improvements are
exempt under Kansas law. In re Hodes (1999, BC DC Kan) 235 BR 104, affd (2002, DC Kan) 287
BR 561, affd (2005, CA10 Kan) 402 F3d 1005, CCH Bankr L Rptr P 80262.
Because separating real property which was subject of debtors' claim of homestead exemption
under 11 USCS § 522(b)(2), Ark. Code Ann. § 16-66-217 (Supp. 2001), Ark. Const. art. 9, § 5, into
exempt and non-exempt parcels would be unlawful subdivision, Arkansas bankruptcy court ordered
sale of property and would later allocate proceeds between trustee and debtors according to each
parties' interest. In re Bradley (2002, BC WD Ark) 282 BR 430, affd (2003, BAP8) 294 BR 64, 50
Bankruptcy debtors' limited occupancy of timeshare for brief period each year, coupled with
lack of any intent or ability to use timeshare as permanent residence, precluded timeshare from be-
ing deemed homestead under Florida law and thus precluded residence exemption under 11 USCS §
522(d)(1). In re Brown (2003, BC ND Tex) 299 BR 425.
5.Particular Homestead Exemptions 120. Federal homestead exemption
Debtor's lien interest in former marital residence, along with other charges upon land for pay-
ment of debt or duty that debtor might possess, do not qualify as aggregate interest in real property
or personal property qualifying for exemption under 11 USCS § 522(d)(1); bankruptcy appellate
panel erred when it affirmed allowance of debtor's exemption claim because claim was based upon
lien against his former marital residence that debtor was awarded in divorce decree, neither debtor
nor his dependents used lien as their residence; under state law, lien was merely collateral for debt
and did not represent continuation of debtor's common ownership of marital estate, and debtor's
mere collateral interest in his former marital residence did not rise to level of homestead right under
§ 522(d)(1). Keller v Johnson (In re Johnson) (2004, CA8 Minn) 375 F3d 668, CCH Bankr L Rptr P
80127.
Federal homestead exemption permits debtor to claim homestead exemption in both realty and
personalty. In re Ladd (1982, BC DC Me) 21 BR 579, 34 UCCRS 1442.
Fact that 11 USCS § 522(m) allows separate federal homestead exemptions to debtors in joint
case does not conflict with state provision of allowing only one homestead exemption to joint debt-
ors; under New York law, each joint debtor may claim same homestead exemption separately for
same real property, but value of exemption is not cumulative; same value may be used by either
spouse as often as is necessary against his or her creditors, but when real property is sold at forced
sale only one homestead exemption is available to joint debtors from proceeds of sale. In re Brooks
(1983, BC SD NY) 31 BR 302, 10 BCD 1051, 8 CBC2d 1082.
In reopened Chapter 7 case filed prior to Colorado's opting out of federal exemption scheme, 11
USCS § 522(d)(1) controls, thus debtor may only exempt up to $ 7,500 of her equity in homestead
and may not avoid judicial liens beyond that amount and liens to attach to remaining equity over
amount of exemption. In re Palmquist (1985, BC DC Colo) 54 BR 24.
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11 USCS § 522
Although federal homestead exemption should be liberally construed in favor of Chapter 7

debtor, debtor must have interest in property before exemption will be allowed. In re Russell (1987,
BC DC Vt) 80 BR 662.
Bankruptcy court had previously found that even if debtor had established domicile in New
Hampshire while debtor lived there during 2000, debtor's return to New Jersey residence at end of
operation of seasonal business evidenced domicile change back to New Jersey, and court would
reach same conclusion as to "residence;" thus, prior ruling established that as of end of 2000, debtor
either had not established property as debtor's residence or had abandoned it as debtor's residence,
but it was not clear if debtor may have established residence at property for purposes of 11 USCS §
522(d)(1) in 2001 just before bankruptcy filing, and thus prior ruling did not preclude debtor from
claiming exemption under § 522(d)(1). In re Marsico (2002, BC DC NH) 2002 BNH 15, 278 BR 1.
121. California
Under California homestead exemption, when Chapter 7 debtor fails to reinvest homestead pro-
ceeds within period of 6 months in which debtor has control of those proceeds, proceeds revert to
Chapter 7 trustee; because debtor had full control of proceeds from time of sale of his residence un-
til trustee commenced action, which was longer than 6-month period exemption period was not
tolled from time debtor filed his petition. In re Golden (1986, CA9 Cal) 789 F2d 698, CCH Bankr
L Rptr P 71125.
Bankruptcy debtors in California may claim California homestead exemption. Kendall v Plad-
son (In re Pladson) (1994, CA9 Cal) 35 F3d 462, 94 CDOS 7044, 94 Daily Journal DAR 12899,
Chapter 7 debtors' entire house could not be exempted under California homestead exemption
because statute merely gives debtors right to specified amount of money after forced sale, but it
does not give debtors absolute right to retain homestead itself; while another exemption statute
does, under certain circumstances, prevent trustee from selling debtors' homestead, it does so only
when bids received at sale are less than sum of all liens and encumbrances on property plus amount
of debtors' homestead exemption; thus, nothing in California exemption statutes precludes trustee
from proceeding with forced sale, even if debtors' valuation of their home suggests that no equity is
available for creditors; trustee is merely barred from completing sale if no bids above minimum
threshold are received. Bernard v Coyne (In re Bernard) (1994, CA9 Cal) 40 F3d 1028, 94 CDOS
8793, 94 Daily Journal DAR 16364, 32 CBC2d 508, CCH Bankr L Rptr P 76206, cert den (1995)
514 US 1065, 131 L Ed 2d 559, 115 S Ct 1695.
California's conflict of law principles were irrelevant in determining applicability of California
homestead exemption to debtor's Michigan house since plain language of 11 USCS § 522(b)(2)(A)
points to state's exemption laws, not its conflict of law rules; California exemption statute permitted
debtor to claim exemption for residence located in Michigan. Arrol v Broach (In re Arrol) (1999,
CA9 Cal) 170 F3d 934, 41 CBC2d 995, CCH Bankr L Rptr P 77913 (criticized in In re Drenttel
(2003, BC DC Minn) 302 BR 26).
Court of Appeals for Ninth Circuit overruled its decision in Jones v. Heskett (In re Jones), 106
F.3d 923 (9th Cir. 1997) and found, consistent with intervening California case law, that judgment
creditor is entitled to surplus equity that accrues in declared homestead after abstract of judgment is
recorded. Wolfson v Watts (In re Watts) (2002, CA9 Cal) 298 F3d 1077, 2002 CDOS 7076, 2002
Daily Journal DAR 8862, 49 CBC2d 190.
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11 USCS § 522
Debtor's homestead declaration is not rendered invalid by fact that it is technically defective for
failure to execute separately that portion of document which recites that facts stated are within per-
sonal knowledge of declarant since addition of required language is mere surplusage to statements
in declaration of homestead and legislative intent would be defeated if declaration of homestead
were found to be unenforceable. In re Williams (1986, BC SD Cal) 58 BR 114.
Chapter 7 debtors may not, under 11 USCS § 522(f), avoid liens encumbering their alleged
homestead exemption in order to facilitate voluntary sale of homestead, because California home-
stead law exempts proceeds from sale only where there is forced judicial sale; liberal construction
of California homestead exemption statute does not give license to Bankruptcy Court to rewrite
California law. In re Knudsen (1987, BC CD Cal) 80 BR 193.
Under California homestead exemption, conveyance by Chapter 7 debtors of title to property to
third party, 6 months after the debtors recorded declaration of homestead on that property, de-
stroyed any homestead interest they had in property, even though debtors continued to live there;
upon retransfer of property to debtors after escrow had been entered into to sell this property, decla-
ration of homestead was not automatically resurrected, and thus no homestead exemption attached
to proceeds from transfer. In re Knudsen (1987, BC CD Cal) 80 BR 193.
Under California law, dwelling exemption for real property owned in fee simple is automatic--
nothing has to be recorded--but dwelling exemption only applies to involuntary or forced sale of
homestead; Chapter 7 trustee's objection to claimed exemption is tantamount to motion to sell be-
cause, if sustained, dwelling property may be sold with or without debtors' consent, and sale of
property by trustee would be involuntary or forced sale. In re Yau (1990, BC CD Cal) 115 BR 245.
To claim dwelling exemption successfully under California law upon forced or involuntary sale,
debtor or his spouse must have continuously resided at dwelling from date of creditor's lien attach-
ment until date court determines dwelling is homestead; only when there is temporary absence from
dwelling, such as vacation or hospital stay, does debtor who vacates dwelling satisfy continuous
residency requirement. In re Yau (1990, BC CD Cal) 115 BR 245.
Properly recorded declaration of homestead under California law does not automatically entitle
debtor to benefits of dwelling exemption, it only adds benefits to dwelling exemption; after debtor
properly qualifies independently for dwelling exemption, upon declaration exempt proceeds from
voluntary sale are protected, judgment liens do not attach to equity protected by declared homestead
exemption, and protection of homestead against attachment of judgment liens may continue upon
death of homestead owner; thus, recording of valid homestead declaration gives debtor further ad-
vantage of obtaining priority for dwelling exemption over judgment lien where debtor records valid
homestead declaration before judgment is recorded; because declared homestead only adds benefits
to dwelling exemption, continued residency requirement must be met before debtor can obtain
benefits of declared homestead. In re Yau (1990, BC CD Cal) 115 BR 245.
Creditor whose claim had been held nondischargeable under 11 USCS § 523(a)(2) was barred
by 11 USCS § 522(c) from enforcing its judgment against residence which Chapter 7 debtor had
claimed as exempt and which had revested in debtor on closing of case even if residence had appre-
ciated in value to point there was some equity above amount allowable under California homestead
laws. S & C Home Loans, Inc. v Farr (In re Farr) (1998, BC ND Cal) 224 BR 438, 40 CBC2d 915.
In determining "gross annual income" under Cal. Code Civ. Proc. § 704.730(a)(3)(C), where
debtor had interest in S corporation whose primary business was providing services (as opposed to
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11 USCS § 522
business that required purchase of inventory, so it made sense to deduct "cost of goods sold"),
debtor was not allowed to deduct his share of corporation's losses from his gross income; bank-
ruptcy court found support for its position in Cal. Fam. Code § 4058, governing child support obli-
gations, which made distinction between income based on commissions, salaries and royalties and
income from business that required actual expenditures for its operation. In re Sweitzer (2005, BC
CD Cal) 332 BR 614.
Chapter 7 trustee's motion to limit debtors' California homestead exemption to $ 75,000 is de-
nied and debtors are permitted $ 100,000 exemption since trustee failed to prove their gross income
in year before bankruptcy filing exceeded $ 20,000, despite debtors' high expenses and large pay-
ments to creditors prepetition. Shelley v Kendall (In re Shelley) (1995, BAP9 Cal) 184 BR 356, 95
CDOS 5654, 95 Daily Journal DAR 9605, adopted, affd (1997, CA9) 110 F3d 68, reported at
(1997, CA9) 109 F3d 639, 97 CDOS 2162, 97 Daily Journal DAR 4007.
Bankruptcy court misapplied 11 USCS § 522(c) in invalidating creditor's lien in its entirety be-
cause debtor's exemption under California statute was limited to $ 100,000, as debtor had claimed;
11 USCS § 522(c) did not prevent creditor from satisfying its lien from available nonexempt equity,
under state law. S & C Home Loans, Inc. v Farr (In re Farr) (2002, BAP9) 2002 Bankr LEXIS 535,
reprinted as amd (2002, BAP9) 278 BR 171, 2002 CDOS 4410, 2002 Daily Journal DAR 5731, 48
CBC2d 586.
Where debtor claimed $ 100,000 homestead exemption under California law in bankruptcy pro-
ceeding, debtor could not later claim full equity value of residence as exempt under 11 USCS §
522(c) against claim of prepetition judgment lien creditor. S & C Home Loans, Inc. v Farr (In re
Farr) (2002, BAP9) 278 BR 171, 2002 CDOS 4410, 2002 Daily Journal DAR 5731, 48 CBC2d 586.
Homestead exemption rights of registrants under Cal. Fam. Code § 297.5, California's Domestic
Partner Rights and Responsibilities Act of 2003, were identical to those of people who were mar-
ried, which was single combined exemption; registered domestic partners could not each claim full,
separate homestead exemption under Cal. Code Civ. Proc. § 704.730(a)(2) when both filed bank-
ruptcy. Rabin v Schoenmann (In re Rabin) (2006, BAP9) 359 BR 242, CCH Bankr L Rptr P 80822.
122. Florida
Florida constitution exempted Florida homestead, where debtor acquires homestead using non-
exempt funds with specific intent of hindering, delaying, or defrauding creditors in violation of
Florida statutes. Havoco of Am., Ltd. v Hill (2001, CA11 Fla) 255 F3d 1321.
Husband and wife who lived separately could both claim Florida homestead exemption, where
appellee failed to come forward with evidence that its claim fell within one of enumerated excep-
tions in Article X, § 4 of Florida Constitution or that debtors maintained separate domiciles in an-
ticipation of defrauding creditors. Colwell v Royal Int'l Trading Corp. (In re Colwell) (1998, SD
Fla) 226 BR 714, affd (1999, CA11 Fla) 196 F3d 1225, CCH Bankr L Rptr P 78041, 13 FLW Fed C
158, reh, en banc, den (2000, CA11 Fla) 209 F3d 726.
Under Florida's Constitution, lien did not fix on Florida exempt homestead property and was
therefore not avoidable under 11 USCS § 522(f)(1)(A); nor did it impair debtor's exemption "to
which he would have been entitled but for lien itself," under federal law. Cannon v Cannon (2000,
SD Fla) 254 BR 773, 45 CBC2d 459.
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11 USCS § 522
Alien with B-1 visa, permitting operation of business but not permanent residency, cannot claim
Florida homestead exemption in Chapter 7 case, because lack of possession of permanent visa
makes legally impossible formation of intent to remain in Florida permanently or to have family
reside in Florida permanently, either of which is prerequisite for invocation of homestead exemp-
tion in residence. In re Gilman (1986, BC SD Fla) 68 BR 374.
Chapter 7 debtors' down payment of $ 66,043.59 cash on purchase of residence less than ten
months before their bankruptcy filing, which resulted in approximately $ 65,000 of equity in resi-
dence, constituted transfer of non-exempt assets to exempt assets with intent to hinder, delay, or de-
fraud debtors' creditors, thus forfeiting debtors' homestead exemption under Florida law to extent of
their use of non-exempt assets to purchase residence, where circumstances of case made it apparent
that debtors undertook well considered and carefully orchestrated series of maneuvers for purpose
of shielding their assets from creditors; in addition, fact that debtors had foresight to begin process
of transferring assets approximately 18 months prior to filing did not alter conclusion that debtors
improperly shielded their assets from creditors. In re Bandkau (1995, BC MD Fla) 187 BR 373
(criticized in In re Young (1999, BC MD Fla) 235 BR 666, 12 FLW Fed B 249).
Debtor was entitled under Florida law to claim homestead exemption for house even though he
and his former wife, who also resided there, planned to sell it and debtor kept most of his personal
property in storage, since debtor's intent to reside there permanently was evidence by his actually
moving into house and using it as his residence. In re Wilbur (1997, BC MD Fla) 206 BR 1002,
CCH Bankr L Rptr P 77355, 10 FLW Fed B 281.
Debtor's homestead exemption claim was properly limited to only structure in which they re-
sided and surrounding area no larger than 1.25 acres, rather than to entire property made up of con-
tiguous parcels with different addresses and other structures which defendants rented; Florida Con-
stitution's provision of homestead exemption applies to rural as well as municipal homesteads. In re
Pietrunti (1997, BC MD Fla) 207 BR 18, 10 FLW Fed B 275.
Until Supreme Court of Florida determines equitable considerations may be taken into consid-
eration and recognized as additional exception to immunity of homestead, Bankruptcy Court is in-
clined to find that debtor's homestead is exempt from claims of creditors inasmuch as conversion of
nonexempt assets to homestead with intent to hinder, delay or defraud creditors is not exception to
Florida homestead exemption; since there was no contention in instant case that debtor used fraudu-
lently-obtained funds to acquire homestead, objection to claimed exemption would be overruled. In
re Lazin (1998, BC MD Fla) 221 BR 982 (criticized in In re Tabone (2000, BC MD Fla) 247 BR
541, 35 BCD 279, 13 FLW Fed B 148).
Florida homestead exemption extended only to portion of property used by Chapter 7 debtor as
his residence and did not include any portion rented to and occupied by third party. In re Nofsinger
Chapter 7 debtor was entitled to Florida homestead exemption in seasonal vacation property
which he had conveyed, without consideration, to his sister and brother-in-law in order to place it
outside reach of his creditors where creditor was unable to establish that vacation property was not
debtor's homestead prior to date on which it recorded its judgment against debtor since (1) debtor
had reconveyed property to himself prior to that date, (2) debtor also prior to that date recorded war-
ranty deed, applied for homestead tax exemption, and changed his driver's license to county in
which vacation property was located, and (3) debtor moved into mobile home on vacation property;
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11 USCS § 522
fact that debtor's conveyance of property to his sister and brother-in-law was made with intent to
defraud creditors was not basis for denying debtor's homestead claim. In re Lee (1998, BC MD Fla)
223 BR 594 (criticized in In re Tabone (2000, BC MD Fla) 247 BR 541, 35 BCD 279, 13 FLW Fed
B 148).
Chapter 7 debtor did not lose entitlement to Florida homestead exemption by conducting busi-
ness on homestead property. In re Nelson (1998, BC SD Fla) 225 BR 508.
Chapter 7 debtor was entitled to Florida homestead exemption only as to portion of duplex used
as his residence and not as to portion of duplex which was rented out. In re Oliver (1998, BC MD
Fla) 228 BR 771, 12 FLW Fed B 97.
Motion to avoid judicial lien pursuant to 11 USCS § 522(f)(1) is granted since real property was
claimed and allowed as exempt, debtor owned property at time of commencement of case and still
owns it although it is on the market, and homestead is tenancy by entireties property which judg-
ment cannot reach under Florida law since judgment is against debtor alone and not spouse. Ban-
deras v Doman (In re Banderas) (1999, BC MD Fla) 236 BR 849, 12 FLW Fed B 260.
Chapter 7 debtor's home is exempt from claims of creditors under 11 USCS § 522(b)(2)(B) since
debtor owns property as tenant by entireties, no joint creditors exist, and tenancy by entireties prop-
erty is exempt under Florida law; despite Trustee's contention debtor converted non-exempt assets
into exempt assets with intent to hinder, delay, and defraud creditors, debtor is still entitled to ex-
empt property although Trustee may pursue avoidance action under 11 USCS § 548. In re
Hendricks (1999, BC MD Fla) 237 BR 821, 42 CBC2d 851, 12 FLW Fed B 329 (criticized in In re
Tabone (2000, BC MD Fla) 247 BR 541, 35 BCD 279, 13 FLW Fed B 148).
11 USCS § 522(f)(1)(A) was applicable to real property protected by Florida's homestead ex-
emption; debtor successfully avoided judicial lien, arising out of dissolution proceedings, which
impaired his homestead exemption, where lien secured payment of award not in nature of alimony,
maintenance, or support. In re Lowe (2000, BC MD Fla) 250 BR 422, 13 FLW Fed B 259 (criticized
in Cannon v Cannon (2000, SD Fla) 254 BR 773, 45 CBC2d 459).
Chapter 13 debtors were entitled to claimed Florida homestead exemption even though they had
constructed eight-car garage on homestead property and had earned income from use of garage; fact
that debtors earned income from use of facilities located on real property within constitutionally-
sanctioned area limitations claimed as their homestead did not, in and of itself, entitle creditors to
partition income producing property from non-income producing property. In re Haning (2000, BC
MD Fla) 252 BR 799, 13 FLW Fed B 289.
Chapter 7 bankruptcy debtor's motion to avoid pre-bankruptcy judgment based on argument that
judgment impaired her homestead interest was denied because under Fla. Const. art. 10, § 4(a)(1)
judgment did not attach to debtor's homestead interest and because 11 USCS § 522(f) only applied
to situations in which state or federal exemption limited dollar amount of property that could be ex-
empted; in Florida, value debtor could place on her homestead exemption was not limited. In re Ep-
stein (2003, BC SD Fla) 298 BR 917, 16 FLW Fed B 247.
11 USCS § 303(i) does not trump constitutional protection of Florida homestead of debtor under
Fla. Const. art. X, § 4; thus, where Michigan bankruptcy court, prior to debtor filing for relief under
Chapter 11, found debtor liable under § 303(i) for money damages for filing bankruptcy petition
against creditor in bad faith and ordered that home debtor purchased in Florida did not qualify as
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11 USCS § 522
homestead, order was not binding on Florida bankruptcy court and did not operate as res judicata. In
re Adell (2005, BC MD Fla) 321 BR 562, 18 FLW Fed B 144.
Chapter 11 debtor established his bona fide residence in state and was entitled to homestead ex-
emption under Fla. Const. art. X, § 4 where debtor purchased home in state more than 180 days
prior to filing bankruptcy petition, moved into home on purchase date, registered his car in state,
obtained state driver's license, registered to vote, opened and maintained bank accounts in state, and
started new business venture in state. In re Adell (2005, BC MD Fla) 321 BR 562, 18 FLW Fed B
144.
State debtor who met legal requirements for claiming homestead exemption for his state resi-
dence, pursuant to Fla. Const. art. X, § 4, and 11 USCS § 522, was entitled to that protection and
Chapter 7 discharge, pursuant to 11 USCS § 727, even though property was purchased with his pro-
ceeds from what was eventually found to be Ponzi scheme; there was no evidence of any wrongdo-
ing or fraudulent transfer to debtor. Neilson v Laing (In re Laing) (2005, BC MD Fla) 329 BR 761,
18 FLW Fed B 352.
Debtor's homestead exemption claimed under Fla. Stat. ch. 222.20 was subject to statutory cap
of $ 125,000 set forth in 11 USCS § 522(o), (p), (q), added by Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, and that applied to all bankruptcy cases filed after April 20,
2005; statutory cap applied even to those exemptions made under state "opt-out" provision such as
Fla. Stat. cn. 222.20 In re Kaplan (2005, BC SD Fla) 331 BR 483, CCH Bankr L Rptr P 80369, 18
FLW Fed B 419.
Provisions of Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, set forth in
11 USCS § 522(b) and (p), applied to State homestead exemption claimed through Fla. Cons. art. X,
§ 4, even if State was considered "opt out" state as set forth in Fla. Stat. ch. 222.20. In re Wayrynen
(2005, BC SD Fla) 332 BR 479, CCH Bankr L Rptr P 80391.
Where debtor had not obtained permanent resident status or "green card" as of date he filed his
Chapter 7 petition, he did not fulfill residency requirement as of petition date and thus could not
claim homestead exemption under Florida law; fact that debtor intended to make this home his per-
manent residence was insufficient because without his green card, debtor could not legally formu-
late requisite intent to make house family's permanent residence, regardless of debtor's subjective
intention to remain indefinitely. In re Fodor (2006, BC MD Fla) 339 BR 519.
Debtor's exemption was limited to $ 125,000 where, although debtor held equitable ownership
interest in subject property located in state, which would have supported his homestead claim, sub-
ject property was not his principal residence until he moved to state six months prior to com-
mencement of his Chapter 7 case; limitation on homestead exemption in 11 USCS § 522(p) applied
in state notwithstanding unlimited homestead exemption guaranteed by Fla. Const. art. X, § 4. In re
Buonopane (2006, BC MD Fla) 344 BR 675, CCH Bankr L Rptr P 80657, 19 FLW Fed B 327.
Debtor's motion, pursuant to 11 USCS § 522(f)(1)(A), to avoid judgment lien as impairing her
homestead exemption was denied because recording of certified copy of final judgment against
debtor in county where her real property was located did not create lien under state law. In re Pearl-
stein (2006, BC SD Fla) 349 BR 317, 19 FLW Fed B 398.
Cap of $ 125,000 under 11 USCS § 522(p) did not limit debtor's claim of exemption based on
his ownership of homestead property as tenancy by entirety; therefore, Chapter 7 trustee's objection
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11 USCS § 522
to claimed homestead exemption under Fla. Const. art. X, § 4 was overruled. In re Buonopane
Florida real property owned by Florida-domiciled debtor is exempt from administration as prop-
erty of estate regardless of when debtor became Florida domiciliary if debtor had, immediately be-
fore commencement of case, interest in that property held in tenancy by entireties with spouse, and
there is no difference under 11 USCS § 522(b)(3)(B) whether property at issue was real property or
personal property. Once property is held in tenancy by entireties in Florida by Florida domiciliary,
that property is immune from execution under Florida law and exempt under § 522(b)(3)(B). Tolz v
Robedee (In re Robedee) (2007, BC SD Fla) 367 BR 901, 20 FLW Fed B 419.
123. Iowa
Antecedent debt exception to state homestead exemption statute limiting homestead exception
when debtor has incurred debt prior to acquisition of homestead is enforceable in Bankruptcy Court
under 11 USCS § 522(b) where Chapter 7 debtor purchases new home while indebted to mortgagee
of first home and amount of such debt exceeds value of collateral and there is no other nonexempt
property from which debt can be satisfied; failure to obtain exemption of homestead under such cir-
cumstances cannot be avoided by invoking trustee's avoidance powers under 11 USCS § 522(f) in
order to avoid foreclosure judgment lien since trustee's power of avoidance is contingent on whether
property is exempt in first place. In re Ellingson (1986, ND Iowa) 82 BR 88.
Under Iowa opt-out provisions, Chapter 7 debtors may claim homestead exempt to extent it is
not necessary to satisfy deficiency in judgment acquired prior to acquisition of homestead, upon
liquidation of other property subject to execution; exemption may not be claimed to extent defi-
ciency exists. In re Nehring (1988, BC SD Iowa) 84 BR 571.
11 USCS § 522(c) does not preempt Iowa homestead exemption law, and, therefore, trustee's ob-
jection to debtor's homestead exemption was sustained to extent antecedent debts were not satisfied
after other property of debtors subject to execution was exhausted. In re Norkus (2000, BC SD
Iowa) 256 BR 298.
Where debtors were residents of Iowa and claimed homestead was located in that state, applica-
ble law for determining whether there was valid homestead exemption was not 11 USCS § 522(b)
because state had specifically opted out of federal exemption scheme as set forth in Iowa Code §
627.10. In re Allen (2002, BC SD Iowa) 301 BR 55.
11 USCS § 522(e) rendered waiver of homestead exemption unenforceable as matter of federal
law where debtor signed contract of guarantee that included waiver of homestead exemption, but
language was insufficient to have constituted waiver under Iowa Code § 561.21(2); creditor's judg-
ment lien never attached and creditor held only unsecured claim. Hebert (2003, BC ND Iowa) 301
BR 19, 50 CBC2d 1672.
Statement in contract of guarantee that debtor waived benefit of all homestead exemption laws
was ineffective to waive debtor's homestead exemption under Iowa Code § 561.21(2) because it did
not "expressly stipulate" that homestead would be liable for debt; because waiver provision was un-
enforceable under state law, debtor's homestead was exempt on date that creditor obtained judgment
against debtor and judgment lien did not attach to debtor's homestead. Hebert (2003, BC ND Iowa)
301 BR 19, 50 CBC2d 1672.
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Unpublished: Where Chapter 7 debtor was managing member and sole member of New Hamp-
shire limited liability company (LLC), debtor was entitled to summary judgment in action brought
by creditors of company, which objected to debtor's discharge of debt owed to them by debtor's
company, because record did not raise material factual dispute that there had been injustice or fraud
which would permit piercing company's veil; nothing in record raised any factual dispute that
debtor ever misled or concealed company's status as LLC, that debtor was conducting his personal
business through LLC, or that debtor commingled his personal assets with those of LLC. Teasck v
Gilbert (In re Gilbert) (2007, BC DC NH) 2007 BNH 11.
124. Kentucky
Because Kentucky has opted out of federal exemptions, District Court must look to applicable
Kentucky statute to determine whether Chapter 7 debtor is entitled to homestead exemption before
11 USCS § 522(f) lien avoidance can be applied. In re Brooks (1986, WD Ky) 71 BR 6, affd without
op (1987, CA6 Ky) 817 F2d 104 and affd without op (1987, CA6 Ky) 817 F2d 104.
Chapter 7 debtor may not avoid judgment lien under 11 USCS § 522(f) where lien was created
prior to debtor's purchase of residence and lien was executed upon property prepetition and thus,
under Kentucky exemption scheme, debtor may not exempt residence under homestead exemption;
Kentucky homestead statute giving priority to purchase money mortgages and not to pre-existing
debts or those arising from home improvements is not at odds with Bankruptcy Code. In re Brooks
(1986, WD Ky) 71 BR 6, affd without op (1987, CA6 Ky) 817 F2d 104 and affd without op (1987,
CA6 Ky) 817 F2d 104.
Under Kentucky law, "homestead" means land on which owner's dwelling house is located; ex-
istence of homestead depends on facts of particular case viewed in light of controlling principles
adjudged by court and, likewise, existence of homestead must be decided on evidence adduced and
on intention and purpose of claimant. In re McMahon (1986, BC WD Ky) 60 BR 632.
Judicial lien on homestead property may be avoided under 11 USCS § 522 by Chapter 7 debtors
to extent they are entitled to Kentucky homestead exemption in entire 55-acre farm where their
permanent residence is located, not just in house itself and land on which it sits. In re Gill (1986,
BC WD Ky) 61 BR 201.
Chapter 7 debtors may not avoid judicial lien on homestead because, under Kentucky law,
where subject debt predates purchase of homestead property and erection of improvements thereon,
debtors are not entitled to exemption. In re Lawson (1987, BC WD Ky) 69 BR 103.
125. Massachusetts
Massachusetts exception for preexisting liens from homestead protection is preempted by 11
USCS § 522(f)(2) and Massachusetts exception for prior contracted debts from homestead protec-
tion is preempted by 11 USCS § 522(c). Patriot Portfolio, LLC v Weinstein (In re Weinstein) (1999,
CA1 Mass) 164 F3d 677, cert den (1999) 527 US 1036, 144 L Ed 2d 794, 119 S Ct 2394.
Term "criminal act" in 11 USCS § 522(q)(1)(B)(iv) did not exclude crimes of negligence, and it
was evident that criminal act requirement was met on facts of case since literal lines of 11 USCS §
522(q)(1)(B)(iv) did not require "conviction" as prerequisite to application of cap on homestead ex-
emptions claimed under state law; therefore, finding that debtor was criminally liable for state crime
of negligent vehicular homicide under Mass. Gen. Laws ch. 90, § 24G(b) qualified as "criminal act"
Page 236
11 USCS § 522
which capped debtor's homestead exemption to $ 125,000 under Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, Pub. L. No. 109-8, § 322(a), 119 Stat. 23, 97 (codified at 11
USCS § 522(q)(1)(B)(iv)). Larson v Howell (In re Larson) (2008, CA1 Mass) 513 F3d 325.
Exceptions for prior contracted debts and previously recorded judicial liens under Massachusetts
Homestead Act are preempted because they conflict with 11 USCS § 522. In re Weinstein (1998,
DC Mass) 217 BR 5.
Since residence claimed as exempt had been conveyed to spouses as joint tenants, they acquired
property as tenants by entirety under Massachusetts common law in absence of contrary intent ap-
pearing on face of deed and, under Massachusetts common law, debtor/husband had superior right
to residence than did nondebtor/wife who had only right of survivorship in property so that
debtor/husband was entitled to full Massachusetts homestead exemption of $ 100,000. In re Conroy
(1998, BC DC Mass) 224 BR 282.
11 USCS § 522 pre-empts exemptions to Massachusetts homestead exemption, since § 522(c)
does not protect debt which arose prior to homestead declaration from homestead exemption. In re
Ballirano (1999, BC DC Mass) 233 BR 11, 34 BCD 410.
Mortgagee failed to meet its burden of proving that homestead exemption was not properly
claimed, where it was not apparent from pleadings whether debtor and spouse at time of declaration
of homestead intended to occupy property as their principal residence pursuant to state's homestead
act. In re Sebio (1999, BC DC Mass) 237 BR 1.
Debtor was entitled to claim homestead exemption under Massachusetts law although she no
longer resided on property, since debtor's husband's declaration of homestead was not questioned as
to its continuing validity and debtor and her husband were still married; creditor's judicial lien was
avoided under 11 USCS § 522(f)(1)(A). In re Taylor (2002, BC DC Mass) 280 BR 294.
Debtors' motion to avoid judicial lien was denied because it was attempt to have state court de-
cision that their homestead exemption was invalid "overturned" by bankruptcy court, which was
prohibited under Rooker-Feldman doctrine; therefore, because state court determined that debtors
did not have valid homestead under Mass. Gen. Laws ch. 188, § 1, they could not avoid bank's at-
tachment under 11 USCS § 522(f). In re Zambre (2004, BC DC Mass) 306 BR 428.
Pursuant to Mass. Gen. Laws ch. 188, § 1, debtor, as owner of residence, could acquire estate of
homestead if he occupied or intended to occupy home as principal residence, and debtor was not
divested of title to residence by creditor's levy and suspension concerning residence because bank-
ruptcy intervened before creditor completed its levy on residence such that title never vested in
creditor; because debtor could file valid declaration of homestead after levy on execution but before
sale had taken place under Mass. Gen. Laws ch. 188, § 1, his claim for homestead exemption was
valid in bankruptcy. In re Mariano (2004, BC DC Mass) 311 BR 335.
Deed of real property from debtor and his co-owner to debtor as sole owner, without express
reservation of previously recorded declaration of homestead on property, terminated estate of home-
stead under Mass. Gen. Laws ch. 188, § 7. In re Hildebrandt (2004, BC DC Mass) 313 BR 535, affd
(2005, BAP1) 320 BR 40.
11 USCS § 522(c) did not protect equity of residence from effect of second mortgage because as
between Chapter 7 debtor and trustee, second mortgage had not been avoided, but was preserved for
estate by 11 USCS § 551, and as result, 11 USCS § 522(c) provided debtor with no greater protec-
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11 USCS § 522
tion from trustee than debtor would have had from mortgage under non-bankruptcy law. In re
Guido (2006, BC DC Mass) 344 BR 193.
Chapter 7 debtor's action in filing homestead exemption declaration pursuant to Mass. Gen.
Laws Ann. ch. 188, § 1, less than 1,215 days before he filed his bankruptcy petition did not bring
him within $ 125,000 exemption cap set out in 11 USCS § 522(p)(1)(D) because recordation of
homestead interest did not constitute acquisition of quantifiable interest in property. In re Lyons
(2006, BC DC Mass) 355 BR 387.
Chapter 13 plan's proposed distribution to creditors satisfied best interests test in 11 USCS §
1325(a)(4) because distribution to unsecured creditors properly excluded debtor's entire net equity
in her jointly owned residence and not just net equity to extent of $ 125,000 cap under 11 USCS §
522(p); indeed, cap did not apply because debtor's non-debtor husband could have invoked home-
stead exemption under Mass. Gen. Laws Ann. ch. 188, § 1 et seq., to protect full amount of resi-
dence's net equity of $ 271,440. In re Walsh (2007, BC DC Mass) 359 BR 389, CCH Bankr L Rptr
P 80855.
Bankruptcy court properly sustained Chapter 7 trustee's objection to debtor's claimed homestead
exemption in real property where deed transferred real property from debtor and friend to debtor
alone; transfer was conveyance under plain language of Mass. Gen. Laws ch. 188, § 7(1) because it
transferred entire estate, not just friend's interest, and debtor had not specifically reserved home-
stead in deed transferring property. Hildebrandt v Collins (In re Hildebrandt) (2005, BAP1) 320 BR
40.
Where debtor re-obtained legal title to her residence and recorded new homestead exemption
within 1215 days prior to filing her Chapter 13 petition, her claimed homestead exemption under
Mass. Gen. Laws. ch. 188, § 1, was limited to $ 125,000 pursuant to 11 USCS § 522(p)(1). Aroesty
v Bankowski (In re Aroesty) (2008, BAP1) 385 BR 1, CCH Bankr L Rptr P 81216.
126. Minnesota
Minnesota's homestead exemption law applies where bankruptcy petition has been properly
filed in federal bankruptcy court in Minnesota, as (1) 11 USCS § 522(b)(2)(A) clearly designates
that state law where petition is filed is applied with regard to homestead exemptions; (2) state
choice of law principles are not applied to determine if different state's exemption law applies,
where residence of Minnesota bankruptcy debtors is located in another state; and (3) there is noth-
ing in Minn. Stat. § 510.01 that precludes homestead exemption's application to out-of state resi-
dence of Chapter 11 debtor where debtor sold Minnesota home and purchased new residence in dif-
ferent state within 180 days of filing his or her bankruptcy petition in Minnesota. Drenttel v Jensen-
Carter (In re Drenttel) (2005, CA8) 403 F3d 611, CCH Bankr L Rptr P 80259.
Minnesota bankruptcy debtors were entitled to claim exemption for their new Arizona home un-
der Minnesota's homestead exemption law, as (1) under 11 USCS § 522(b)(2)(A), Minnesota's
homestead exemption law applied to determine exemption that debtors were entitled to claim; (2)
language of Minn. Stat. § 510.01 did not limit exemption to property that was located in Minnesota
only; and (3) under state statute, debtors could claim homestead exemption for Arizona residence
they had purchased just before they filed their bankruptcy petition in Minnesota. Drenttel v Jensen-
Carter (In re Drenttel) (2005, CA8) 403 F3d 611, CCH Bankr L Rptr P 80259.
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11 USCS § 522
Under Minnesota legislation enacted pursuant to 11 USCS § 522, there is no need for Chapter 7
debtor to show insolvency as defined by 11 USCS § 101(26) in order to qualify for homestead ex-
emption. In re Hogard (1984, BC DC Minn) 43 BR 590.
Although at time debtors filed their Chapter 7 petition they were occupying dwelling place lo-
cated on parcel 1, having just moved there day before filing, their presence did not constitute "actual
occupancy" within meaning of Minnesota homestead exemption law where debtors had previously
lived on parcel 3 and returned to that parcel after filing, having taken only minimum necessities
with them to parcel 1, even though debtors stated they intended to occupy dwelling on parcel 1 at
some time in future; further, in order to effectively claim parcel 1 as homestead debtors must have
abandoned their prior homestead located on parcel 3, but intention to remove permanently from that
parcel at future time does not constitute abandonment until removal takes place; fact that debtors
left almost all belongings at parcel 3 dwelling and have testified that it is larger and more suitable
for family needs indicates they have not abandoned it as their homestead. In re Sikkink (1986, BC
DC Minn) 60 BR 298.
Chapter 11 debtor farmers may not claim as homestead 80 acres of land not contiguous to land
on which dwelling is located, even though Minnesota statutory limitation that acreage must consist
of land upon which dwelling is situated in order to qualify for homestead exemption seems to bear
little present reasonable relationship to legislative purpose of protecting livelihood of family farm-
ing. In re Priebe (1987, BC DC Minn) 69 BR 100.
Chapter 7 debtor's homestead exemption under Minnesota opt-out provisions is subject to state
tax lien for unpaid income taxes where legislature repealed former exemption for homestead prop-
erty from such liens. In re Jewell (1988, BC DC Minn) 84 BR 619.
Under previous constitutional definition of business homestead, .85 acre tract was debtors' busi-
ness homestead under Texas law and sale of such tract and lease-back with option to purchase was
pretend sale of homestead prohibited by Texas law; pursuant to Tex. Const. art. XVI, § 50(c), Tex.
Prop. Code Ann. § 41.006 (Vernon 2002), deed was void. Jay v Nesco Acceptance Corp. (In re Jay)
(2003, BC ND Tex) 308 BR 251.
In Texas, business homestead existed if claimed property was used for principal business of
homestead claimant and property was essential and necessary for business of homestead claimant;
property that was incidentally useful or profitable to business did not qualify as business homestead.
Jay v Nesco Acceptance Corp. (In re Jay) (2003, BC ND Tex) 308 BR 251.
Under previous Texas Constitution's definition of business homestead, tract in issue was
debtor's business homestead and tract's sale and lease-back was prohibited pretended sale of home-
stead in Texas where court applied both former Tex. Const. art. XVI, § 51 (amended 1999) and Tex.
Const. art. XVI, § 51. Jay v Nesco Acceptance Corp. (In re Jay) (2003, BC ND Tex) 308 BR 251.
Debtors were entitled to homestead exemption under Minn. Stat. § 510.02 where land occupied
by debtors as their residence was not included in laid out or platted portion of city in which it was
located, and area surrounding debtors' home would have been characterized as "rural" under Minne-
sota case law. In re Engstrom (2007, BC DC Minn) 370 BR 205.
Debtor was not entitled to homestead exemption under Minnesota law since debtor had aban-
doned residence and bankruptcy court properly determined that debtor's lien against former marital
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11 USCS § 522
residence was not exempt under 11 USCS § 522(b)(2)(A). Mueller v Buckley (In re Mueller) (1998,
BAP8 Minn) 215 BR 1018.
127. Mississippi
Under Mississippi homestead exemption, debtor may claim $ 30,000 from proceeds of sale of
homestead even though debtor agreed to sale of homestead prior to filling. In re Williamson (1985,
BC SD Miss) 49 BR 675.
128. New York
New York state opt-out provisions for homestead exemption relate back to date of petition
where it would be inequitable not to apply exemption to interest Chapter 7 debtor acquired in prop-
erty within 180 days of filing petition, even though exemption by its terms requires debtor to own
property exempted at time of filing of petition. Connelly v Roach (1987, WD NY) 79 BR 159.
Chapter 13 debtor is not entitled to claim impairment of exemption under 11 USCS § 522(f) law
since bank's lien resulted from mortgage foreclosure involving purchase price for property and no
exemption exists under New York law. In re Liberman (2000, ED NY) 244 BR 557, 43 CBC2d 787,
affd (2000, CA2 NY) 225 F3d 646, reported in full (2000, CA2 NY) 2000 US App LEXIS 23459
and cert den (2001) 531 US 1164, 148 L Ed 2d 991, 121 S Ct 1123 and (criticized in Peoples Heri-
tage Bank, N.A. v Hart (In re Hart) (2002, BAP1) 282 BR 70, 49 CBC2d 74).
Trustee's objections to debtors' claims of exemptions under New York opt out statute are denied
where homestead exemption could be claimed by one spouse and cash exemption by other spouse
so that exemptions claimed are susceptible to allocation satisfying statutory guidelines. In re Ar-
nold (1983, BC ED NY) 33 BR 765.
For purposes of New York law providing that current homestead scheme applies only to debts
contracted before effective date, debt was contracted on date debtors executed contract, not date
when creditor obtained judicial liens; thus former homestead scheme applies and because debtors
failed to "designate" their homestead as required under former scheme, they may not avoid liens on
homestead under 11 USCS § 522(f). In re Eipp (1984, BC ND NY) 66 BR 1 (criticized in In re Betz
(2002, BC DC Mass) 273 BR 313).
Purpose of New York's homestead exemption statute is to protect homeowner from seizure of
his or her home to satisfy money judgment and to protect debtor's home in event of bankruptcy;
however, in event of mortgage foreclosure action, exemption does not apply because it is suit in eq-
uity not resulting in money judgment within meaning of statute; surplus monies realized in mort-
gage foreclosure action are personalty and, hence, not within ambit of statute. In re Ellerstein
(1989, BC WD NY) 105 BR 214.
Judgment liens on debtor's New York real property were avoided and declared null and void on
grounds that they impaired exemption of debtor in such real property, since by applying formula of
11 USCS § 522(f)(1)(A), debtor residing in New York who has no equity in home and who other-
wise qualified for exemption would always be entitled to homestead exemption for purposes of §
522(f)(1). In re Whitehead (1998, BC WD NY) 226 BR 539.
Debtor was not entitled to homestead exemption under New York law for mobile home which
he moved to his property and lived in for two days before town ordered it moved as part of ongoing
zoning dispute, where his short term of residency, stated purpose of moving in order to establish
homestead exemption, and lack of ordinary necessities on property created inference that he did not
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11 USCS § 522
intend to permanently reside in mobile home. Town of Skaneateles v Scott (In re Scott) (1998, BC
ND NY) 233 BR 32.
Amendment to N.Y. C.P.L.R. 5206(a) (amended by N.Y. Laws ch. 623, effective August 30,
2005), was remedial statute which under state law was to be applied retroactively and such retroac-
tive application did not violate vested rights of any pre-August 30, 2005 general unsecured creditor
in violation of U.S. Const. art. 1, § 10. In re Hayward (2006, BC WD NY) 343 BR 41 (criticized in
In re Carpenter (2006, BC WD NY) 2006 Bankr LEXIS 1009).
Two obligations of debtor that arose in connection with his state court matrimonial proceedings
and were previously ruled to be nondischargeable pursuant to 11 USCS § 523 were not properly
avoidable by debtor who was invoking 11 USCS § 522(f) because Congress could not have intended
for such result to obtain under § 522; that being so, creditor's liens were payable out of proceeds of
sale of debtor's homestead as to which he had claimed state law exemption provided that such result
was proper under state law, which bankruptcy court declined to decide on finding that it was ques-
tion of first impression. Rupp v Elmasri (In re Elmasri) (2007, BC ED NY) 369 BR 96.
Bankruptcy court found that Chapter 13 debtor who owned homestead as tenant by entireties
had right to entire estate under state law, and it valued property at its fair market value on date
debtor filed his bankruptcy petition and found that debtor could not avoid judgment lien in amount
of $ 428,576, pursuant to 11 USCS § 522(f), because debtor's interest in property was worth more
than value of judgment lien once amount of two mortgages on property and value of debtor's home-
stead exemption under N.Y. Debt. & Cred. Law § 282 were subtracted. In re Levinson (2007, BC
ED NY) 372 BR 582.
129. Ohio
Chapter 7 debtors can avoid judicial liens on homestead property under 1994 amendments to 11
USCS § 522(f), as debtors' exemption under Ohio law is impaired in amount greater than judicial
liens sought to be avoided. Holland v Star Bank, N.A. (In re Holland) (1998, CA6 Ohio) 151 F3d
547, 40 CBC2d 560, CCH Bankr L Rptr P 77749, 1998 FED App 235P.
Ohio homestead protection is not available to latter-day "assignments" of land once received by
settlor from United States under land patent. Buroker v Raybourn (1986, SD Ohio) 61 BR 10, 14
BCD 110, 14 CBC2d 516.
Debtor is entitled to $ 5,000 exemption in real property provided under Ohio Rev. Code Ann. §
2329.66, unrestricted by § 2329.661, where judgment liens on property, not being enumerated in
statute, are not exception under § 2329.661 to debtor's exemption. In re Anderson (1986, BC SD
Ohio) 57 BR 953.
Where debtor had declared throughout her bankruptcy petition and schedule of exemptions that
her domicile was Michigan, she could not now claim Ohio homestead exemption under 11 USCS §
522(d)(1), since her assertion that she intended to return to Ohio at some point belied her previous
assertion of Michigan domicile, defined by 11 USCS § 522(d)(1) as "actual residence with present
intention to remain there." In re Lusiak (2000, BC ND Ohio) 247 BR 699.
Under Ohio law, judgment lien against debtors' residence did not impair debtors' exemption
within meaning of 11 USCS § 522(f) and may not be avoided, where lienholder brought his action
of foreclosure, which avoided debtors' original mortgage but not assignee's mortgage, prior to rec-
Page 241
11 USCS § 522
ordation of mortgage by assignee. In re Ochmanek (2000, BC ND Ohio) 266 BR 114 (criticized in

Moldo v Charnock (In re Charnock) (2004, BAP9) 318 BR 720, CCH Bankr L Rptr P 80218).
130. Oklahoma
Debtor's exemption was limited by Oklahoma law to $ 5,000 where more than twenty-five per-
cent of total square footage of improvements on claimed homestead was used for business purposes.
In re Klaus (1999, BC ND Okla) 228 BR 475.
Bankruptcy court erred as matter of law in holding that judicial lien did not impair debtor's ex-
emption and lien is avoidable pursuant to 11 USCS § 522(f); even though Oklahoma exemption
laws allow debtor to claim homestead as exempt and protect it from forced sale, Oklahoma law al-
lows lien to attach to homestead, and 11 USCS § 522(f) preempts state law in determining whether
judicial lien impairs homestead exemption. Coats v Ogg (In re Coats) (1999, BAP10 Okla) 232 BR
209, 16 Colo Bankr Ct Rep 112.
131. Texas
Debtor may have financial or moral obligation to adult married daughter, for purposes of deter-
mining Texas rural homestead exemption; in absence of such per se rule that debtor has no such ob-
ligation to married child, Bankruptcy Court in this case was entitled to credit and to rely on testi-
mony that daughter and granddaughter were in physical danger when they first came to reside with
debtor, had no avenue of assistance but debtor, and have depended on her for emotional and finan-
cial support since that time. In re Hill (1992, CA5 Tex) 972 F2d 116.
Texas legislature's amendment of definition of homestead to provide for single adults did not
change definition of word "family" to exclude any family unit in which unmarried person is head of
household. In re Hill (1992, CA5 Tex) 972 F2d 116.
Debtor has proved elements of family for purpose of Texas homestead exemption where debtor,
her daughter, and her granddaughter function and appear as unit in community. In re Hill (1992,
CA5 Tex) 972 F2d 116.
Daughter's employment does not disprove her dependence on debtor mother, for Texas rural
homestead exemption purposes, where daughter's income is insufficient to enable her to leave her
mother's household--absolute dependence is not necessary; although Bankruptcy Court improperly
used "any dependency" standard rather than "but for" standard, error is harmless since its factual
findings fulfill correct Texas test. In re Hill (1992, CA5 Tex) 972 F2d 116.
Moral support given by debtor to her adult daughter alone does not establish dependence for
purposes of establishing family rural homestead exemption under Texas law. In re Hill (1992, CA5
Tex) 972 F2d 116.
Homestead interests exist in real property under Texas law; proceeds are personal property and
cannot be homestead; therefore, exemption of proceeds and exemption of homestead is not tanta-
mount to exemption of 2 homesteads. In re England (1992, CA5 Tex) 975 F2d 1168, CCH Bankr L
Rptr P 74979.
When one sells his homestead under Texas law, proceeds of that sale are exempt, but when one
acquires new homestead after sale of previous homestead, he abandons previous homestead, chang-
ing its character to former homestead; therefore, proceeds from sale of former homestead are not
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11 USCS § 522
exempt under Texas homestead exemption. In re England (1992, CA5 Tex) 975 F2d 1168, CCH
Texas statute exempting proceeds from sale of homestead exempts only proceeds of sale of
homestead and only during 6 months following sale of homestead when claimant has not acquired
another homestead do claimants have any protected rights in homestead sale proceeds; sale of
homestead instantly activates protection of proceeds exemption statute and shelters proceeds up to 6
months; however, acquisition of another homestead during that 6-month period instantly changes
prior homestead to former homestead and deactivates proceeds exemption statute such that proceeds
of former homestead are no longer exempt. In re England (1992, CA5 Tex) 975 F2d 1168, CCH
Where debtor claims homestead exemption as allowed by 11 USCS § 522(b)(2)(A), bankruptcy
court is not bound to follow Texas Property Code procedure for designating debtor's homestead
from a larger parcel of property in order that remainder may be liquidated. Crowell v Theodore
Bender Accounting (In re Crowell) (1998, CA5 Tex) 138 F3d 1031, 39 CBC2d 1389, CCH Bankr L
Rptr P 77691.
Chapter 7 debtor was entitled to Texas rural homestead despite parties' prenuptial agreement
limiting his legal obligations since his moral obligation of support continued, notwithstanding alle-
gation that his wife had greater wealth and needed no support, so that second prong of Roco deci-
sion was satisfied in that head of household had moral or legal obligation to support other members
of family. Painewebber Inc. v Murray (2001, ED Tex) 260 BR 815.
Real property owned by corporation owned and controlled by Chapter 13 debtors is not within
Texas homestead exemption where (1) property is used only to grow hay in order to feed hogs
raised by debtors on separate property and thus does not provide debtors with meaningful or sub-
stantial source of income and support; (2) property is not used as place to exercise calling or busi-
ness of debtors; and (3) debtors have made no declaration of property as their homestead. In re
Brokmeyer (1985, BC SD Tex) 51 BR 704.
Fact that debtors claim more than one parcel of homestead property and did not designate home-
stead until after deed of trust was executed does not, under Texas law, affect their homestead claim.
In re Howard (1986, BC WD Tex) 65 BR 498, 14 BCD 1291.
Chapter 7 debtor may claim homestead exemption under Texas opt-out provisions on entire
91.93 acres of mortgaged rural property used as debtor's sole residence, even though debtor signed
previous agreement with mortgage bank limiting homestead to 10 acres, where: (1) property was in
law and fact rural homestead of debtor at all pertinent times; and (2) this was known or should have
been known to bank. In re Skinner (1987, BC ND Tex) 74 BR 571.
Texas rural homestead exemption analysis does not include economic support as required test
for eligibility, but only that homestead claimant have possessory interest in land, demonstrate intent
to claim it has homestead, and use it for purpose of home, which use would include economic sup-
port as well as use for shelter, protection, comfort, convenience, and enjoyment of home; in present
case where evidence establishes that property is clearly rural, it qualifies for homestead where it
provides shelter, recreation, comfort, and convenience as well as solitude. In re Mitchell (1991, BC
WD Tex) 132 BR 553.
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11 USCS § 522
Chapter 7 debtor's use and occupancy of property on which his used car business was located
clearly established property as both residence and business homestead, although debtor's former
spouse and children were allowed to continue residing on other property following parties' divorce,
debtor continued to claim residence in which his family lived as his homestead for tax purposes, he
listed that house on financial statement to creditor, and he claimed that property as his homestead in
bankruptcy proceedings, as well as property on which business was located, where debtor moved
into apartment located on business residence in anticipation of his divorce, he constructed larger
living quarters by adding second floor to business property in which he has resided since its com-
pletion, and he continues to conduct his used car business from that location; debtor is not estopped
from claiming property as his homestead even though homestead affidavit, financial statements, and
statement in deed of trust indicated that property in which his family continue to reside was his
homestead where: (1) homestead affidavit was signed more than 3 years after creditor issued loan in
question in connection with another loan; (2) with respect to financial statements, in which debtor
listed family residence as his homestead both before and after 1984 loan, bank did not rely on
statements given in advance of loan, and those given after loan cannot work estoppel as to loan al-
ready made; and (3) there is no evidence that creditor relied upon statement in deed of trust, and
debtor openly and continuously lived on and used premises as his residential and business home-
stead. Julian v FDIC (In re Julian) (1994, BC ND Tex) 163 BR 478.
Under Texas law debtor may sell homestead and reinvest proceeds in new homestead without
proceeds becoming part of bankruptcy estate, so long as he does so within six months. In re Reed
(1994, BC WD Tex) 178 BR 707, op withdrawn, reported at (1994, BC WD Tex) 8 Tex Bankr Ct
Rep 283.
Fact that Chapter 11 debtor subsequently converted to Chapter 7 did not allow creditors to at-
tack homestead claim where new homestead was purchased within six months of sale of old home-
stead with proceeds from that sale and had thus, under Texas law, never entered bankruptcy estate.
In re Reed (1994, BC WD Tex) 178 BR 707, op withdrawn, reported at (1994, BC WD Tex) 8 Tex
Bankr Ct Rep 283.
Chapter 7 debtors' leasehold interest in farm property was sufficient under Texas law to support
homestead claim and homestead was not abandoned by their conveyance of life estate to one
debtor's parents in order to assure latter that they would always "have a say" concerning the prop-
erty. Eskew (1998, BC WD Tex) 233 BR 708.
Where debtor's homestead consisted of two tracts, second of which was not sold to buyer of first
tract until court voided creditor's lien on tract, six-month period in Tex. Prop. Code Ann. §
41.001(c) within which to reinvest homestead sale proceeds ran not from sale of first tract but from
sale of second tract because homestead consisted of both tracts. In re Bading (2007, BC WD Tex)
376 BR 143.
Debtor's sporadic use of 64-acre tract of property located approximately three miles from
debtor's residence had insufficient nexus with debtor's homestead to qualify for exemption under
Texas law; although debtor and his wife intended to use property for hay and cattle and to support
dog breeding business, they had not done so prior to their bankruptcy filing. In re Palmer (2008, BC
ED Tex) 391 BR 386.
132.--Business homestead exemption
Page 244
11 USCS § 522
Debtor who has several places of business can claim only one as his business homestead under
law of Texas, but he may be permitted to make choice in Bankruptcy Court. Gulbransen Co. v
Couch (1932, CA5 Tex) 61 F2d 932.
Chapter 7 debtors' second business location was not "essential to and necessary for" operation of
business and therefore did not qualify for Texas business exception where 2 properties were not
used in single, integrated business, although second property was primarily used to capture expand-
ing retail market, debtors conducted both wholesale and retail businesses at first property, properties
were operated separately, and debtors expressly disclaimed second property when they entered into
loan arrangement with creditor. In re Webb (1992, CA5 Tex) 954 F2d 1102, CCH Bankr L Rptr P
74494, reh den (1992, CA5 Tex) 1992 US App LEXIS 6340.
Since debtor's use of building for storing boxes is only incidental to his primary business of
meat processing, building was not indispensable to his business and is therefore not within Texas
business homestead exemption; scope of business homestead is not intended to extend so far as to
protect property which is only incidentally useful or profitable to business, such as property used to
warehouse goods. In re Starns (1985, SD Tex) 52 BR 405, 13 CBC2d 853.
Bankrupt's business located in separate city approximately 8 miles from his home was not ex-
empt under urban homestead provision of Texas constitution which contemplates lot or lots located
in one urban community. In re Pittman (1976, BC ND Tex) 2 BCD 558.
Real property owned by corporation owned and controlled by Chapter 13 debtors is not within
Texas homestead exemption where (1) property is used only to grow hay in order to feed hogs
raised by debtors on separate property and thus does not provide debtors with meaningful or sub-
stantial source of income and support; (2) property is not used as place to exercise calling or busi-
ness of debtors; and (3) debtors have made no declaration of property as their homestead. In re
Brokmeyer (1985, BC SD Tex) 51 BR 704.
Chapter 11 debtor may not claim business homestead exemption on property owned by her and
leased to company in which she holds 49 percent ownership where debtor is not conducting busi-
ness or calling on premises in question because there is no "business" associated with debtor's rent-
ing this land to company that runs restaurant on premises and debtor is not currently in restaurant
business as she is merely passive investor in company which is in restaurant business; furthermore,
after she inherited her husband's interest in property, along with whatever business homestead he
might have established in property, she removed herself from business operation of company, aban-
doning any possible exemption that might otherwise have obtained from her late husband; finally,
there is no family unit extending to include son who operates business because exemption never ap-
plied to him while he was within family unit and, in any event, he is clearly head of his own family
unit, and son that lives with debtor is not dependent upon her, did not begin residing with debtor
until after bankruptcy was filed, and is not in any way involved in ownership of corporation under
which debtor claims exemption. In re Finkel (1993, BC WD Tex) 151 BR 779.
Retroactive application of Texas business homestead exemption did not impermissibly impair
existing contractual rights and/or constitute taking of property without due process of law in viola-
tion of Constitution. Hughes v Team Bank (In re Hughes) (1993, BC ND Tex) 172 BR 205, amd, in
part, on reconsideration, objection denied (1993, BC ND Tex) 159 BR 197.
133. Vermont
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11 USCS § 522
Protection of Chapter 7 debtor's family and purpose of homestead exemption statutes, both
Vermont statute and 11 USCS § 522, are well served by allowing debtor as homestead exemption
grist mill building in which family resided, stable, and storage barns with land upon which they
stand and used in connection therewith, but house and land which debtor rented cannot be claimed
as part of homestead despite debtor's contention that state law prohibited subdivision of property
because subdivision is to crucial to protection of homestead exemption; homestead exemption is
purely statutory and gives no greater right than statute itself creates and it signifies dwelling house
in which family resides. In re Evans (1985, BC DC Vt) 51 BR 47.
Law of Vermont is that homestead of debtor is exempt from attachment upon debts contracted
after filing of deed of homestead for record and before occupation of premises by debtor as home-
stead, and thus, where Chapter 11 debtor filed deed prior to commencement of construction of resi-
dence but did not move in until after completion of residence, she is not precluded from asserting
homestead as against contractor's lien where debtor clearly intended premises to be her homestead;
further, debtor moved into residence prior to time when contractor perfected his lien thus debtor's
homestead was established before contractor's lien attached. In re Bernstein (1986, BC DC Vt) 62
BR 545.
Debtors cannot claim Vermont homestead exemption in property conveyed prepetition to part-
nership, in which debtors were partners, because partnership is separate legal entity, which owned
property; later deeds conveying property to debtors as tenants in common are corrective deeds for
deficient deeds entered into prior to conveyance to partnership; thus debtors have not satisfied most
basic requirement, that they own property they claim as exempt. In re Gorman (1986, BC DC Vt)
68 BR 541, affd (1987, DC Vt) 82 BR 253.
Increase in homestead exemption under Vermont law just prior to debtors' filing of Chapter 7
bankruptcy was available to debtors under 11 USCS § 522(b)(2)(A) with regard to all prepetition
debts even though state law limited exemption to debts incurred after its effective date. In re Skjetne
(1997, BC DC Vt) 213 BR 274.
Chapter 7 debtors are entitled to exempt from property of estate under 11 USCS § 522(b)(2)(A)
the $ 75,000 Vermont homestead exemption regardless of fact creditor's claim arose before debtor's
homestead was established, and even though creditor's judicial lien arose prior to increase in amount
of homestead exemption, lien is avoided since lien would impair debtors' homestead exemption.
Euber v Sheldrick (In re Euber) (1998, BC DC Vt) 217 BR 448, 39 CBC2d 970.
134. Virginia
Wife is not entitled to homestead exemption, under Virginia state law, where she continues to
reside with husband, and does not maintain separate residence; state statute which allows husband
and wife to claim 2 homestead exemptions only if they are maintaining separate residences is not
unconstitutional, since purpose of exemption is to conserve family home from forced sales, and
husband and wife with one residence, since they are not living separately, have only one home to
conserve. In re Thompson (1980, ED Va) 4 BR 823, 2 CBC2d 1257.
Under Virginia law debtors each have right to claim $ 5,000 homestead exemption in their
jointly held property and because only section of new Bankruptcy Code not available to Virginia
debtors is 11 USCS § 522(d)(1)-(11) setting out Federal exemptions, homestead exemption may be
relieved of burden of creditor's judgment lien pursuant to 11 USCS § 522(f). In re Snellings (1981,
BC WD Va) 10 BR 949, CCH Bankr L Rptr P 68022.
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11 USCS § 522
Debtor who had received discharge in bankruptcy pursuant to his Chapter 7 proceeding could
not invoke exemption of 11 USCS § 522(b)(2)(B) to bar creditor from foreclosing on property
which debtor and his wife owned as tenancy by entirety where husband and wife were jointly liable
to bank on debt secured by property and under Virginia law entirety property is not exempt from
process by joint creditor of husband and wife. In re Costley (1984, BC ED Va) 39 BR 585, 10
CBC2d 1367.
Debtor's attempt in opt-out state to exempt account receivable from creditor's lien of fieri facias
by amending Homestead Deed is ineffective since amendment to deed may not set apart additional
items not included in original deed under Virginia Law. In re Pennington (1985, BC ED Va) 47 BR
322.
Under 11 USCS § 522, filing of homestead deed, under Virginia law, insulates fund established
with proceeds from sale of Chapter 7 debtor's property from enforcement of alleged consensual lien
where purchasers did not execute upon their alleged consensual lien and acquire decree ordering
escrow agent to pay them proceeds prior to filing of homestead deed. In re Trammel (1986, BC ED
Va) 63 BR 878, 15 CBC2d 998.
Although purchasers, who were aware of judgment liens on property purchased from Chapter 7
debtor, bargained for clear title to property and escrow agreement, which required payment of
debtor's share of proceeds into escrow pending order of Bankruptcy Court, indicating debtor's inten-
tion to make good on covenant of title, Bankruptcy Court cannot release under 11 USCS § 522
judgment liens against property remaining after debtor's claimed exemption in funds under Virginia
homestead law. In re Trammel (1986, BC ED Va) 63 BR 878, 15 CBC2d 998.
Wife's claimed homestead exemption in husband's IRA accounts was disallowed, since she had
at most expectancy interest in it and husband could withdraw funds at any time; nor did children
have exemption as contingent beneficiaries. In re Cathcart (1996, BC ED Va) 203 BR 599, 8 Fourth
Cir & Dist Col Bankr Ct Rep 867.
135. Wyoming
Purchase money security interest has priority over Chapter 7 debtor's homestead exemption un-
der Wyoming opt-out provisions, but to extent that security interest is nonpurchase money, exemp-
tion is superior; Wyoming homestead provision is not limited to real property but encompasses all
property qualifying as homestead. Geist v Converse County Bank (1987, DC Wyo) 79 BR 939, 5
UCCRS2d 1267.
Chapter 7 debtor's nonfiling spouse is not entitled to homestead exemption claimed in her behalf
by debtor since, even if debtor could claim exemption in her behalf, such exemption would have to
be valid under applicable state law whereas spouse's exemption failed under opt-out Wyoming law
because she had no ownership interest in residence. In re Johnson (1995, BC DC Wyo) 184 BR 141.
Chapter 7 trustee's objection to Chapter 7 debtor's claimed exemption for six guns was sustained
where debtor was allowed to claim only one gun as exempt household goods under Alaska Stat. §
09.38.020(a). In re Shell (2003, BC DC Alaska) 295 BR 129.
136. Miscellaneous
Colorado homestead exemption is interest in real estate rather than personal right of debtor, so
that where debtor and his nondebtor wife jointly own property in which homestead is claimed, value
Page 247
11 USCS § 522
of exemption is to be applied to joint interest in property and not to debtor's individual interest in
proceeds of sale under 11 USCS § 363(h). In re Pruitt (1987, CA10 Colo) 829 F2d 1002.
Under Colorado law homestead exemption may not be claimed by one joint owner to exclusion
of others; value of homestead must be deducted from value of entire property, rather than solely
from value of debtor's interest in reaching value of property of debtor's estate. In re Pruitt (1987,
CA10 Colo) 829 F2d 1002.
Homestead exemption in Illinois entitles debtor to remain in his home rent free until he receives
cash value of exemption. In re Szekely (1991, CA7 Ill) 936 F2d 897, 24 CBC2d 2028, CCH Bankr
L Rptr P 74070.
Bankruptcy Court's finding that Chapter 7 debtor was not farmer is not clearly erroneous for
purposes of determining debtor's homestead exemption under Wisconsin law, despite debtor's con-
tention that she always considered herself to be farmer, where at time she filed her petition debtor
did not derive substantial part of her income from farming, and, other than through sale of mare and
by participation in Conservation Reserve Program, debtor had not been engaged in farming activi-
ties. In re Lloyd (1994, CA7 Wis) 37 F3d 271, 31 CBC2d 1786, CCH Bankr L Rptr P 76125.
Bankruptcy Court's finding, that 3 acres of Chapter 7 debtor's 113 acres of land was reasonable
amount upon which she could construct residence and keep her 2 horses, is not clearly erroneous,
where debtor was not farmer, and debtor's only objection to amount of land allocated is with respect
to limitations this allocation places on her farming activities. In re Lloyd (1994, CA7 Wis) 37 F3d
Chapter 7 debtor's contingent future expectancy interest in real estate was not spared by election
under 11 USCS § 522(b)(2) and homestead exemption under R.I. Gen. Laws § 9-26-4.1 (2002),
where proper valuation of debtor's interest in property held via tenancy by entirety was 100 percent.
In re Ryan (2002, DC RI) 282 BR 742, 49 CBC2d 140.
Under 11 USCS § 522(b), state law controls homestead exemption, and debtor cannot prevent
trustee from selling his survivorship interest in tenancy by entirety because Tennessee law provides
that homestead is right of occupancy, not estate in land, and remainder or reversion can be sold. In
re Walls (1984, BC ED Tenn) 45 BR 145, 12 BCD 663, CCH Bankr L Rptr P 70175.
Chapter 7 debtor may properly claim homestead exemption under South Dakota law in property
she owns with other family members either as joint tenants or as tenants in common. In re Johnson
(1986, BC DC SD) 61 BR 858.
Property that otherwise can be classified as homestead property under Wisconsin opt-out provi-
sions should be presumptively considered "reasonably necessary" for use of dwelling as home as
long as it does not exceed statutorily prescribed limit and presumption can only be rebutted by spe-
cific showing of unreasonableness. In re Mann (1986, BC WD Wis) 82 BR 981.
North Dakota opt-out homestead exemption allowing debtor to exempt up to $ 7,500 in lieu of
homestead is not limited to cash, and Chapter 12 debtors may exempt farm equipment under provi-
sion up to $ 15,000 in joint case, but any homestead exemption, no matter how small, preempts "in
lieu of" exemption. In re Ptacek (1987, BC DC ND) 78 BR 986.
Chapter 7 debtors may not claim interests in employer's profit sharing retirement plan as exempt
under South Dakota homestead law, because plan interests are neither houses, nor mobile homes,
nor proceeds from sales of houses. In re Bowen (1987, BC DC SD) 80 BR 1012, 16 BCD 1315.
Page 248
11 USCS § 522
Disqualifying clause in Maine exemption statute that exemption does not apply to judgments
based on torts involving other than ordinary negligence on debtor's part is nugatory in case of Chap-
ter 7 debtor against whom judgment arising from his withdrawal of funds in joint account on date of
testator's account was entered in state court, although judgment was based on tort involving other
than ordinary negligence where state's opt-out provision renders disqualifying clause ineffective in
bankruptcy case; thus debtor may claim $ 60,000 homestead exemption for disabled persons.
Applebee v Brawn (1992, BC DC Me) 138 BR 327.
Chapter 7 debtor's homestead property, in which bedroom has been refurbished and used on ad
hoc basis for business activities, is not used for business purposes within meaning of Oklahoma
homestead exemption statute which provides "mixed-use" penalty when homesteader uses property
for business purpose, and therefore debtor's claim of homestead is granted since exemption of whole
realty as homestead is not abuse, and enforcement of mixed-use penalty is not appropriate, where:
(1) realty is in residential district, is of ordinary residential type, and would be recognized by any-
one as normal single family home; (2) realty itself produces no income by rent or any other means
and none of its total value is attributable to any business activities which debtor conducts therein;
(3) use of bedroom for business activities, or of telephones in house to make and receive business
calls, has occurred on temporary, ad hoc basis, during acute collapse of debtor's ordinary business
activities, and is expected to continue only until debtor's ordinary business activities resume; (4)
business activities conducted from home have involved mere winding up of debtor's former busi-
ness and search for new employment, which use has been de minimis and strictly incidental to nor-
mal functioning of undoubted homestead. In re Ozey (1994, BC ND Okla) 171 BR 116.
Debtors may not claim as exempt 40 acres which debtor husband inherited from his father and
on which they now reside as to creditor whose lien attached to this parcel of land prior to time land
became debtors' homestead; relevant time period is when creditor's lien attached and at that time,
not only did debtors not reside on 40-acre parcel, they showed no intent to make that 40 acres their
homestead but, rather, they lived on another 190-acre tract of land, refused to move from that 190
acres for 8 months after foreclosure, continued to litigate issue of entitlement to 190 acres, secreted
their ownership of 40-acre parcel, and testified under oath that 190 acres was their "home"; fact that
debtors considered 230 acres as their "homeplace" does not expand their homestead rights under
Arkansas law, which provides for exemption of only 160 acres, and fact that debtors did not desig-
nate any portion of that 230 acres when lien attached as homestead does not given them right to des-
ignate particular portion of that land for purposes of electing homestead when debtors filed bank-
ruptcy; debtor husband's statement with respect to 190-acre parcel that he wanted his "home" back,
combined with acreage limitations imposed under Arkansas law, compels conclusion that 160 of
190 acres was debtors' homestead during relevant time period when creditor's lien attached. In re
Austin (1994, BC ED Ark) 172 BR 262.
Connecticut statute providing homestead exemption of up to $ 75,000 in value was intended to
apply only to obligations or claims that arose on or after effective date of exemption statute and
such result was not altered in context of bankruptcy; accordingly, objection to claim of Connecticut
homestead exemption by Chapter 7 debtors had to be sustained as to claims against debtors that
arose prior to effective date of exemption statute. In re Ahmed (1996, BC DC Conn) 194 BR 540.
If no deficiencies exist as to deed's form or in fees tendered, homestead deed is admitted to re-
cord when properly received by clerk's office. In re Quy Van Nguyen (1998, BC ED Va) 226 BR
547, 11 Fourth Cir & Dist Col Bankr Ct Rep 115, affd (2000, CA4 Va) 211 F3d 105.
Page 249
11 USCS § 522
Chapter 7 debtors did not abandon Idaho homestead by vacating property for six months prior to
filing bankruptcy and putting property up for sale where debtors did not forsake homestead but
lived in dwelling supplied by relative during six-month term of temporary job in another area of
state. In re Koopal (1998, BC DC Idaho) 226 BR 888.
Chapter 7 debtor was entitled to $ 7,500 Indiana exemption for personal residence where (1)
property had served in that capacity for several years prior to bankruptcy filing, debtor was in pos-
session of property as renter on date he filed his bankruptcy petition, (2) property had been left to
debtor in landlord's will and it was undisputed that debtor would receive legal title to property after
sufficient time had passed for probate of estate to be completed, and (3) allowing exemption sup-
ported policy behind Indiana exemption statute which was liberally construed in favor of debtors. In
re Robertson (1998, BC SD Ind) 227 BR 844.
North Carolina has opted out of exemptions provided for in 11 USCS § 522(d) and, under North
Carolina law, debtor with remainder interest in property subject to life estate may claim homestead
exemption where debtor is residing on property. In re Cain (1998, BC MD NC) 235 BR 812.
State court award of $ 5000 equity in marital residence occupied by debtor's former spouse may
not be claimed as homestead exemption under Missouri law where debtor neither owned nor occu-
pied nor intended to reoccupy property. In re Schissler (2000, BC WD Mo) 250 BR 697.
11 USCS § 522(c) preempts Rhode Island homestead act's exemption for debts contracted prior
to estate in homestead; thus, debtor was entitled to exempt property, even though lien on it predated
both homestead act and his ownership. In re Strandberg (2000, BC DC RI) 253 BR 584.
Debtors in Missouri, state which had opted out of federal exemption scheme of 11 USCS § 522,
were bound by express language of Missouri homestead statute which allowed only one joint owner
to claim entire $ 8000 homestead exemption. In re Smith (2000, BC WD Mo) 254 BR 751.
Since Idaho homestead exemption is not limited to defined amount of land and does not require
that homestead consist of one parcel or legal description, Chapter 7 debtors were entitled to exempt
$ 50,000 homestead consisting of three separate parcels, each with separate legal description, where
debtors had acquired additional property after purchase of initial homestead property in order to
meet zoning requirements and where parcels were contiguous, debtors actually resided on property,
and debtors utilized parcels as single property. In re Zantman (2001, BC DC Idaho) 2001 Bankr
LEXIS 708.
Debtor failed to establish that she had equitable interest in property under state law as benefici-
ary of prepetition resulting trust, where she funded down payment of $ 40,000 from her inheritance
for family home titled in her husband's name, from which non-rebutted presumption of gift arose,
and she did not list her "trust" interest in property in schedules signed under penalty of perjury. In re
Cantrell (2001, BC DC Conn) 270 BR 551.
Proceeds from voluntary sale of Kansas homestead to be used to purchase homestead in another
state are not exempt under Kansas homestead exemption laws; thus, they are not exempt in bank-
ruptcy. In re Ginther (2002, BC DC Kan) 282 BR 16, 48 CBC2d 1559.
North Dakota is among majority of states that has chosen to "opt out" of federal exemption
scheme of 11 USCS § 522 and limits its residents to exemptions allowed under North Dakota law,
pursuant to N.D. Cent. Code § 28-22-17, and N.D. Cent. Code § 47-18-01 defines limits of home-
stead exemption. In re Murphy (2003, BC DC ND) 292 BR 403.
Page 250
11 USCS § 522
Pursuant to Alaska Stat. § 09.38.010(a), Chapter 7 debtor was allowed to claim full homestead
exemption for six-plex where debtor met plain language requirements of statute, i.e., debtor owned
building and it was debtor's principal residence, and nothing in Alaska homestead statute's legisla-
tive history, purpose, or caselaw interpreting statute indicated that homestead exemption was lim-
ited exclusively to residential property. In re Shell (2003, BC DC Alaska) 295 BR 129.
Bankruptcy court held that debtors' motor home was motor vehicle for purposes of Ariz. Rev.
Stat. § 33-1125(8). In re Sleeth (2003, BC DC Ariz) 300 BR 351.
Debtors, husband and wife, qualified for enhanced motor vehicle exemption under Ariz. Rev.
Stat. § 33-1125(8) due to husband's disability where husband had advanced atherosclerosis and
heart disease, had undergone three by-pass surgery operations, placement of stints, and angioplasty,
he also suffered from knee problems and diabetes, and received total and permanent disability pay-
ments from Social Security Administration. In re Sleeth (2003, BC DC Ariz) 300 BR 351.
Debtor was entitled to claim $ 20,000 exemption under O.C.G.A. § 44-13-100(a)(1) where his
wife did not have title to home and did not file bankruptcy with him; statute imposed no require-
ment that non-titled spouse also be in bankruptcy. In re Burnett (2003, BC MD Ga) 303 BR 684
(criticized in Wright v Taylor (In re Taylor) (2005, BC ND Ga) 2005 Bankr LEXIS 269).
In 11 USCS § 522 exemption matter, bankruptcy court found that at time involuntary Chapter 7
petition was filed, debtors had equitable interest that would have been property of estate but for op-
eration of Kansas homestead exemption; debtors had equitable interest in Kansas homestead and
properly applied Kansas exemption to their interest. In re McGinnis (2004, BC WD Mo) 306 BR
279.
When involuntary petition was filed, Chapter 7 debtors were domiciled in Kansas for 114 days,
which was well more than half of preceding 180 days required; debtors were, therefore entitled un-
der 11 USCS § 522 to utilize Kansas exemption statutes. In re McGinnis (2004, BC WD Mo) 306
BR 279.
Where debtor was separated from his estranged spouse and had moved out of marital residence
at time of his bankruptcy filing, debtor could not claim homestead exemption in residence under
Alabama law because he did not actually occupy property; fact that debtor hoped one day to reoc-
cupy home by reconciling with his estranged wife was not enough to create valid homestead exemp-
tion. In re Simmons (2004, BC MD Ala) 308 BR 559.
Retired debtors could not claim exemptions in their motor vehicles under La. Rev. Stat. Ann. §
13:388 because statute required that in order to exempt vehicle, debtor was required to be em-
ployed; further, nothing in statute supported debtors' contention that they could claim exemptions in
their vehicles because they used their vehicles to travel to medical appointments. In re Hill (2004,
BC WD La) 310 BR 294.
Pre-paid rents attributable to leasehold could have been exempt under state homestead statute,
Ala. Code § 6-10-2, as leasehold interest giving debtor present right to possession as of date of
bankruptcy satisfied "ownership" requirement for valid homestead exemption but, because debtor
made volitional transfer to her landlord prepaying her apartment rent, if trustee was able to avoid
that transfer under one of avoidance powers sections enumerated in 11 USCS § 550, then 11 USCS
§ 522(g) precluded debtor from claiming recovered funds as exempt. In re Rutland (2004, BC MD
Ala) 318 BR 588.
Page 251
11 USCS § 522
Where debtors owned duplex in which they occupied one-half as their residence and rented
other half to residential tenant on month to month basis, debtors were entitled to homestead exemp-
tion of entire duplex pursuant to Kan. Stat. Ann. § 60-2301 because they demonstrated considerable
control and use of entire duplex; debtors maintained and enjoyed yard surrounding duplex, they
maintained interior and exterior of entire duplex, they insured and paid taxes on entire structure, and
they used driveway leading to tenant-occupied portion of duplex to store their trailer. In re McCam-
bry (2005, BC DC Kan) 327 BR 469.
Only sensible reading is to limit homestead exemption to aggregate maximum of $ 30,000 and
hold that spouse of debtor who joins in joint bankruptcy petition under 11 USCS § 302, part of
Bankruptcy Code, although entitled to also elect his or her own $ 30,000 homestead exemption, is
not entitled to add such $ 30,000 homestead exemption to their spouse's homestead exemption and
thereby exceed $ 30,000 cap under Mich. Comp. Laws Serv. § 600.5451(1)(n). In re Lindstrom
(2005, BC ED Mich) 331 BR 267.
11 USCS § 522(p), as added by Bankruptcy Abuse Prevention and Consumer Protection Act of
2005, limits amount Nevada debtor may claim as homestead exemption to $ 125,000 if debtor has
not owned property for more than 1215 days and did not previously own property in Nevada. In re
Virissimo (2005, BC DC Nev) 332 BR 201, CCH Bankr L Rptr P 80385.
As Missouri opted out of federal bankruptcy exemption scheme under Mo. Stat. Ann. § 513.427,
debtor was entitled to claim entire state homestead exemption, under Mo. Stat. Ann. § 513.475, in
her one-half interest in homestead because, while debtor left homestead following fight with her
companion, with whom she had bought homestead, she always intended to return to and did return
to homestead. Additionally, debtor's companion testified that he had not filed for bankruptcy relief,
that he had no creditors pursuing him, and that he was not contemplating filing for bankruptcy re-
lief. In re Nguyen (2005, BC WD Mo) 332 BR 393.
Debtors' homestead proceeds that were exempt as of petition date remained exempt notwith-
standing provision in Arizona's exemption statute, Ariz. Rev. Stat. § 33-1101(C), that proceeds be
reinvested in another homestead within 18 months. Pre-emptive federal law did not permit debtor's
postpetition use of exempt property to change its exempt status as of date of petition. In re Konnoff
(2006, BC DC Ariz) 341 BR 28.
Debtors were entitled, pursuant to 11 USCS § 522(p)(1), to claim $ 125,000 homestead exemp-
tion, and because debtors rolled over equity from their previous state homestead purchased more
than 1,215 days prior to filing of their petition, they could claim rolled-over equity subject to $
150,000 homestead cap of Ariz. Rev. Stat. § 33-1101. In re Summers (2006, BC DC Ariz) 344 BR
108.
Chapter 7 trustee's objection to debtor's claimed exemption of interest in real property based
upon Mich. Comp. Laws § 600.5451(1)(n) was sustained because § 600.5451 was state's attempt to
create its own set of bankruptcy-specific exemptions, and, as such, violated Supremacy Clause, U.S.
Const. art. VI, cl. 2. In re Wallace (2006, BC WD Mich) 347 BR 626, CCH Bankr L Rptr P 80703.
In today's mobile society and given choice of law provisions in bankruptcy code, creditor cannot
reasonably anticipate borrower's future exemptions under 11 USCS § 522 at time debt contract is
executed; therefore, contracting party has no reasonable expectation that any particular state's ex-
emption law in existence at time debt is incurred is substantial yet unwritten part of its contract
should that debtor file for bankruptcy protection in future and no contract right is substantially im-
Page 252
11 USCS § 522
paired by South Carolina Home Security Act, S.C. Code Ann. § 15-41-30(1), in federal bankruptcy
setting. In re Evans (2006, BC DC SC) 362 BR 275.
Debtor could not claim exemption under Me. Rev. Stat. Ann. tit. 14, § 4422, because his right to
receive $ 50,000 from his former spouse pursuant to equitable property division that attended his
divorce because he held no possessory or lien interest in property; he also could not claim proceeds
exempt under Me. Rev. Stat. Ann. tit. 14, § 4422(C), because he had held them for more than six
months. In re Toppi (2007, BC DC Me) 378 BR 9.
Although 11 USCS § 522(m) provides that exemptions may apply separately to each debtor in
joint bankruptcy case, subsection (m) does not apply where state has opted out of federal exemp-
tions and, under Nevada law, joint debtors who are married but living apart, may claim only one
homestead exemption. Rowe v Jackman (In re Rowe) (1999, BAP9 Nev) 236 BR 11, 99 CDOS 5814,
99 Daily Journal DAR 7599, CCH Bankr L Rptr P 77962.
Given statements by Kansas Supreme Court that equitable title supported homestead exemption
under Kansas law and liberal policy supporting such finding, bankruptcy court correctly held that
Chapter 7 debtors had properly claimed homestead exemption in their residence where they had
transferred legal title of property to two self-settled living revocable trusts, they retained equitable
interest in property under Kansas law that was sufficient to make it property of estate, and there was
no evidence that language in trust instrument deviated from general rule in Kansas that property of
revocable trust was subject to claims of settlor's creditors. Redmond v Kester (In re Kester) (2006,
BAP10) 339 BR 749.
D.Household Goods 137. Generally
Bankruptcy Court correctly relied on Kansas court of appeals' decision that phrase "reasonably
necessary," as it relates to household furnishing exemption, should not be enlarged to exempt all
household furnishings, but that court should make factual determination that exempt property is rea-
sonable and necessary to debtor's customary standard of living; although Bankruptcy Court is not
bound by decision because it was not rendered by Kansas Supreme Court, it is some indication of
how that court would rule on issue. Walnut Valley State Bank v Coots (1986, DC Kan) 60 BR 834.
Bankrupt is entitled to exemption for household goods he tried to waive in his agreement with
lending agency from which he borrowed money pledging his household goods as security. In re De
Cova (1975, BC DC Hawaii) 2 BCD 1536.
"Household goods" as used in listing of exempt property does not include savings account, since
household goods is defined as those items found within residence. In re Smith (1986, BC ED Mo) 3
BAMSL 3355.
Although state may elect to control what property is exempt under state law, federal law deter-
mines availability of lien avoidance under 11 USCS § 522(f). In re Erwin (1996, BC SD Tex) 199
Debtors may exempt household goods included in 11 USCS § 522(f)(1)(B) following trustee's
avoidance of liens on such property, where amount of exemptions claimed by debtors equals value
of property recovered by trustee, without increasing debtors' Chapter 13 plan payments, in order to
comply with best interests of creditors test of 11 USCS § 1325(a)(4), since there would be no excess
equity payable to unsecured creditors in Chapter 7; however, where property was motor vehicle and
lien was voluntarily granted, debtors were not entitled to benefit of exemption and must pay into
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11 USCS § 522
their plan for benefit of unsecured creditors amount of money equal to value of vehicle as of effec-
tive date of plan. In re Brennan (1997, BC SD Ill) 208 BR 448, 37 CBC2d 1484.
Where household furnishings do not have community property limitation under state law,
spouse claiming state law exemption may claim all furnishings and is not limited to one-half com-
munity interest therein. In re Dahdah (1982, BAP9 Cal) 20 BR 665, 9 BCD 166, CCH Bankr L
Rptr P 68704.
138. Construction
Terms "household goods" and "household furnishings" must be given narrow construction;
household goods are those items necessary to function of household but not recreational items. In
re Ruppe (1980, BC DC Colo) 3 BR 60, 5 BCD 1404, 1 CBC2d 479.
Definition of household goods must be given narrow construction, to apply to those items nec-
essary to functioning of household consistent with providing debtor with fresh start contemplated by
overall bankruptcy philosophy. In re Ruppe (1980, BC DC Colo) 3 BR 60, 5 BCD 1404, 1 CBC2d
479.
Debtors may claim exemption in household goods in excess of $ 200 limit prescribed by 11
USCS § 522(d)(3) by use of spillover exemption provided for in 11 USCS § 522(d)(5), inasmuch as
there is no limitation or restriction of any kind with regard to type of property which may be exempt
under such spillover provision. In re Boozer (1980, BC ND Ga) 4 BR 524, 6 BCD 529, 2 CBC2d
Phrases "household furnishings" and "household goods" used in 11 USCS § 522 should be given
liberal construction to include any personal property normally used by debtors or dependents in or
about residence, and these phrases include home entertainment items, such as stereo system, regard-
less of how elaborate; such phrases are not to be given more restricted scope for determining
whether creditor's lien in exempt property may be avoided, than they are given in determining
whether property should be exempt, so that, if creditor challenges scope of lien avoidance, it must
be through statutory provisions governing what property may be claimed as exempt. In re Coleman
(1980, BC MD Tenn) 5 BR 76, 6 BCD 669, 2 CBC2d 608.
Absent future direction from Congress, Bankruptcy Court will not be bound by FTC rule defin-
ing "household goods", and will continue to make case-by-case determination of validity of debtor's
claim of exemption under 11 USCS § 522(f)(2)(A), despite fact that FTC rule and Bankruptcy Code
section both seek to limit reach of security interests in household goods which have little value to
creditors but which place great burden on consumers when such goods are taken to satisfy liens. In
re Smith (1986, BC ND Ga) 57 BR 330, 13 BCD 1325, CCH Bankr L Rptr P 70977.
Term "household goods" should be broadly interpreted; such items as rifles and chain saws
which may be used in and about debtor's household are therefore properly exempt under state law
and fall within lien avoidance section of Bankruptcy Code. In re Barley (1987, BC ND Ind) 74 BR
450, 4 UCCRS2d 298.
Household goods and household furnishings as used in 11 USCS § 522(d) and (f) should be
given liberal construction to include any personal property normally used by Chapter 7 debtors or
their dependents in or about their residence. In re Barrick (1989, BC MD Pa) 95 BR 310, 18 BCD
1463.
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11 USCS § 522
Chapter 7 debtor would not be denied exemption in household goods in debtor's possession be-
cause of failure to list property with any specificity where that failure was due to mere transcribing
error; court would not rule on contention by former spouse that exemption should be disallowed
with respect to any property in which she might have interest since, once debtor exempts property
from estate, it is not appropriate for Bankruptcy Court to determine extent of interest in that prop-
erty held by debtor or anyone else. In re Leucht (1998, BC MD Fla) 221 BR 1009, 11 FLW Fed B
308.
139. Furniture
Sofa, loveseat, chair, floorlamp, end table, and coffee table constitute household goods. In re
Mulcahy (1980, BC SD Ind) 3 BR 454, 6 BCD 223, 1 CBC2d 887.
Issue of whether debtor's furniture must be treated as living room set or as dinning room set for
purposes of applying 11 USCS § 522(d)(3) is moot where plaintiff has adequate exemption to cover
furniture, $ 15.00 of other property and tax refund under § 522(d)(5), which entitles debtor to ex-
empt $ 7,900.00 worth of property. In re Johnson (1981, BC WD Mo) 15 BR 681, CCH Bankr L
Rptr P 68518.
Household furnishings that are truly household goods that are held in storage for security are
exemptible under 11 USCS § 522(d)(3). In re Kochell (1982, BC WD Wis) 26 BR 86, 9 BCD 1329,
4 EBC 1734, CCH Bankr L Rptr P 68942, affd (1983, WD Wis) 31 BR 139, 4 EBC 1942, affd
(1984, CA7 Wis) 732 F2d 564, 11 BCD 1174, 5 EBC 1289, CCH Bankr L Rptr P 69835.
Chair and table worth approximately $ 100 or less constitute living room, bedroom, and dining
room furniture within meaning of Louisiana statute and thus are exempt; vehicle used in firewood
business is also exempt where amount of income produced from business is within "marginal addi-
tional income" doctrine. In re Baker (1987, BC WD La) 71 BR 312.
Chapter 7 trustee objected to debtor's claim of miscellaneous beach furniture at vacation home
as exempt household furniture under Virginia law; purpose of Virginia exemption statute and 11
USCS § 522(f)(2)(A) were identical in that both seek to protect debtors and their families from being
left destitute by creditor process, therefore beach furniture at vacation home did not fall under defi-
nition of household furnishings under Virginia law, and was therefore not exempt. In re Latham
(1995, BC WD Va) 182 BR 479.
Chapter 7 debtor was not entitled to exempt household furniture under Rhode Island presump-
tion that household goods and furnishings in joint possession of husband and wife are prima facie
owned by entirety and therefore exempt from levy and sale where married women's acts had elimi-
nated presumption and there was no evidence of intent of debtor and nondebtor spouse to hold
property as tenants by entirety. In re Homonoff (2001, BC DC RI) 261 BR 551, 46 CBC2d 438.
140. Flatware, china or glassware
Testimony that boxed antique glassware was included on list of antiques taken by bank as col-
lateral, that boxed items were "unused," and that items were in debtors' attic compels conclusion
that such items are not reasonably necessary to maintain debtors' customary standard of living and
thus are not exempt under Kansas household furnishings exemption, and, consequently, bank's liens
on them may not be avoided under 11 USCS § 522(f); evidence that antique stove was in debtors'
basement is insufficient to show stove is household furnishing reasonably necessary to maintain
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11 USCS § 522
debtors' customary standard of living, and thus it is not exempt and liens on it may not be avoided.
Walnut Valley State Bank v Coots (1986, DC Kan) 60 BR 834.
Debtor's claim for exempt property as to silverware is denied where original claim was broad
and ambiguous and failed to list and describe property as required by law and where debtor claimed
no legal title in silverware. In re Polk (1981, BC ED Mo) 1 BAMSL 293.
Each particular item of silverware which does not exceed $ 200 in value is exempt under 11
USCS § 522(d)(3) where aggregate worth of sterling silverware collection, not held for speculation
or investment purposes, far exceeds $ 200. In re Wahl (1981, BC ED Wis) 14 BR 153, 8 BCD 98,
Debtor's silver flatware and china qualify for exemption under Virginia statute, which permits
debtor to exempt enumerated articles, which puts no limit on value of articles exempted, which
specifies no time for setting aside qualifying property, and which specifies no procedure for claim-
ing property as exempt. In re Maginnis (1982, BC ED Va) 24 BR 146.
Chapter 7 debtors' sterling silver flatware is exempt under South Carolina state opt-out exemp-
tions where it is used for personal and business dining and entertainment of guests. In re Shaffer
(1987, BC DC SC) 78 BR 783, 16 BCD 807.
141. Guns
Chapter 13 debtors' handgun is "household good" within meaning of 11 USCS § 522(f)(2)(A),
where debtors' handgun protects home and facilitates daily household living. First Family Fin.
Servs. v Raines (In re Raines) (1994, ND Ga) 170 BR 187.
Arms and military accoutrements exempt under state statute means one gun sufficient for per-
sonal protection and not gun collection valued at between $ 200,000 and $ 225,000 and bankrupt is
entitled to have one suitable weapon chosen by trustee and set aside as exempt. In re Palermo
(1978, BC WD La) 4 BCD 502, 17 CBC 808, CCH Bankr L Rptr P 66916.
Debtor's guns do not fall within meaning of household furnishings or goods under 11 USCS §
522(f)(2)(A), but gun cabinet does fall within meaning of household furnishings. In re McPherson
(1982, BC DC NM) 18 BR 240.
Rifle is not household good within meaning of 11 USCS § 522(d)(3) and § 522(f)(2)(A); not all
property kept in household is encompassed by term household goods. In re Noggle (1983, BC ED
Mich) 30 BR 303.
Bankruptcy Court will not exempt debtor's guns under state law exemption for household goods,
regardless of their use in hunting game for family's consumption, without evidence that debtor's
family would otherwise be unable to feed themselves. In re Greenlee (1986, BC DC Colo) 61 BR
257, 14 BCD 583.
Debtors cannot exempt under South Carolina state opt-out provisions: (1) 2 video cassette re-
corders unnecessary to afford debtors reasonably comfortable existence; (2) magnum pistol and
semiautomatic gun; or (3) .22 caliber pistol. In re Stroman (1987, BC DC SC) 78 BR 785.
Gun is not household good within meaning of 11 USCS § 522(d)(3) or (f)(2)(A) and therefore
creditor's nonpurchase money security interest in gun may not be avoided. In re Barrick (1989, BC
MD Pa) 95 BR 310, 18 BCD 1463.
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11 USCS § 522
Rifle is household good for purposes of lien avoidance provisions of 11 USCS § 522(f)(1)(B)(i),
since debtors use rifle for defensive purposes in and around their home. Crawford v First Family
Fin. Servs. (In re Crawford) (1998, BC ND Ga) 226 BR 484.
Since firearms are neither per se included nor per se excluded from category of household
goods, resolution of issue of whether they are exempt under Idaho law which now mirrors 11 USCS
§ 522(f)(1)(B)(i) requires proof of use made of firearms by debtor and functional nexus between
them and debtor's household. In re Mason (2000, BC DC Idaho) 254 BR 764.
Creditor failed to present any evidence that any of debtor's claimed exemptions for firearms and
fishing supplies did not fall under purview of "household good" under 11 USCS § 522(d)(3) and
creditor bore burden of proof that debtor was not properly entitled to claimed exemptions. Local
Union No. 38 v Andershonis (In re Andershonis) (2004, BC MD Pa) 324 BR 247.
142. Motor vehicles
Jeep should not be treated as household good. In re Steele (1980, BC DC SD) 8 BR 94, 3
CBC2d 598.
Debtor's automobile is not household good under 11 USCS § 522(f)(A) merely because it is used
to drive daughter to and from school. In re Ramey (1984, BC WD Va) 45 BR 562, 12 BCD 793,
In Chapter 7 case, debtors' all-terrain vehicle (ATV) qualified for Arizona's motor vehicle ex-
emption statute, Ariz. Rev. Stat. § 33-1125(8); fact that ATV could serve only recreational purposes
did not disqualify it from being exempt, and it was undeniably motor vehicle. In re Buchberger
(2004, BC DC Ariz) 311 BR 794.
Creditor could not dismiss Chapter 7 bankruptcy petition filed by debtor when debtor sought to
exempt from estate motor vehicle in which creditor had lien interest, because debtor provided credi-
tor with sufficient notice of its intent under 11 USCS § 521(2) and was not required to physically
deliver motor vehicle to creditor. In re Cornejo (2005, BC MD Fla) 18 FLW Fed B 116.
Where debtor's wheelchair equipped van was converted and specifically designed for her to en-
ter and exit, and debtor required van to participate in everyday activities, including weekly visits to
her doctor, van was uniquely situated as health aid, and debtor was entitled to claim it as exempt
under Fla. Stat. ch. 222.25(2) and 11 USCS § 522(2)(A). In re Allard (2005, BC MD Fla) 18 FLW
Fed B 294.
143. Television, VCR or stereo
Television set is not exempt either as household furniture or as musical instrument within state
statute. In re Michealson (1953, DC Minn) 113 F Supp 929, affd (1954, CA8 Minn) 209 F2d 625.
$ 600 used color television set is not "necessary" furniture under New York law, and was not
exempt property under former 11 USCS § 24. In re De Martini (1976, SD NY) 414 F Supp 69.
Color television worth $ 100 was allowed bankrupt under Vermont statute exempting such arti-
cles of household furniture as may be necessary for sustaining life, which extends to things of con-
venience and comfort and is not confined to things absolutely necessary for mere subsistence. In re
Cota (1975, BC DC Vt) 2 BCD 24.
Page 257
11 USCS § 522
Television recording system and stereo sound system, although not appliances or musical in-
struments within meaning of such terms as used in 11 USCS § 522, are household goods, as such
term is used, so that debtor may claim exemption and avoid security interests in such item. In re
Beard (1980, BC SD Iowa) 5 BR 429, 6 BCD 786, 2 CBC2d 895, CCH Bankr L Rptr P 67673.
Component parts of stereo system constitute household goods. In re Sweeney (1980, BC ED
Wis) 7 BR 814, 6 BCD 1377, 3 CBC2d 523, CCH Bankr L Rptr P 67834, revd on other grounds
(1982, CA7 Wis) 669 F2d 468, 8 BCD 880, 5 CBC2d 1290, CCH Bankr L Rptr P 68549, different
results reached on reh, en banc (1982, CA7 Wis) 688 F2d 447, 9 BCD 730, 6 CBC2d 1441, CCH
Television set is within ambit of exempt household furnishings and goods under 11 USCS §
522(d)(3) as are tools, even those not of trade, where there is no indication that they are other than
ordinary items found in most households. In re Hagerman (1981, BC WD Mo) 9 BR 412, 7 BCD
542, 4 CBC2d 202.
Chapter 7 debtors' may exempt as household furnishings, under California law, stereo and video
cassette recorder, telephone answering machine, oil painting and figurines, and German beer steins;
they may not claim, however, camera, golf clubs or exercise bike. In re Lucas (1986, BC SD Cal)
62 BR 949, 14 BCD 729, affd in part and revd in part on other grounds (1987, BAP9 Cal) 77 BR
242.
Assuming that Nebraska statute intends that only necessary items may be exempted as house-
hold furnishings, Chapter 7 debtors' stereo and color television are not necessities and thus not ex-
empt; however, debtors may exempt these items under "wild card" exemption, whose only limita-
tion is that it does not apply to wages. In re Welborne (1986, BC DC Neb) 63 BR 23.
Stereo equipment, television, and cassette player are household goods under 11 USCS § 522(f)
and Missouri exemption statutes; therefore lien on them may be avoided. In re Lanzoni (1986, BC
WD Mo) 67 BR 58.
Debtors cannot exempt under South Carolina state opt-out provisions: (1) 2 video cassette re-
corders unnecessary to afford debtors reasonably comfortable existence; (2) magnum pistol and
semiautomatic gun; or (3) .22 caliber pistol. In re Stroman (1987, BC DC SC) 78 BR 785.
Stereo and VCR are household goods and therefore creditor's nonpurchase money security in-
terest in them may be avoided under 11 USCS § 522(f). In re Barrick (1989, BC MD Pa) 95 BR
310, 18 BCD 1463.
Debtors may avoid creditors' lien in camera and accessories and VCR, pursuant to 11 USCS §
522(f)(2)(A), where items are household goods which are normally found in today's average home,
since camera and accessories are used to memorialize family events which supports and facilitates
day-to-day living within home, and since VCR is used for personal entertainment and not for pro-
fessional or commercial use; however, debtors may not avoid lien on 16-gauge shotgun and .38
caliber revolver, where such items are not household goods, since wife, who allegedly needs shot-
gun for protection of herself and children while husband is away from home, had never practiced
loading or firing shotgun, and since revolver is second gun in city household, and second gun will
not significantly support and facilitate debtor's day-to-day living within home. In re French (1995,
BC ED Tenn) 177 BR 568.
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11 USCS § 522
Bankruptcy court rejected creditor's argument, that nonpossessory, nonpurchase-money security

interest in big-screen television could not be avoided because such television was "luxury" item,
because "luxury" was not mentioned as factor limiting exemptions for household goods under 11
USCS § 522(f)(1)(B)(i); this fact was supported by television's low value of $ 450, and Tenn. Code
Ann. § 26-2-103 exempted personal property valued at less than $ 4,000. In re Doss (2003, BC WD
Tenn) 298 BR 866.
144. Miscellaneous
"Appliance" as used in 11 USCS § 522, connotes some useful domestic function, and is most
likely instrument or machine utilizing power supply, especially electric current, such as vacuum
cleaner, refrigerator, toaster, or air conditioner; "musical instrument" is instrument having capacity
in and of itself to produce or initiate musical sound. In re Beard (1980, BC SD Iowa) 5 BR 429, 6
Small garden tractor and mower attachment used by debtor for yard work and never used for
any commercial venture, purchased by debtor without any evidence of intent to use for other than
household purposes, are household goods subject to exemption under 11 USCS § 522. In re Jones
(1980, BC MD NC) 5 BR 655, 6 BCD 848, 30 UCCRS 1697 (criticized in In re McAllister (2001,
BC ND Iowa) 267 BR 614, 47 CBC2d 431, 46 UCCRS2d 1138).
Debtor's two air conditioners, vacuum cleaner, television set and stereo are exempt under Okla-
homa law, as authorized in 11 USCS § 522(f). In re Fisher (1981, BC WD Okla) 11 BR 666.
Under 11 USCS § 522(d)(3), debtor may exempt mowers except to extent that value of riding
mower exceeds maximum per item allowance, but debtor may not exempt bottle collection, there
being no evidence that collection is necessary for fresh start. In re Norman (1983, BC WD Mo) 32
BR 562.
Debtors may not avoid lien under 11 USCS § 522(f) on speedboat, motor, and boat trailer where
such are not household goods under exemption provisions of Bankruptcy Code. In re Lenczowski
(1983, BC ND Ind) 79 BR 392.
Debtors' doll collection is ordered turned over to trustee under 11 USCS § 542(a) and 11 USCS
§ 105(a) to be sold under 11 USCS § 363(b) where dolls are worth at least $ 1300 individually and
collectively and assuming they are household goods, unexhausted availability of only $ 1,000 for
exempt household goods remains; after sale trustee is ordered to pay debtors, less expenses, up to $
1,000 for their unused homestead exemption. In re Phillips (1985, BC DC SC) 54 BR 664.
Word "animals" in 11 USCS § 522(d)(3) is used to limit exemption for property held for house-
hold use; fact that tool of trade exemption under 11 USCS § 522(d)(6) contains no limiting language
demonstrates that Congress intended that it not be limited. In re Cook (1985, BC WD Wis) 66 BR 3.
they may not claim, however, camera, golf clubs or exercise bike. In re Lucas (1986, BC SD Cal)
242.
Camera and related equipment are not subject to exemption as household goods under Colorado
exemption statute, but stereo system consisting of speakers, tuner, tape decks, and equalizer is ex-
empt as household good. In re Whitney (1987, BC DC Colo) 70 BR 443.
Page 259
11 USCS § 522
Term "household goods" should be broadly interpreted; such items as rifles and chain saws
which may be used in and about debtor's household are therefore properly exempt under state law
and fall within lien avoidance section of Bankruptcy Code. In re Barley (1987, BC ND Ind) 74 BR
450, 4 UCCRS2d 298.
Term "goods" as used in 11 USCS § 522(f)(2)(A) in considering goods subject to lien avoidance
includes more than those items that are indispensable to base existence of debtor and his family and
includes items which, while not being luxuries, are convenient or useful to reasonable existence
such as VCR, guns, fishing equipment, golf clubs, tent, cameras, home workshop tools, drill, hand-
tools, luggage, penny collection, barbecue grill, jewelry and piano/organ. In re Bowen (1988, BC
ED Mo) 82 BR 102, 4 BAMSL 4051.
Chapter 7 debtor can avoid liens on lawn equipment, guns, bicycles and exercise equipment un-
der 11 USCS § 522(f)(2)(A) to extent such liens impair exemptions to which debtor may be entitled,
since scope of § 522(f)(2)(A) includes items which, while not being luxurious, are convenient or
useful to reasonable existence. In re Ray (1988, BC ED Mo) 83 BR 670, 4 BAMSL 4063.
Creditor's nonpurchase money lien on hunting equipment would be avoided under 11 USCS §
522(f) where hunting equipment is limited to clothing because hunting clothes are wearing apparel.
In re Barrick (1989, BC MD Pa) 95 BR 310, 18 BCD 1463.
Debtors may avoid creditors' lien in camera and accessories and VCR, pursuant to 11 USCS §
522(f)(2)(A), where items are household goods which are normally found in today's average home,
since camera and accessories are used to memorialize family events which supports and facilitates
day-to-day living within home, and since VCR is used for personal entertainment and not for pro-
fessional or commercial use; however, debtors may not avoid lien on 16-gauge shotgun and .38
caliber revolver, where such items are not household goods, since wife, who allegedly needs shot-
gun for protection of herself and children while husband is away from home, had never practiced
loading or firing shotgun, and since revolver is second gun in city household, and second gun will
not significantly support and facilitate debtor's day-to-day living within home. In re French (1995,
Former member of champion football team may avoid lien on his championship ring which he
had pledged as security, since he had formed real sentimental attachment to ring which commemo-
rated seminal event and represented extensive training and competition. In re Wilson (1997, BC DC
RI) 213 BR 413.
Personal computer is household good for purposes of lien avoidance provisions of 11 USCS §
522(f)(1)(B)(i). Crawford v First Family Fin. Servs. (In re Crawford) (1998, BC ND Ga) 226 BR
484.
Chapter 7 debtor's tools were exempt under Alaska Stat. § 09.38.020(c) as tools of trade even
though debtor was no longer employed as carpenter where debtor used tools to maintain six-plex
that debtor owned, resided, and from which debtor received rental income. In re Shell (2003, BC
DC Alaska) 295 BR 129.
Golf clubs, camera equipment, exercise bike, and Hummel figurines are household property un-
der California opt-out provisions. In re Lucas (1987, BAP9 Cal) 77 BR 242.
E.Tools of the Trade or Profession 145. Generally
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11 USCS § 522
There is no tools of trade exemption in proceeds of property sold during administration of estate
under 11 USCS § 522 unless debtors have expressed intention to use proceeds to buy cheaper or
smaller tools so that they can continue in their trade. In re Patterson (1987, CA7 Wis) 825 F2d
1140, 16 BCD 607, CCH Bankr L Rptr P 71935 (superseded by statute as stated in In re Stallsworth
(1991, BC SD Ind) 133 BR 470).
Language of Vermont's exemption statute dictates consideration of function or use of property
in debtor's trade, rather than its size or type, to determine whether it falls within statutory language.
Parrotte v Sensenich (In re Parrotte) (1994, CA2 Vt) 22 F3d 472, 25 BCD 859, CCH Bankr L Rptr
P 75860.
Trade tools must actually be used in bankrupt's trade in order to be exempt. In re Fox (1924,
DC La) 2 F2d 374.
Tools of trade exemption is available if debtor can show he is in trade when he files his com-
plaint or intends to continue trade in the future. Middleton v Farmers State Bank (1984, DC Minn)
41 BR 953, 12 CBC2d 401.
To be tools of trade, items must be commonly understood to be such and commonly used by
persons in trade. Middleton v Farmers State Bank (1984, DC Minn) 41 BR 953, 12 CBC2d 401.
Chapter 7 debtors may avoid lien on implements and tools of trade to extent provided in 11
USCS §§ 522(d)(6) and (5); nothing in 11 USCS § 522(f)(2)(B) limits extent to which debtors can
avoid liens to amount specified in 11 USCS § 522(d)(6). In re Patterson (1986, WD Wis) 64 BR
120, 14 BCD 1276, remanded on other grounds (1987, CA7 Wis) 825 F2d 1140, 16 BCD 607, CCH
Bankr L Rptr P 71935 (superseded by statute as stated in In re Stallsworth (1991, BC SD Ind) 133
BR 470).
General rule is that debtor must be engaged in trade on date of bankruptcy petition in order to
claim tools of trade as exemption; however, when debtor has only temporarily ceased vocation at
time of petition, tools of trade still may be exemptable but debtor must show reasonable prospects
for re-engaging in trade. In re Johnson (1982, BC DC Kan) 19 BR 371.
Wild card or spillover provisions of 11 USCS §§ 522(d)(1) and (5) are unlimited and may be
applied to any property of debtor including whatever property constitutes tools and implements of
trade under § 522(f). In re Middleton (1983, BC DC Minn) 37 BR 36, remanded (1984, DC Minn)
41 BR 953, 12 CBC2d 401.
Debtor carpenter is "mechanic" within meaning of Virginia exemption statute despite fact that
he is also general contractor and therefore he may exempt his tools of trade to extent items claimed
are reasonably necessary both in kind and quality to perform his craft in efficient and competent
manner. In re Allen (1985, BC ED Va) 52 BR 206 (superseded by statute as stated in In re
Weinstein (1995, BC ED Va) 192 BR 133).
Debtor may claim tools of trade exemptions under 11 USCS § 522 for every bona fide trade in
which he proves both intent and ability to engage; thus, where debtors engage in both farming and
machine repair, they may exempt tools of both trades. In re Weinbrenner (1985, BC WD Wis) 53
BR 571.
Iowa law does not use primary occupation test for allowing exemptions; thus, debtors need not
show that primary occupation of each of them is farming in order to each qualify for tools of trade
exemption. In re Myers (1985, BC SD Iowa) 56 BR 423.
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11 USCS § 522
Under Nevada tools of trade exemption, tools of trade will be exempt where debtor wishes to
continue in his trade or profession, even if on date of filing he was not so engaged; court must re-
quire at minimum, however, (1) that claimed trade or profession has actually contributed to support
of debtor and his family to some reasonable and meaningful extent in past and (2) in absence of this
past history of support, or where debtor has ceased using property claimed as exempt, court must
require that debtor demonstrate reasonable and realistic prospect of using property to earn his living
in future. In re Kolsch (1986, BC DC Nev) 58 BR 67.
Debtor may claim $ 750 tools-of-trade exemption under Illinois law and may exempt his excess
equity of $ 850 pursuant to Illinois wild card provision, there being no evidence that Illinois legisla-
ture intended to repeal tools-of-trade exemption by limiting exemptions to property used for per-
sonal purposes; rather, combining 2 exemptions enhances debtor's opportunity to realize self-
sufficiency, which is goal of exemption statutes and thus debtor may avoid bank's nonpurchase
money security interest in amount of $ 1600 which is extent that it impairs debtor's exemption. In
re Allman (1986, BC CD Ill) 58 BR 790.
Debtors are limited to $ 5,000 exemption in tools of trade, rather than $ 10,000 as provided for
in amendment to Minnesota statute, where $ 5,000 limit was in effect at time of agreement because
to allow retroactive application would so substantially and materially alter remedy existing for se-
cured creditor at time contract was made that it would be in violation of both impairment of contract
clause and due process clause. In re Fossum (1986, BC DC Minn) 59 BR 820 (criticized in In re
Larson (2001, BC DC Colo) 260 BR 174, 2001 Colo J C A R 2723).
Where debtor carries on more than one trade or profession, he/she may only exempt those arti-
cles belonging to his/her main or principal business, or to business in which he/she is primarily en-
gaged; "principal business/primarily engaged" test only applies where debtor carries on more than
one business and not here where debtor wife is housewife, which does not constitute profession,
trade, business or occupation within meaning of Kansas exemption statute. In re Meckfessel (1986,
BC DC Kan) 67 BR 277, 15 BCD 202.
Husband and wife may each claim separate small tools and implements exemption provided
them under Wisconsin statute in joint bankruptcy case and $ 300 limitation on value of exemption
applies only to certain articles described within statute. In re Kowalewski (1986, BC WD Wis) 78
BR 553.
Term "tools in trade" should be given its customary meaning and as ordinarily used connotes
manually operated devices and property of relatively insignificant value for purposes of determining
whether object is eligible for lien avoidance under 11 USCS § 522(f)(2)(B). In re Harrell (1987, BC
ND Ala) 72 BR 107, CCH Bankr L Rptr P 71757.
Under Iowa tools of trade exemption provision, fifth wheel camper used by dredge operator as
living quarters at remote job sites and for storage of his equipment is not exempt property under 11
USCS § 522 in Chapter 7 bankruptcy since camper primarily serves as shelter and is no different
from any other basic necessity of life, and since it is also used for merely transporting work tools
and in that respect is indistinguishable from nonexempt vehicle. In re Honomichl (1987, BC SD
Iowa) 82 BR 92, 16 BCD 1288.
Scope of 11 USCS § 522(d)(6) and that of 11 USCS § 522(f)(2)(B) are coextensive; Congress, in
using terms "implements" and "tools of the trade" in §§ 522(d)(6) and 522(f)(2)(B), did not intend
that their meaning be limited in § 522(d)(6) to "tools of modest value" such as "rakes and other
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11 USCS § 522
hand tools," and their meaning then be expanded in § 522(f)(2)(B) to include capital assets. In re
Hintz (1988, BC ED Wis) 86 BR 571.
Chapter 7 debtor may combine Georgia exemptions for $ 500 tools of trade and $ 5,400 wild
card exemption to exempt $ 5,900 of tools of trade for purpose of 11 USCS § 522(f). In re Jones
(1988, BC MD Ga) 87 BR 738.
Prior case authority under which exemption is not impaired unless its amount is diminished in
value is legislatively reversed by 1994 addition of 11 USCS § 522(f)(2)(A) under which judgment
lien will impair debtor's exemption to extend sum of that judgment lien, other avoidable liens, if
any, and applicable exemption exceed value of debtor's interest in property. In re Moe (1995, BC
DC Mont) 179 BR 654.
Creditor's objection to debtors' motion to avoid lien was sustained, as debtors failed to meet
burden of proof required by preponderance of evidence that secured property at issue constituted
tools of trade and, accordingly, debtors could not avoid creditor's lien as exempt in bankruptcy pur-
suant to 11 USCS § 522(f); court sustained. In re Henke (2003, BC DC ND) 294 BR 105.
Bankruptcy court adopted LaFond test and held that tools necessary to trade in which debtor
was engaged at time of bankruptcy petition filing could still qualify as tools of trade under 11 USCS
§ 522(f)(2)(B), even where debtor was presently engaged in some other pursuit, provided that debtor
had only temporarily ceased vocation to which tools belonged and was sincere in his or her intent to
shortly resume that vocation. In re Henke (2003, BC DC ND) 294 BR 105.

Lien on Chapter 7 debtor's breeding cattle may be avoided under 11 USCS § 522(f) as lien on
tool of trade, up to $ 5,000 limit of state exemption which provides that debtors may exempt breed-
ing stock as tool of trade, because breeding livestock to livestock farmer is functional equivalent of
crop farmer's tractor, which is implement of farmer's trade. In re Heape (1989, CA10 Kan) 886 F2d
Debtor ranchers' livestock are "tools of trade" under 11 USCS § 522(f)(2)(B) and thus they are
able to avoid nonpossessory, nonpurchase-money security interest held by creditor on their live-
stock. In re Heape (1989, CA10 Kan) 886 F2d 280, 19 BCD 1397, CCH Bankr L Rptr P 73160.
Chapter 12 debtors' 3 bulls may be classified as "tools of trade" under Vermont's exemption
statute, where there is no contention that bulls at issue were not used by debtors as necessary in-
struments in ultimate process of producing milk for sale; there is no need to make categorical dis-
tinction that precludes inclusion of animals in classification of "tools of trade" when animals are
actually used by debtor as instruments which are necessary to process of carrying on debtor's trade
or profession. Parrotte v Sensenich (In re Parrotte) (1994, CA2 Vt) 22 F3d 472, 25 BCD 859, CCH
Vermont's specific livestock exemption does not preclude use of "tools of trade" exemption by
Chapter 12 debtors to exempt 3 bulls from bankruptcy estate. Parrotte v Sensenich (In re Parrotte)
(1994, CA2 Vt) 22 F3d 472, 25 BCD 859, CCH Bankr L Rptr P 75860.
Debtor farmers can exempt cattle as tools of trade under Vermont law which provides exemp-
tion for professional or trade books or tools of profession or trade. Parrotte v Sensenich (In re Par-
rotte) (1994, CA2 Vt) 22 F3d 472, 25 BCD 859, CCH Bankr L Rptr P 75860.
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11 USCS § 522
Chapter 7 debtors' cows are not tools of trade within meaning of 11 USCS § 522(d)(6), and liens
on such cows may not be avoided under 11 USCS § 522(f)(2)(B). In re Patterson (1986, WD Wis)
64 BR 120, 14 BCD 1276, remanded on other grounds (1987, CA7 Wis) 825 F2d 1140, 16 BCD
607, CCH Bankr L Rptr P 71935 (superseded by statute as stated in In re Stallsworth (1991, BC SD
Ind) 133 BR 470).
Cattle are not implements or tools of trade of debtor dairy farmer for purpose of lien avoidance
under 11 USCS § 522(f)(2)(B). In re Meadows (1987, WD Va) 75 BR 357.
Breeding stock owned by farmer debtor are not implements or tools of the trade for purposes of
exemption under 11 USCS §§ 522(d)(6) and 522(f)(2)(B); debtor cannot avoid non-purchase money
security interest in such stock under § 522(f)(2)(B), even though such stock may be exempt under
11 USCS § 522(d)(5). In re Yoder (1983, BC WD Pa) 32 BR 777, affd in part and revd in part on
other grounds (1984, WD Pa) 48 BR 744 and (criticized in In re Larson (2001, BC DC Colo) 260
BR 174, 2001 Colo J C A R 2723).
Twenty-six head of cattle are necessary tools of debtor's trade as dairy farmer since description
of object as "tool" necessarily implies classification based upon object's functional and utilitarian
purpose in hands of its owner or user; Congress did not place limit on kinds of property that may
constitute "tool" since to do so would unfairly discriminate against particular professions and un-
dermine fresh start policy Code seeks to promote. In re Walkington (1984, BC WD Mich) 42 BR 67,
Word "animals" in 11 USCS § 522(d)(3) is used to limit exemption for property held for house-
hold use; fact that tool of trade exemption under 11 USCS § 522(d)(6) contains no limiting language
demonstrates that Congress intended that it not be limited. In re Cook (1985, BC WD Wis) 66 BR 3.
Under Missouri law, debtor dairy farmers may not exempt cows used for commercial or produc-
tion purposes under statute allowing exemption for animals used for personal, family, or household
use, nor may they exempt them under tools of trade exemption because term "tool" does not en-
compass livestock, but instead refers to inanimate devices such as instrument or apparatus that
augments or extends limits of human physical ability or power; since cows are not exempt, liens on
them may not be avoided under 11 USCS § 522(f). In re Eakes (1987, BC WD Mo) 69 BR 497.
Debtors' breeding cattle were not tools of trade for purposes of avoiding lien on them, despite
debtors' argument that they used them to create salable product, i.e., calves, on which they made
their living, since use of property to create salable product does not automatically establish that
property as tool of trade; court would follow established definition that tools of trade are instru-
ments of manual operation. In re Smith (1996, BC ND Iowa) 206 BR 186.
147. Farm tools, machinery or equipment
Definition of "farmer" found in 11 USCS § 101(17) applies only where word "farmer" appears
in Bankruptcy Code, and will not apply to prevent debtor, who earns less than 80 percent of his in-
come from farming, from protecting the tools of his farming trade under lien avoidance provisions
of 11 USCS § 522(f)(2)(B). In re La Fond (1986, CA8 Minn) 791 F2d 623, 14 CBC2d 1185, CCH
Chapter 7 debtor is entitled to avoid lien on large farm equipment where debtor is in business of
farming, large farm equipment is "tools of trade" even though of substantial financial value, and
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11 USCS § 522
equipment is reasonably necessary to conduct of business. In re La Fond (1986, CA8 Minn) 791
F2d 623, 14 CBC2d 1185, CCH Bankr L Rptr P 71143.
Whether implement is used in Chapter 7 bankrupt's trade is fact question under 11 USCS §
522(f) based on individual's particular circumstances; temporary abatement of work in trade is not
fatal to claim for exemption for tools or implements of that trade; statutory definition of farmer in
11 USCS § 101(17)-(18) is not controlling for purposes of tool or trade provisions. In re Liming
(1986, CA10 Okla) 797 F2d 895, CCH Bankr L Rptr P 71261.
Debtor may avoid judicial lien pursuant to 11 USCS § 522(f) on full value of tractor, despite
dollar limitation on exemption under Bankruptcy Code, where state law exemption for farm imple-
ments does not contain such limitation. In re Liming (1986, CA10 Okla) 797 F2d 895, CCH Bankr
L Rptr P 71261.
Debtors still operating dairy farm and in possession of cows and farm machinery at time of peti-
tion for conversion of Chapter 11 bankruptcy to Chapter 7 are entitled to use tools of trade exemp-
tion under 11 USCS § 522 despite fact that debtors quit farming by time they filed their motion to
avoid bank's lien on such property. In re Patterson (1987, CA7 Wis) 825 F2d 1140, 16 BCD 607,
CCH Bankr L Rptr P 71935 (superseded by statute as stated in In re Stallsworth (1991, BC SD Ind)
133 BR 470).
In Chapter 7 bankruptcy case filed by husband and wife debtors, wife as well as husband was
entitled to claim "tools of trade" exemption for farm equipment under Kan. Stat. Ann. § 60-2304(e)
as wife worked on farm, contributed income to joint account used to purchase equipment, and co-
signed on loans for which equipment served as collateral; trustee failed to show that debtors oper-
ated farm as partnership. Lampe v Williams (In re Lampe) (2003, CA10 Kan) 331 F3d 750, CCH
Bankrupt is entitled to exemption of certain farming tools as farmer even though he stopped
farming temporarily and was engaged in another pursuit. where there is no permanent abandonment
of his former occupation. In re Fly (1901, DC Cal) 110 F 141.
Husband and wife debtor were entitled to $ 7500 exemption each as allowed under Wisconsin
law for tools of farm trade subject to nonpossessory, nonpurchase money lien, rather than $ 5000
per debtor under federal law, since where state did not expressly prohibit avoidance of lien at issue,
11 USCS § 522(f)(3) did not apply. United States v Ehlen (In re Ehlen) (1997, WD Wis) 207 BR
Debtor who carries on more than one trade or profession may claim exemption for tools of trade
under Kansas opt-out legislation but exempted articles must pertain to business in which debtor is
primarily engaged; debtor's testimony that she operates equipment, hauls grain, makes trip for fertil-
izer, cares for hogs and does other farm chores supports contention that primary occupation is farm-
ing even though she works part-time for insurance company; and thus debtor is entitled to $ 5,000
exemption for farm equipment and may therefore avoid nonpossessory, nonpurchase money lien on
said equipment to that extent under 11 USCS § 522(f). In re Oetinger (1985, BC DC Kan) 49 BR 41
(criticized in Lampe v Iola Bank & Trust (In re Lampe) (2002, BAP10) 278 BR 205).
Under opt-out provision of 11 USCS § 522, Chapter 13 debtor farmers under Nebraska law are
allowed exemption for tools up to value of $ 1,500, but exemption is for individual; thus husband
and wife debtors may claim up to $ 3,000. In re Keller (1985, BC DC Neb) 50 BR 23.
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11 USCS § 522
Since farming is occupation requiring skilled labor, commonly engaging specialized implements
and tools, farming is trade for purposes of 11 USCS §§ 522(d)(6) and 522(f)(2)(B). In re Weinbren-
ner (1985, BC WD Wis) 53 BR 571.
Under Iowa exemption law, debtors' work as full time teachers does not prevent them from
claiming farm equipment as exempt tools of trade where it is undisputed that debtors are engaged in
farming and there has been no allegation that such work failed to contribute to their support; engag-
ing in trade for profit instead of debtors' personal support does not prevent debtors from claiming
tools of trade exemption; thus, custom farmer is farmer for purpose of Iowa exemption statute and,
because debtors were engaged in custom farming at the time they filed their petition, they are to be
considered farmers for purpose of exemption statute, and they did not by becoming custom farmers
abandon trade of farming. In re Myers (1985, BC SD Iowa) 56 BR 423.
Chapter 7 debtors' avoidance of liens on farm equipment exempt under Wisconsin law is not
limited to $ 750 amount contained in 11 USCS § 522(d)(6). In re Brzezinski (1985, BC WD Wis) 65
BR 336.
Farmer's wife is "farmer" for purposes of exemptions and for purposes of lien avoidance upon
exemptions under 11 USCS § 522. In re Schmitt (1986, BC ND Iowa) 56 BR 708.
Debtor, who had been farmer for some time prior to filing bankruptcy, is farmer for purposes of
Minnesota exemption statute and for purposes of avoiding lien under 11 USCS § 522(f)(2)(B) even
though debtor is presently enrolled in vocational-technical institute taking classes in over-the-road
trucking where debtor has evidenced clear intention to resume farming operations and has demon-
strated that his hiatus in farming is temporary; temporary abatement of work in trade may not be
fatal to claimed exemption for tools of trade and, further, abandonment of trade requires intentional
abandonment. In re Schuette (1986, BC DC Minn) 58 BR 417.
Chapter 7 debtor husband is farmer for purposes of exemption and lien avoidance provisions re-
garding tools of trade under 11 USCS § 522 where he has been farmer in past, although he is cur-
rently employed elsewhere, and he has present intention to continue farming in future; debtor wife
is also farmer even though she has full-time job outside farm, where she has helped husband with
numerous farm chores, she takes care of book work for farm, she does numerous domestic chores
necessary to operation of farm family, and where, if farm is to continue in operation, she will play
significant role in that operation. In re Peters (1986, BC DC Minn) 60 BR 711 (criticized in In re
Larson (2001, BC DC Colo) 260 BR 174, 2001 Colo J C A R 2723).
Kansas exemption statute for tools of trade does not require debtor to farm his own property for
himself, as opposed to performing farm labor for someone else; mere fact that debtor's farm income
was derived from landlord's share of crops does not preclude him from being farmer where he has
testified that he actually engages in farming activities. In re Massoni (1986, BC DC Kan) 67 BR
195.
Kansas exemption for tools of trade does not require debtor to farm his own property for himself
as opposed to performing farm labor for himself. In re Meckfessel (1986, BC DC Kan) 67 BR 277,
15 BCD 202.
Debtor wife qualifies as farmer who may exempt farm equipment as tools of trade under Kansas
law, even though farm income is used for mutual benefit and even though husband may do more of
farm work and may take care of financial aspects of farming operation where wife has testified that
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11 USCS § 522
she has engaged for 50 years, and continues to engage, in farming activities. In re Meckfessel
(1986, BC DC Kan) 67 BR 277, 15 BCD 202.
Modern farm implements may be exempt, notwithstanding fact that they are not specifically de-
scribed in state statute providing exemption for many obsolete farm implements, if they are succes-
sors of antiquated exempt implements, and therefore debtor may avoid nonpossessory, nonpur-
chase-money security interests in such property under 11 USCS § 522(f). In re Sutheimer (1986,
BC WD Wis) 87 BR 64.
Debtor is farmer for purposes of Iowa opt-out exemption for tools of trade, even though debtor
has been involved in off-farm employment, where: (1) debtor exchanged custom farming activities
on father's farm for rent; and (2) debtor performed additional farming work and has desire to return
to farming full time. In re Smith (1987, BC SD Iowa) 78 BR 922.
Although most of Chapter 7 debtors' farm implements are individually of modest value, taken
together they are in fact debtors' capital assets, and thus, they do not qualify for lien avoidance un-
der 11 USCS § 522(f)(2)(B). In re Hintz (1988, BC ED Wis) 86 BR 571.
Chapter 7 debtor may exempt tools and implements as tools of trade under Georgia exemption
provisions and for purpose of lien avoidance under 11 USCS § 522(f) where: (1) debtor has been
farmer for 35 years; (2) debtor states intention to resume farming as occupation; and (3) tools and
implements are essential to debtor if he is to resume farming. In re Jones (1988, BC MD Ga) 87 BR
738.
For purposes of determining her rights to exemption under state exemption statute, Chapter 7
debtor wife's occupation and business continue to be farming, despite fact that she has taken part-
time job off farm, where: (1) she has worked on farm since her marriage in 1966; (2) she considers
herself farm owner; (3) she has shown that she performs numerous tasks that can only be classified
as "farming"; and (4) her outside work can hardly be said to have contributed major portion of cou-
ple's means of living, since her contribution to gross income was approximately 10 percent of total
income. In re Kobs (1994, BC DC Kan) 163 BR 368, 30 CBC2d 1225.
Bankruptcy court found that after applying Kansas law, debtor wife was engaged in farming as
wife's principal occupation, was entitled to tool of trade exemption in farm equipment under Kan.
Stat. Ann. § 60-2304, and could avoid creditor's lien. In re Kieffer (2002, BC DC Kan) 279 BR 290.
In consideration of debtor's 11 USCS § 522(f) motion to avoid creditor's lien on tools of trade,
bankruptcy court was not convinced that debtors had any reasonable prospect of return to farming
business and one debtor's statements related to his hopes were not enough to satisfy LaFond test. In
re Henke (2003, BC DC ND) 294 BR 105.
148.--Particular items
Bank's lien on Chapter 7 debtor's tractor impairs bankruptcy exemption to which debtor would
have been entitled under state law exempting implements of husbandry necessary to farm home-
stead, and may be avoided under 11 USCS § 522(f). In re Liming (1986, CA10 Okla) 797 F2d 895,
Present-day hay "bailer" may be exempted under Wisconsin statute exempting "hay loader" as
tool of trade and present-day "haybine" may be exempted as "mower," even though present-day
equipment performs functions in addition to those performed by equipment named in statute and
may be more valuable; fact that debtor may own "mower" as used in statute does not preclude her
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11 USCS § 522
from exempting haybine. In re Erickson (1987, CA7 Wis) 815 F2d 1090, CCH Bankr L Rptr P
71725.
Expensive farm equipment can be "tools of trade" for to hold that only inexpensive items would
be tools of trade would penalize those who choose farming as profession and would be contrary to
fresh start purpose of bankruptcy. Middleton v Farmers State Bank (1984, DC Minn) 41 BR 953, 12
CBC2d 401.
Hay baler and haybine are modern equivalents of "mower" and "hay loader" which are specifi-
cally exempted under Wisconsin law and thus debtor may exempt them even though she also owns
mower; statute should be construed to exempt modern equivalents of obsolete farm implements
named in statute in order to effectuate intent of legislature and debtor has burden of proving that
implement for which exemption is sought is modern successor to obsolete implement listed in stat-
ute. In re Erickson (1986, WD Wis) 63 BR 632, affd (1987, CA7 Wis) 815 F2d 1090, CCH Bankr L
Rptr P 71725.
Personal property which qualifies as exempt under state exemption of tools or instruments used
by farmer will include tools which are commonly used by farmers in use reasonably related to farm-
ing operation, such as welders and other mechanic's tools used to repair farm equipment, and car-
pentry tools and construction equipment used to maintain farm buildings, as well as small and port-
able buildings used in farming operation which have no other utility than in raising and care of
swine; however such exemption will not include generator not shown to have relationship to normal
farming operation, or truck and automobiles which, although used in farming operation, are classi-
fied as vehicles, rather than tools or instruments, under applicable state exemption statutes. In re
Hahn (1980, BC SD Iowa) 5 BR 242, 2 CBC2d 761.
"Tools of trade" and "implements" as used in 11 USCS § 522(d)(6) and (f)(2)(B) does not in-
clude large farm machinery. In re Yparrea (1981, BC DC NM) 16 BR 33.
Farmer who is fulltime hospital employee and cannot meet 80 percent test imposed by 11 USCS
§ 101(17) defining "farmer" as one earning more than 80 percent of gross income from farming op-
erations is nonetheless permitted under 11 USCS §§ 522(d)(6) and 522(f)(2) (B) to exempt and
avoid liens upon farm implements and tools, such as large pieces of farm equipment, as "tools of the
trade." In re Yoder (1983, BC WD Pa) 32 BR 777, affd in part and revd in part on other grounds
(1984, WD Pa) 48 BR 744 and (criticized in In re Larson (2001, BC DC Colo) 260 BR 174, 2001
Colo J C A R 2723).
Creditor's argument that 11 USCS § 522(f)(2) exemption for tools of trade only applies to small
tools of little value is too narrow; debtors may exempt expensive farm machinery necessary to beef
cattle operation. In re La Fond (1984, BC DC Minn) 45 BR 195, affd (1985, DC Minn) 61 BR 303
and affd (1986, CA8 Minn) 791 F2d 623, 14 CBC2d 1185, CCH Bankr L Rptr P 71143.
Large farm equipment qualifies as tools of trade under 11 USCS § 522(f)(2)(B) if regularly used
by farmers in debtor's operation, and section is not limited to small hand tools by $ 750 limit on tool
exemption, because debtor can use overflow provision of 11 USCS § 522(d)(5) to add on homestead
exemption of $ 7,500, which covers large equipment; especially where state (Minnesota) law ex-
plicitly exempts farm equipment. In re Middleton (1985, BC DC Minn) 45 BR 744, CCH Bankr L
Rptr P 70228.
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11 USCS § 522
For purposes of Virginia statute which allows exemption for plow, Chapter 7 debtors are enti-
tled to exempt disc because legislature intended exemption for farm implement that farmer can use
to get his land ready for planting and, at present, debtors would be unable to till land in satisfactory
manner without use of disc as plow. In re Newsome (1986, BC ED Va) 60 BR 169.
Chapter 7 debtors' stock trailer, which they use to transport livestock to market, is exempt as
"wagon or cart" within meaning of Virginia statute as statute intends that farmer is allowed to ex-
empt piece of equipment which he needs to transport his commodities and does not require that it be
pulled behind horse or tractor. In re Newsome (1986, BC ED Va) 60 BR 169.
Grain bin and "miscellaneous tools" are not farm implements or machines within meaning of
Minnesota exemption statute for farm machines and implements, thus they may not be claimed as
exempt and liens on those items may not be avoided. In re Peters (1986, BC DC Minn) 60 BR 711
(criticized in In re Larson (2001, BC DC Colo) 260 BR 174, 2001 Colo J C A R 2723).
Fact that debtor allowed his sons to use his tractor does not preclude debtor from claiming trac-
tor as tool of trade under Kansas law. In re Massoni (1986, BC DC Kan) 67 BR 195.
Trucks, crawler loader, and fax machine used by Chapter 7 debtor in his home construction
work qualified for exemption as tools of trade under Connecticut law. In re Clifford (1998, BC DC
Conn) 222 BR 8, CCH Bankr L Rptr P 77728.
Debtor could not claim exemption under 735 Ill. Comp. Stat. 5/12 -1001(d) for piece of equip-
ment used in construction as "tool of trade" because purpose of exemption was to enable debtors to
retain tools of modest value, not large pieces of machinery. In re Gentry (2003, BC CD Ill) 297 BR
553.
149. Motor vehicles
Chapter 7 debtor may not exempt motor vehicle under Wyoming tools of trade opt-out provision
where vehicle is (1) not used directly in performance of debtor's employment duties; and (2) only
required by debtor to commute to his sole workplace. Johnston v Barney (1988, CA10 Wyo) 842
F2d 1221, CCH Bankr L Rptr P 72232.
Debtor may not avoid lien pursuant to 11 USCS § 522(f)(2)(A), (B), or (C) on 1980 Oldsmobile
Cutlass because automobile cannot be considered tool of trade; court will not expand upon clear in-
tention of Congress to treat automobiles as motor vehicles particularly where to treat them as tools
in trade would allow complete avoidance of nonpossessory, non-purchase money security interests
by virtue of 11 USCS § 522(f). In re Nowak (1984, WD Wis) 48 BR 290.
In providing for separate exemption for tools of trade and motor vehicles, Congress clearly did
not intend that motor vehicle automatically qualify as tool of trade. In re Meyers (1980, BC ED
Mich) 2 BR 603, 5 BCD 1306, 1 CBC2d 470.
Personal vehicle which debtor claims as exempt is allowable exemption under 11 USCS § 522
only as motor vehicle, and not tool of debtor's trade, where debtor is employed to operate fork lift,
and is not required to, nor does he use, personal vehicle to perform such services, but uses it merely
to go to and from work. In re Meyers (1980, BC ED Mich) 2 BR 603, 5 BCD 1306, 1 CBC2d 470.
Description of object as tool of trade must be based upon object's functional and utilitarian pur-
pose in hands of owner or user, and enumeration of automobile elsewhere in 11 USCS § 522 does
not preclude its classification as tool of trade where debtor in fact uses automobile as such, as is
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11 USCS § 522
case with real estate salesman who must have constant and immediate access to reliable transporta-
tion both for himself and his clients. In re Dubrock (1980, BC WD Ky) 5 BR 353, 6 BCD 771, 2
CBC2d 776.
Enumeration of motor vehicle as exempt property does not preclude its classification as tool of
trade. In re Dubrock (1980, BC WD Ky) 5 BR 353, 6 BCD 771, 2 CBC2d 776.
Automobile should not automatically qualify for tool of trade exemption, and debtor whose use
of car is wholly unrelated to occupation as factory worker is not entitled to tool of trade exemption
even though she lacks alternative means of transportation to work; likewise, debtor's automobile
does not qualify for tool of trade exemption where he is employed as service station mechanic, not-
withstanding he allegedly uses vehicle in employment to carry tools and provide necessary transpor-
tation to job sites, and for use in procuring and delivering parts and items which he may repair and
work on as mechanic, where vehicle has not been specifically adapted for use by roving mechanic,
and is not equipped with accoutrements, such as winch or towing mechanism, which would make it
uniquely suitable for on-the-road vehicle maintenance as "traveling workshop". In re Damron
(1980, BC WD Ky) 5 BR 357.
Van, which is specially equipped with shelving and brackets on inside and which debtor uses to
transport full stock of merchandise he sells, is tool of trade within meaning of 11 USCS § 522. In re
Seacord (1980, BC WD Mo) 7 BR 121.
Debtor may exempt 2 trucks, car, bobcat, asphalt roller, air compressor, and concrete saw but
not banking account used for working capital in Kansas, which opted out of federal exemptions un-
der 11 USCS § 522(b)(2)(A). In re Frierson (1981, BC DC Kan) 15 BR 157.
Debtor's pick up truck qualified as "tool of trades" which can be claimed as exempt property
pursuant to 11 USCS § 522(d)(6) where debtor necessarily uses truck to carry on his trades as part-
time farmer and electrician; further, debtor may avoid creditor's security trust in its entirety under §
522(f)(2) (b) by employing "spillover" provision of § 522(b)(5). In re Eagan (1982, BC ND NY) 16
BR 439, 8 BCD 762.
Debtor's pickup truck is not tool or implement of his trade under 11 USCS § 522(d)(6) where he
has not reasonably shown that truck is more than means of transportation. In re Maricle (1982, BC
ND Tex) 25 BR 36.
Under Oregon law vehicle may not be treated as tool of trade unless it is uniquely suited for and
principally used in connection with principal business activity. In re Lindsay (1983, BC DC Or) 29
BR 25.
Exemption for tools of trade under Montana opt-out provisions does not include truck or auto-
mobile, but is limited to instruments of manual operation; debtor tradesman or artisan may not ex-
empt truck equipped with mobile crane under Montana provisions. In re Gehnert (1983, BC DC
Mont) 79 BR 17.
Motor vehicle is tool of trade exempt under 11 USCS § 522(f)(2)(B) only if it is necessary to and
is used by debtor to carry on his trade; van which debtor husband used in business of cleaning and
buffing floors of various establishments with use of heavy, specialized equipment, and which was
modified for carriage of equipment in way which apparently significantly reduced van's utility for
hauling other cargo is tool of trade. In re Dempsey (1984, BC ED Pa) 39 BR 561.
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11 USCS § 522
Pickup truck is not "tool of the trade" of installer of sound equipment in churches, pursuant to
11 USCS § 522(f)(2)(B), absent proof that truck serves as other than transportation or of capacity in
which debtor is so employed. In re Parker (1984, BC ND Ala) 40 BR 490.
According to rule that exemption statutes are to be liberally construed, car used by debtor is
"tool of the trade" under 11 USCS § 522(f) where debtor is salesman whose job requires him to fur-
nish car in order to make sales calls; debtor may therefore avoid nonpossessory, nonpurchase-
money security interest under 11 USCS § 522(f) up to $ 750 limit; value of car in excess of $ 750
limit may be exempted under "wild card" exemption in 11 USCS § 522(d)(6). In re Nowak (1984,
Debtor registered nurse's automobile is not tool of trade under 11 USCS § 522(f)(B) simply be-
cause it is used to drive to and from work at hospital; thus, lien on automobile cannot be avoided.
In re Ramey (1984, BC WD Va) 45 BR 562, 12 BCD 793, CCH Bankr L Rptr P 70229.
Chapter 7 debtor housekeeper's automobile, which is used primarily to transport herself and her
cleaning equipment to various homes at which she is employed is not "tool of the trade: within 11
USCS § 522(f)(2)(B) and nonpossessory nonpurchase money lien on it may not be avoided. In re
Weiss (1985, BC DC Colo) 51 BR 224, 13 CBC2d 506, CCH Bankr L Rptr P 70681.
Assuming that Chapter 7 debtors' fully encumbered Mercedes is tool of trade in their catering
business, debtor's may not exempt it under 11 USCS § 522(b) because Texas law does not exempt
property which is subject to secured lien; further, debtors may not avoid lien on vehicle because 11
USCS § 522(f) is dependent upon entitlement to exemption under 11 USCS § 522(b). In re Graham
(1986, BC SD Tex) 64 BR 469.
Chapter 7 debtors may exempt their semi-truck cab under Minnesota tools of trade exemption
where debtors are self-employed truckers and trucking business consists of hauling goods, com-
modities, and bulk from one place to another for fee by trucks such as debtors' that are specially de-
signed, equipped, and used for that sole purpose. In re Smith (1986, BC DC Minn) 68 BR 581.
Fact that both automobiles and trucks are defined as motor vehicles does not preclude debtor
from exempting truck as tool of trade nor does provision in separate statute for motor vehicle ex-
emptions, allowing debtor to exempt interest in personal use motor vehicle, preclude application of
tools of trade exemption in appropriate cases. In re Smith (1986, BC DC Minn) 68 BR 581.
Determination of whether automobiles and trucks can be exempt under tools of trade exemp-
tions must be made upon facts of each particular case and resolution should be based upon their
connection with particular trade or business, not upon their connection with individual debtor. In re
Smith (1986, BC DC Minn) 68 BR 581.
Chapter 7 debtors may not exempt their tractor and trailer valued at $ 30,000 under Maryland
tools of trade exemption, even though they are used by debtor husband in his hauling business and
debtors will be hard pressed to maintain same level of earnings without tractor and trailer, because
Maryland General Assembly did not intend to exempt motor vehicles as tools of trade in light of
their often large value; had legislature intended to include excessive equity in such vehicles within
exemption protection, dollar limitations would have been provided as in other segments of exemp-
tions; Maryland Constitution deals with preserving from execution reasonable amount of debtor's
property and tractor-trailer exceeds reasonable amount contemplated by legislature. In re Chapman
Page 271
11 USCS § 522
(1986, BC DC Md) 68 BR 745 (criticized in In re Butcher (1995, BC DC Md) 189 BR 357, 8 Fourth
Cir & Dist Col Bankr Ct Rep 238, CCH Bankr L Rptr P 76824).
Chair and table worth approximately $ 100 or less constitute living room, bedroom, and dining
room furniture within meaning of Louisiana statute and thus are exempt; vehicle used in firewood
business is also exempt where amount of income produced from business is within "marginal addi-
tional income" doctrine. In re Baker (1987, BC WD La) 71 BR 312.
"Tool of trade" language found in 11 USCS § 522(f)(2)(B) was not intended by Congress to in-
clude automobiles or trucks because § 522(f) applies only to items of relatively insignificant value.
In re Harrell (1987, BC ND Ala) 72 BR 107, CCH Bankr L Rptr P 71757.
Van is motor vehicle and not exempt tool of trade under Montana law, despite fact debtor musi-
cian used van to transport musical instruments to various locations for work, since van had no spe-
cialized characteristics which enabled debtor to ply his trade by use of such vehicle and holding of
such vehicles as exempt would generally endanger valid liens in motor vehicles. In re Horton
(1987, BC DC Mont) 76 BR 166.
Chapter 7 debtor in Iowa cannot avoid fixing of lien on his vehicles under 11 USCS § 522(f) as
"tools of trade" since Iowa law provides separate exemption categories for tools of trade and vehi-
cles, and as such, vehicles are not included under tools of trade. In re Van Pelt (1987, BC SD Iowa)
83 BR 617.
Chapter 12 debtors may exempt feed truck as tool of trade pursuant to Kansas law, despite
bank's allegation that exemption should be denied since debtor wife has no ownership interest in
truck and her primary occupation is not farming and, therefore, she is not entitled to claim farming
equipment as tool of trade, where debtor wife, who is licensed beautician, has ownership interest in
feed truck since she is shown as co-owner of truck on certificate of title, and debtor wife's primary
occupation is farming, even though she received some income from her beauty salon, where such
income was not even close to one-half of farm income, and she spent more time farming than she
did working as beautician. In re Zink (1995, BC DC Kan) 177 BR 713.
Debtor's vehicle was not "tool of the trade" within meaning of 11 USCS § 522(f)(1)(B)(ii),
where he, in course of his business of buying and selling jewelry and collectibles, drove it to call on
customers, conduct appraisals, and deliver goods, since it was ordinary Porsche with no adaptation
for particular use as delivery car. In re Juhasz (1995, BC SD Tex) 208 BR 32, 34 UCCRS2d 212.
Tractor and trailer owned by Chapter 7 debtor/truck driver were not exempt as tools of trade un-
der Tennessee's opt-out exemption statute since legislative intent behind statute was to include small
items, not high dollar items. In re Nipper (1999, BC ED Tenn) 243 BR 33.
Automobile can be exempted by bankruptcy debtor as tool of trade under 11 USCS § 522(d)(6);
to determine whether automobile is tool of trade, bankruptcy court must consider whether vehicle is
reasonably necessary to debtor's trade or business, which requires more than showing that debtor
needs vehicle to travel to and from place of employment. In re Giles (2006, BC ED Pa) 340 BR
543.
For purposes of tool-of-the-trade exemption under 11 USCS § 522(d)(6), vehicle may be neces-
sary to and used by bankruptcy debtor regardless of whether or not it is specially outfitted for
debtor's trade. In re Giles (2006, BC ED Pa) 340 BR 543.
Page 272
11 USCS § 522
Where bankruptcy debtor operated sole proprietorship in which debtor made women's hats at
home and sold them at vending events, and debtor used automobile to obtain materials and to trans-
port hats to events, debtor's need to have means of transporting materials and products indicated that
automobile was reasonably necessary to debtor's business and thus automobile was properly ex-
empted under 11 USCS § 522(d)(6) as tool of debtor's trade. In re Giles (2006, BC ED Pa) 340 BR
543.
Vehicle used by Chapter 7 debtor and necessary to debtor for his work, trade or occupation may
be claimed as exempt tool of trade under 11 USCS § 522(d)(6) regardless of whether it is specially
outfitted for debtor's trade; therefore debtor may avoid nonpossessory, nonpurchase money security
interest on pickup truck needed to carry drywall tools and materials in his drywall business, and
debtor may also use additional wild card exemption of 11 USCS § 522(d)(5) to avoid security inter-
est in value of truck in excess of exemption for tools of trade. In re McNutt (1988, BAP9 Alaska)
87 BR 84, 19 CBC2d 660, CCH Bankr L Rptr P 72356.
150. Miscellaneous
Implements and tools of bankrupt undertaker are exempt. Steiner v Marshall (1905, CA4 Md)
140 F 710.
Under Oklahoma statute, law library of bankrupt attorney is exempt from general creditors, but
not from claims for wages due employees. In re Nixon (1929, DC Okla) 34 F2d 667.
Debtor may not claim as exempt shop inventory and tools of trade of her late husband, used by
him in his business of television and appliance repair, because debtor herself is not engaged in such
business. In re Huffines (1985, MD Tenn) 57 BR 740.
Restaurant equipment is not subject to "tools of trade" exemption under Virginia opt out law.
Dominion Bank of Cumberlands v Nuckolls (1987, WD Va) 71 BR 593.
Leased masonry tools were exempt under former 11 USCS § 24 where state statute did not men-
tion ownership of exempt item as prerequisite for exemption; claim of cause of action for usury is
not exempt even though it arises from financing of items which are exempt. In re Gorman (1974,
BC ND Tex) 1 BCD 121.
Although artist is not entitled to exemption as family pictures art works which are not represen-
tations of bankrupt's family or friends, he is entitled to exemption for art works used in his occupa-
tion up to value of $ 1000 less any other business exemption. In re Teachout (1975, BC WD Mich)
1 BCD 1271, 5 CBC 511.
Determination of need, in tool-of-trade cases under 11 USCS § 522(d)(6), is essentially factual
one and, accordingly, debtor's table saw, torch and welder are tools of trade of steel fabricator, how-
ever, forklift and trailers are not. In re Reed (1982, BC WD Ky) 18 BR 1009, 8 BCD 1194.
Exemption permitted under Virginia law for tools and utensils of trade of debtor in bankruptcy
may only be claimed in tools of debtor's primary occupation, and debtors will not be permitted to
claim exemption in boat which husband debtor allegedly uses in crabbing where evidence indicates
Page 273
11 USCS § 522
that husband's primary occupation is construction. In re Samuel (1984, BC ED Va) 36 BR 312, 11

BCD 444.
Pleasure boat, converted into commercial shrimping vessel, is not exempt as tool of trade where
it is not presently used as such, and debtor's claim of intent to use vessel for his livelihood is not
corroborated by other evidence, so as to establish good faith and that intent is reasonable and realis-
tic. In re Racca (1984, BC WD La) 40 BR 622.
Organ and speaker cabinet are tools of trade within 11 USCS § 522(d)(6) where debtor was mu-
sician since items were essential to performance of debtor's chosen craft; fact that debtor engages in
additional employment to supplement primary source of income does not affect right to claim items
necessary to primary employment as exemptable tools of trade upon which he may avoid liens. In
re Walkington (1984, BC WD Mich) 42 BR 67, 11 CBC2d 276, CCH Bankr L Rptr P 69987.
Debtors are not allowed to claim as exempt as tools of trade under Nevada law equipment used
in "tanning" business where: (1) debtors intended to terminate business and did so 5 days after filing
petition in bankruptcy; (2) both debtors were employed full time in other occupations; (3) business
never contributed to basic support of debtors; and (4) debtors have not demonstrated intention to re-
engage in business in future nor any realistic prospects for earning their livelihood from this type of
business. In re Kolsch (1986, BC DC Nev) 58 BR 67.
Pursuant to 11 USCS § 522(m), Colorado constitution and exemption statute, and case law, wife,
in joint Chapter 7 case, who had ownership interest in medical equipment arising from her daily use
of equipment as well as her contributions to parties' medical practice, is entitled to claim exemption
in tools of trade in addition to exemption claimed by her debtor husband/doctor; this conclusion is
not precluded by Colorado presumption which provides that husband is owner of household goods
when both spouses are living together because this case involves tools of trade and not household
goods and because there is abundant evidence to contrary that wife contributed to medical practice
itself, which rebuts presumption. In re Reeder (1986, BC DC Colo) 60 BR 312.
Amount of income produced by debtor from sale of firewood was within "marginal additional
income" doctrine of Louisiana law, so that power chain saws and vehicle used in business are ex-
empt, even though expenses of business might be equal to or possibly in excess of revenues derived
from trade; under Louisiana law, where income is substantial, trade need not be debtor's sole trade
nor provide substantial portion of debtor's income in order to justify exemption of its tools as tools
of trade. In re Baker (1987, BC WD La) 71 BR 312.
Under Iowa law, personal computer and printer may be claimed as exempt tool of trade under
11 USCS § 522 if they are adapted to debtor's employment; computer in insurance office satisfies
such standard and debtor insurance salesman need not show that computer is necessity in his busi-
ness to meet standard. In re Knight (1987, BC SD Iowa) 75 BR 838.
Iowa opt-out statute exempting implements and equipment reasonably related to normal farming
operation includes implements used in reasonable conduct of Chapter 7 debtor's trade and includes
personal computer in light of difficulties forcing farmers to pay more attention to business aspects
of farming. In re Eby (1987, BC SD Iowa) 76 BR 140, 16 BCD 539.
Debtor self-employed laborer/contractor may exempt D-7F Cat as tool of trade under Montana
opt-out provisions. In re Challinor (1987, BC DC Mont) 79 BR 19, 6 UCCRS2d 299.
Page 274
11 USCS § 522
Large items of equipment are exempt under Georgia exemption provision for tools of trade, as
well as for purpose of lien avoidance under 11 USCS § 522(f). In re Jones (1988, BC MD Ga) 87
BR 738.
Chapter 7 debtor's "fertilizer business" is "trade" for exemption purposes and debtor may ex-
empt under Texas law front-end loader, truck, radios, and radio tower located on leased land, where
debtor has used items in question on regular basis in his business for many years prior to bankruptcy
filing and he continued to use them in same manner postpetition; tools of trade need not be pecu-
liarly adapted to debtor's trade or profession; any legitimate self-employment is included in phrase
"trade or profession." In re Legg (1994, BC ND Tex) 164 BR 69.
Chapter 7 debtor may exempt computer and software that he actually uses for work at home, al-
though computer is not absolutely necessary to his continued employment because he could perform
all work he currently does at home at office, where debtor's employer provides him with software
necessary to work at home; where employer expends money for purpose of allowing employee to
work at home, those items actually used by debtor to work at home may be considered tools of
trade; second computer not actually used for work at home is not exempt. In re Biancavilla (1994,
BC DC Idaho) 173 BR 930.
200-amp welder utilized by debtor who worked part-time as welder and full-time in another ca-
pacity and who subsequently became full-time welder was tool of trade under 11 USCS § 522 for
purposes of exemption and lien avoidance. In re Henry (1995, BC ND Tex) 183 BR 748, 33 CBC2d
1545.
F.Life Insurance 151. Generally
Former 11 USCS § 24, incorporating in bankruptcy law exemptions made available by state of
bankrupt's domicile includes exemption of life insurance proceeds. Meyer v United States (1963)
375 US 233, 11 L Ed 2d 293, 84 S Ct 318, 64-1 USTC P 9111, 12 AFTR 2d 6141.
In determining whether Chapter 7 debtor's interest in life insurance policy is exempt under 11
USCS § 522, court should focus upon property interest in question and determine whether it is inter-
est in unmatured insurance contract or payment under insurance contract. Cyrak v Poynor (1987,
ND Tex) 80 BR 75, 18 CBC2d 479.
Policies on life of bankrupt payable to wife on death of insured prior to maturity and to insured
if he survives that date are exempt, but if bankrupt changes beneficiary for his personal advantage
or if he survives endowment period, cash surrender value constitutes unadministered assets of bank-
rupt estate. In re Miller (1982, BC DC Md) 16 BR 790, 8 BCD 833, CCH Bankr L Rptr P 68643.
Under 11 USCS § 522(d)(8), debtor is entitled to single $ 4,000 exemption to be applied against
total cash value of life insurance policies, not separate $ 4,000 exemption available for application
against each and every policy of life insurance in effect at time of filing. In re Swartz (1982, BC
DC Mass) 18 BR 454, 8 BCD 1122, 6 CBC2d 195, CCH Bankr L Rptr P 69182.
Life insurance proceeds payable to beneficiary are exempt property under Kansas law. In re
Douglas (1986, BC DC Kan) 59 BR 836.
Chapter 7 debtor may exempt insurance policies under Kansas law where policies are payable to
members of debtor's family and benefit to be paid is considerably more than cost of policies. In re
Barash (1986, BC DC Kan) 69 BR 231.
Page 275
11 USCS § 522
11 USCS §§ 522(d)(7) and (8) are designed solely to protect ownership interests and cash value
of life insurance policy, whereas 11 USCS § 522(d)(11) is designed to protect beneficiary interests
in life insurance contract. In re Poynor (1987, BC ND Tex) 68 BR 919.
Chapter 11 debtor cannot exempt interest in life insurance policy under South Dakota opt-out
provisions where he has assigned all interest in policy to creditor as part of security for loan. In re
Hogg (1987, BC DC SD) 76 BR 735, 4 UCCRS2d 1254.
Chapter 7 debtor may exempt under Illinois opt-out provisions: (1) life insurance policy on
debtor's life naming wife as beneficiary; and (2) life insurance policies payable to debtor's wife and
children that were placed in IRA and Keough accounts, absent evidence that policies were so placed
in order to defraud creditors. In re Vogel (1987, BC ND Ill) 78 BR 192.
Debtor seeking to exempt life insurance proceeds under Arkansas opt-out provisions may only
exempt such proceeds in amount of $ 500, inclusive of other personal property exemptions, since
Arkansas statute does not provide separate exemption for life insurance; amount of proceeds over $
500 will be available to creditors. In re Holt (1988, BC WD Ark) 84 BR 991, affd (1988, WD Ark)
97 BR 997, affd (1990, CA8 Ark) 894 F2d 1005, 22 CBC2d 337, CCH Bankr L Rptr P 73239.
Repayment of life insurance policy loan by Chapter 7 debtor equates with payment of premiums
under Oregon opt-out exemption of life insurance proceeds. In re Summers (1988, BC DC Or) 85
BR 121.
Chapter 7 debtor's life insurance policies together with any attendant cash surrender value are
exempt without limit under Vermont law. In re Gabelhart (1992, BC DC Vt) 138 BR 425.
Bankruptcy court determined that allowing lien to stand against debtors that had received dis-
charge would impair exemption where scope of exemption covered entire proceeds from two insur-
ance policies as well as cash surrender values. In re Elmes (2003, BC ND Ill) 289 BR 100.
152. Unmatured life insurance contract
Debtor may not exempt life insurance policy purchased within 1 year of filing, under Kansas
statute excepting from exemption policies obtained for purpose of defrauding creditors, where: (1)
debtor was insolvent when he purchased policy; (2) policy was purchased just 1 week prior to bank-
ruptcy filing; (3) debtor used his last nonexempt assets to purchase policy; (4) debtor has 2 other
unencumbered policies; and (5) although debtor contends he purchased policy to provide for his
daughter's education, named beneficiaries are "then living children of insured and then living chil-
dren of any child of insured who is not then living." In re Mueller (1987, DC Kan) 71 BR 165, affd
(1989, CA10 Kan) 867 F2d 568, 18 BCD 1496, 20 CBC2d 1431.
Life insurance policy owned by debtor on brother's life, with premiums paid by partnership but
with policies owned by individuals, may be claimed as exempt property under 11 USCS §
522(d)(7), but loan value is property of estate subject to being liquidated, § 522(b)(8) only exempt-
ing dollar amount where debtor is owner and is named insured or dependent is named insured. In re
Norman (1983, BC WD Mo) 32 BR 562.
Chapter 7 debtor's single premium increasing whole life insurance policy was unmatured as of
date of filing and is therefore exempt under Iowa law where debtor was neither dead nor age 100 on
date of filing, either of which is prerequisite to maturity. In re O'Brien (1986, BC ND Iowa) 67 BR
317.
Page 276
11 USCS § 522
153. Cash surrender value

Illinois insurance exemption statute did not cover cash surrender value of life insurance policies
payable to nondependent adult children of bankrupt-insured, so as to protect cash value of such
policies against claim of trustee in bankruptcy. In re Schriar (1960, CA7 Ill) 284 F2d 471.
Where bankrupt died after filing of petition, beneficiaries of life insurance policy were entitled
to claim exemption of portion of cash surrender value of policy under state law, trustee having
failed to file report of exempt property and policy having been claimed as exempt by bankrupt prior
to his death. In re Brostoff (1979, CA9 Cal) 611 F2d 733, 5 BCD 775, 21 CBC 42.
Cash surrender value of life insurance contract is as much "the proceeds of a policy," as money
due on policy after death of insured, and is exempt in Tennessee and in bankruptcy proceedings un-
der former 11 USCS § 24. In re Stansell (1925, DC Tenn) 8 F2d 363.
Trustee in bankruptcy has no right to cash surrender value of life insurance policies which are
exempted by state law for protection of beneficiary. Klebanoff v Mutual Life Ins. Co. (1965, DC
Conn) 246 F Supp 935, 65-2 USTC P 9662, 9 FR Serv 2d 22.15, Case 1, 16 AFTR 2d 5611, re-
manded (1966, CA2 Conn) 362 F2d 975, 18 AFTR 2d 5025.
Under state opt-out legislation, debtor is not entitled to exempt cash surrender value of life in-
surance policy because exemption does not apply to trust where payment of insurance proceeds to
members of insured debtor's family is subject to contingencies created by trust agreement and, al-
though trust agreement does not expressly grant trustee power to use insurance proceeds to pay in-
sured's debts, it is possible that life insurance proceeds could ultimately benefit his creditors and
exemption thereof would not serve policy of Texas exemption statute. Bartholow v Garner (1984,
ND Tex) 43 BR 463.
Cash surrender values of insurance policies are exempt from claim of creditors' under Ohio law
even though joint debtors, who owned policies on lives of each other, were also beneficiaries and
thus cash surrender value is not property of estate under 11 USCS § 541. In re Bess (1985, SD
Ohio) 47 BR 414.
Cash surrender values of debtor's life insurance policies are exempt from claims of creditors un-
der state law, where state has "opted out" of federal exemptions provided by 11 USCS § 522(a). In
re Johnson (1987, WD Ark) 85 BR 518.
Chapter 7 debtors were not entitled under Tex. Ins. Code Ann. § 1108.051 to exempt check for
cash value of life insurance policy that debtors had surrendered prior to filing their bankruptcy peti-
tion. Under § 1108.051, benefit subject to exemption was one that was to be provided to insured or
beneficiary under insurance policy; although cash value was specifically mentioned as benefit under
§ 1108.051(a), there was no policy in existence on petition date for which cash value could be ex-
empted. Milligan v Trautman (2006, WD Tex) 340 BR 773.
Under Minnesota law cash surrender value of insurance policy issued by fraternal benefit soci-
ety is exempt from seizure by any party including trustee and should be set apart as exempt pursuant
to former 11 USCS § 75a(6) and Rules of Bankruptcy, Rule 403(b). In re Heidemann (1975, BC
DC Minn) 1 BCD 1157, 5 CBC 518.
Cash surrender value of life insurance policies owned by debtor is exempt under Kentucky law.
In re Worthington (1983, BC WD Ky) 28 BR 736.
Page 277
11 USCS § 522
Cash surrender value of policies insuring life of spouse, owned by debtor who is beneficiary of
policy, is exempt property pursuant to 11 USCS § 522(B)(2)(A), where applicable Ohio law so in-
tends and provides. In re Bess (1984, BC SD Ohio) 40 BR 509, affd (1985, SD Ohio) 47 BR 414.
Joint Chapter 7 debtors may unequally divide cash surrender value on single life insurance pol-
icy and entire cash value may be exempted pursuant to preamendment version of 11 USCS § 522
under different exemption statutes--wife claiming federal exemptions and husband claiming Texas
exemptions. In re Tillerson (1984, BC ND Tex) 49 BR 11.
Debtors may exempt cash surrender value of certain unmatured life insurance policies under
Iowa law which does not limit exemption for loan value of life insurance policy. In re Bertram
(1986, BC ND Iowa) 59 BR 186.
Chapter 7 debtor may not exempt under Florida law cash surrender value of life insurance poli-
cies on husband's life where debtor is not insured, but owner and beneficiary of policies. In re
Butcher (1986, BC ED Tenn) 62 BR 162, affd (1987, ED Tenn) 75 BR 441, affd without op (1988,
CA6 Tenn) 848 F2d 189 and affd without op (1988, CA6 Tenn) 848 F2d 189.
Cash value proceeds of debtor's life insurance policies are "incident of the life insurance policy"
and thus are exempt under Arkansas law where policies contain no investment device; Arkansas
statute which provides that proceeds of life, health, accident and disability insurance are exempt in
federal bankruptcy proceedings exempts "all moneys," not just death benefits. In re Duckett (1986,
BC WD Ark) 65 BR 545.
Cash surrender values of Chapter 7 debtor's life insurance policies may be claimed as exempt
under Arkansas law because they are mere incidents of life insurance policies which contain no in-
vestment device or special dividend provision. In re Weiler (1986, BC ED Ark) 65 BR 564.
"Proceeds" of life insurance policy in Oregon opt-out exemption includes cash surrender value
of policy; Chapter 7 debtors may not exempt portion of cash surrender value of life insurance policy
that results from debtors' fraudulent repayment of loan on policy and consequent conversion of non-
exempt assets to exempt assets immediately prior to bankruptcy. In re Summers (1988, BC DC Or)
85 BR 121.
Chapter 7 debtors are permitted under Texas law to exempt full $ 77,000 cash value of their life
insurance policies under Texas Insurance Code, but in so doing, they exhaust $ 60,000 personal
property exemption under Property Code, and thus their request to exempt other personal property
must be denied. In re Bowes (1993, BC ND Tex) 160 BR 290 (criticized in In re Young (1994, BC
ED Tex) 166 BR 854) and (criticized in In re Borchers (1996, BC WD Tex) 192 BR 698).
Cash surrender value of life insurance policy owned by debtor insured as of date of bankruptcy
filing is property of estate and is not exempt under New Hampshire law; debtor insured should be
given reasonable opportunity to pay cash surrender value into estate, including payment in install-
ments if equitably required, in order to retain policy without cancellation; trustee can exercise
power to cancel policy and realize cash surrender value from insurance company in event that
debtor insured does not pay that value into estate. In re Monahan (1994, BC DC NH) 171 BR 710.
Term "avails" in Colorado statute which exempts avails of policies or certificates of life insur-
ance encompasses cash surrender value of such polices; absent some sort of restrictive conditions,
not present here, when state statute exempts "avails" of life insurance policies from reach of credi-
Page 278
11 USCS § 522
tors, that term encompasses cash surrender value. In re Griese (1994, BC DC Colo) 172 BR 336, 11
Colo Bankr Ct Rep 118, 32 CBC2d 321.
Unless bankruptcy case is dismissed, property exempted under 11 USCS § 522(b) is not liable
during or after case for any prepetition claim, except for tax, alimony, maintenance, or support
claims that are exempted from discharge; applying Pennsylvania law, cash surrender value of life
insurance policy taken out by Chapter 7 debtor on life of her husband lies beyond reach of trustee
and may not be utilized to make distribution to debtor's creditors. Bernstein v Himel (In re Himel)
(1995, BC WD Pa) 190 BR 59.
Applicable Georgia law allowed Chapter 7 debtor to exempt unmatured life insurance policy it-
self but not its cash value. Flatau v Waggoner (In re Waggoner) (2000, BC MD Ga) 244 BR 492.
Bankruptcy court held that debtor's life insurance policies were exempt property under Mich.
Comp. Laws § 500.2207, but debtor's brokerage account was not exempt property under Michigan
law, and had to be surrendered to trustee on behalf of bankruptcy estate. In re Johnson (2002, BC
ED Mich) 274 BR 473.
Term life insurance policy was property of bankruptcy estate pursuant to 11 USCS § 541, but
only to extent of cash surrender value, which was zero; thus, Chapter 7 Trustee did not have power
to designate beneficiary under policy and accordingly could not sell policy. Lekas v Mann (In re
Lekas) (2003, BC DC Ariz) 299 BR 597.
154. Proceeds on life of person on whom debtor was dependent
Under 11 USCS § 522(d)(7) debtor may exempt proceeds from life insurance policies received
upon death of his son where son's death occurred 7 days after filing of original Chapter 13 petition
even though such proceeds were paid to debtor as beneficiary within 180 days of his filing of peti-
tion. Bancohio Nat'l Bank v Walters (1984, CA4 W Va) 724 F2d 1081, 11 BCD 674, CCH Bankr L
Rptr P 69601.
Under state law, which Chapter 11 debtor elected to apply under 11 USCS § 522(b)(2)(A), pro-
ceeds of life insurance policy would be exempt under 11 USCS § 541 only to extent necessary to
support him and his children. In re Woodson (1988, CA9 Cal) 839 F2d 610, 18 CBC2d 674, CCH
Proceeds of life insurance policies in hands of spouse are not exempt from claims of creditors of
that spouse under Tennessee law, i.e., creditors of spouse of decedent may reach life insurance pro-
ceeds payable to spouse on account of death of decedent in order to pay debts owed by spouse;
therefore, insurance policy proceeds are not exemptable. In re Huffines (1985, MD Tenn) 57 BR
740.
Life insurance proceeds in hands of debtor on account of death of spouse are not exemptable
under Tenn. Code Ann. §§ 26-2-111(1)(C) or 26-2-111(3) because they are neither disability, illness
or unemployment benefits nor payments in compensation of loss of future earnings. In re Huffines
(1985, MD Tenn) 57 BR 740.
Chapter 7 debtor's interest as owner and beneficiary of life insurance policy on husband is ex-
empt under 11 USCS § 522(d)(7), but payments made to her under policy within 180 days after fil-
ing of petition are property of estate under 11 USCS § 541(a)(5)(C) and exemptable only to extent
reasonably necessary for her support. Cyrak v Poynor (1987, ND Tex) 80 BR 75, 18 CBC2d 479.
Page 279
11 USCS § 522
Debtor's wife may claim value of interest in certain death benefits and dependent spouse's inter-
est in monies paid and payable as result of her husband's disability as her exempt property pursuant
to 11 USCS §§ 522(d)(10) and (11). In re Rotert (1981, BC ED Mo) 1 BAMSL 594.
Major portion of $ 52,800 in life insurance benefits received by debtor within 180 days of her
filing of bankruptcy petition is exempt under 11 USCS § 522(d)(11)(C) where debtor was dependent
of her decedent husband as of date of his death, she earns $ 490.67 per month and incurs $ 1,419.00
in month expenses including considerable amount for medicine and medical treatment for herself
and one of her dependents who suffer from diabetes, and likelihood of her improving her employ-
ment and income situation in near future is small since she has limited educational background and
narrow work experience; however because debtor has had considerable indebtedness discharged
through bankruptcy it is equitable for her to make some payment, however nominal, into estate. In
re Hendricks (1981, BC WD Mo) 11 BR 48, 7 BCD 688, 4 CBC2d 638.
Death benefits received from insurance policy within 180 days of filing of bankruptcy petition
which are not contractual and are windfall are included in estate under 11 USCS § 541(a)(5) while
death benefits which result from contract right of debtor as owner and beneficiary under policy are
exempt under 11 USCS § 522(d)(7). In re Walters (1981, BC SD W Va) 14 BR 92, 8 BCD 190, 5
CBC2d 99, CCH Bankr L Rptr P 68354, affd (1984, CA4 W Va) 724 F2d 1081, 11 BCD 674, CCH
Since debtor's life insurance policy names nondependent relative, Ohio exemption for life insur-
ance contracts, which is more restrictive than federal, is not available. Juergens v Rice (1982, BC
SD Ohio) 17 BR 898.
Where surviving spouse in Chapter 7 joint case is ill with progressive disease which will seri-
ously impair, if not destroy, earning capacity, has 2 children to support and has no identifiable pro-
fession or occupation, if total proceeds of yet uncollected life insurance policies do not substantially
increase the $ 275,000 estimated total of proceeds, court may find proceeds are reasonably neces-
sary to support of spouse and dependents and thus exempt under 11 USCS § 522(d)(11)(c). In re
Gallo (1985, BC ND Tex) 49 BR 28, 12 BCD 1272, 12 CBC2d 1138.
Chapter 7 debtor wife may not exempt life insurance proceeds under applicable Tennessee law
because they are not compensation for loss of future earnings. In re Crowell (1985, BC MD Tenn)
53 BR 555, 13 CBC2d 878.
Chapter 7 debtor may not exempt proceeds of life insurance policy insuring her deceased hus-
band under North Carolina statute exempting "compensation" for personal injury or death of person
upon whom debtor was dependent for support, because statute was not intended to include life in-
surance proceeds; evidence that debtor received $ 350 per month from husband for child support is
insufficient to establish that debtor was dependent upon her husband. In re Ragan (1986, BC ED
NC) 64 BR 384.
11 USCS § 522(d)(11) allows Chapter 7 debtor wife to exempt proceeds of deceased debtor
husband's life insurance policy, even though debtor wife is not owner of policy, but only to extent
proceeds are reasonably necessary for support. In re Poynor (1987, BC ND Tex) 68 BR 919.
Under 11 USCS § 522(d)(11)(C) and state law, nondependent beneficiary may not claim exempt
from bankruptcy estate proceeds of life insurance policy issued to Chapter 7 debtor's stepfather. In
re Heins (1988, BC SD Ohio) 83 BR 504.
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Possibility that debtor's children will repay "loans" made to them by debtor from proceeds of
life insurance policy insuring debtor's now deceased husband will not be considered as income in
assessing whether proceeds of policy are reasonably necessary for support as required by Vermont
life insurance exemption statute, where payments to children were actually gifts, rather than loans,
as evidenced by facts that there were no specific terms of repayment, no interest rates, and no writ-
ten notes or contracts; furthermore, even if they were really loans, possibility of repayment is too
uncertain to include in calculations of debtor's future income; additionally, debtor is entitled to her
exemption whether or not loans are repaid, because although $ 23,000 that debtor gave to her chil-
dren is significant sum, debtor would still be facing financial shortfall if loans were repaid--debtor's
expected income is entirely insufficient for her needs, and accounts containing life insurance pro-
ceeds will be necessary for her support. In re Tooker (1994, BC DC Vt) 174 BR 33.
Proceeds of debtor's deceased wife's life insurance policies were exempt under Maryland law. In
re Kleinman (2001, BC DC Md) 272 BR 339.
Debtor wife's monthly deficit of $ 352 was subsistence deficit of type that Congress sought to
avoid with exemption provisions of 11 USCS § 522(d)(11)(C); thus, court must deny trustee's objec-
tion to debtor's claim of exemption in life insurance proceeds upon debtor husband's death. In re
Collins (2002, BC MD Pa) 281 BR 580.
155. Miscellaneous
Arkansas statute providing unlimited exemption for life, health, accident and disability insur-
ance proceeds is unconstitutional as applied to Chapter 7 debtors because it is in direct conflict with
overriding $ 500 limitation on exempt personal property in Arkansas constitution. In re Holt (1990,
CA8 Ark) 894 F2d 1005, 22 CBC2d 337, CCH Bankr L Rptr P 73239.
Dividends declared by insurers of bankrupt and left by him to accumulate at interest are for
benefit of beneficiaries and exempt under New York law. In re Keil (1936, DC NY) 16 F Supp 862,
affd (1937, CA2 NY) 88 F2d 7, cert den (1937) 301 US 708, 81 L Ed 1362, 57 S Ct 941.
Amendment to Kansas life insurance policy exemption statute excepting from exemption claims
of creditors of policy holders filing bankruptcy within 1 year of date policy is issued if policy was
obtained by debtor for purpose of defrauding one or more of debtor's creditors, does not incorporate
"peculiar equity" requirement of prior Kansas case law, but rather any creditor, with or without "pe-
culiar equity," may attack issuance of policy if creditor can show that it was obtained for purpose of
defrauding creditors. In re Mueller (1987, DC Kan) 71 BR 165, affd (1989, CA10 Kan) 867 F2d
568, 18 BCD 1496, 20 CBC2d 1431.
Although trustee argues that Bankruptcy Court should have deemed all prepetition expenditures
from insurance proceeds which depleted debtor's estate to have come out of exempt portion of pro-
ceeds rather than nonexempt portion, trustee did not have any claim over debtor's money prepetition
and he could not have stopped her from spending nonexempt proceeds, or recovered any of pro-
ceeds she spent prepetition unless he could prove that such spending constituted avoidable transfer,
and while trustee asserts that it is inequitable to allow debtor to both spend insurance proceeds and
claim full deduction for exempt portion, had debtor known that some of proceeds were exempt and
some were not, she could have placed money in 2 separate accounts, spending only nonexempt
funds, thus also preserving full amount of her exempt funds; further, prepetition commingling of
exempt and nonexempt proceeds could not have functioned to cause proceeds of 2 exempt policies
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11 USCS § 522
to lose their status as exempt proceeds because such status had not yet been created. In re Rundlett
(1993, SD NY) 153 BR 126.
11 USCS § 522(d)(7) and 11 USCS § 541(a)(1) indicate that life insurance on life of another has
sufficient existence or choatness at all times to be property of bankruptcy estate. In re McCulloch
& Son, Inc. (1983, BC DC Or) 30 BR 7, 10 BCD 752, CCH Bankr L Rptr P 69238.
Nothing in Ohio statute exempting proceeds of insurance policy from attachment by decedent's
creditors would expand exemption to protect proceeds from beneficiary's creditors, even though
beneficiary is codebtor with deceased husband in Chapter 7 case. In re McAlister (1985, BC DC
Or) 56 BR 164.
Chapter 7 debtor who is beneficiary of single incident disability policy which would be payable
should he become injured and unable to perform his duties as professional football player may
claim state exemption for property rights incident to this insurance policy in accordance with Flor-
ida opt-out exemptions; thus, debtor need not cancel policy and receive pre-paid premiums in un-
specified amount as requested by trustee. In re Dennison (1988, BC SD Fla) 84 BR 846.
In determining what constitutes alimony for purposes of exemption under 11 USCS §
522(d)(10)(D) in accordance with 11 USCS § 523(a)(5) principles, life insurance proceeds which
debtor received upon her former husband's death pursuant to divorce decree were not alimony, since
parties' had mutual obligation to maintain each other as beneficiaries which was not contingent
upon remarriage or based upon income disparity. In re Sheffield (1997, BC MD Fla) 212 BR 1019,
11 FLW Fed B 87 (criticized in In re Bentley (2000, BC DC Kan) 245 BR 684).
State provides exemption under Colo. Rev. Stat. Ann. § 10-7-205 pursuant to which named
beneficiary may claim exemption in proceeds of policy of group life insurance, as against debts of
insured or of beneficiary himself; consequently, Chapter 7 debtor, post-petition recipient of life in-
surance proceeds from his deceased wife, was able to exempt proceeds pursuant to § 10-7-205. In re
Fahey (2006, BC DC Colo) 352 BR 288.
G.Benefit Payments 156. Generally
Benefit referred to in 11 USCS § 522(d)(10)(C), and payment referred to in 11 USCS §
522(d)(10)(E), are not limited to single events and may include extended or periodic payments;
benefit or payment to which debtor is entitled under terms of disability policy may be claimed as his
exempt property to extent reasonably necessary for support of debtor and any dependent of debtor,
even though benefit or payment is periodic or continuing. In re Rotert (1981, BC ED Mo) 1 BAMSL
594.
Teacher retirement account is not exempt under 11 USCS § 522(d)(10)(A), which provides ex-
emption status for social security benefit, unemployment compensation or local public assistance
benefit, since, unlike with retirement account, social security wage earner does not have option to
resign from employment and secure repayment of funds paid into social security fund and, under
social security law, employee does not have authority to designate beneficiary and it is clear from
other plans included in § 522(d)(10)(A), intent was to preserve subsistence level benefit plans for
debtors who are in need, category of which teacher retirement fund is not included. In re Werner
(1983, BC DC Minn) 31 BR 418, 10 BCD 1117, 9 CBC2d 371, CCH Bankr L Rptr P 69289.
Funds deposited by debtor in deferred compensation program cannot be exempted out under 11
USCS § 522(b)(2)(A) as property exempt under federal law because benefits to be derived under 26
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11 USCS § 522
USCS § 457 are not entitlement benefits, but derive from voluntary participation and are not present
periodic payments needed for current support; § 457 does not itself contain anti-alienation provi-
sion, it is merely inferred and federal exemptions must be explicitly granted in statute. In re Osburn
(1986, BC SD Ohio) 56 BR 867, 7 EBC 1136 (criticized in In re Mueller (2000, BC DC Md) 256 BR
445, CCH Bankr L Rptr P 78353).
11 USCS § 522(d)(10)(E) is meant to protect benefits akin to future earnings of debtor, and thus
intent is to insure that such benefits are available for retirement purposes, disability, or termination
of employment; qualification of plan for exemption under § 522(d)(10)(E) hinges upon strictness of
restraints on withdrawal of funds for present, as opposed to future, needs. In re Pettit (1986, BC
WD Wash) 61 BR 341, 14 CBC2d 1111.
157. Social security
Social Security Administration cannot be required to pay all or some of Chapter 13 debtors' so-
cial security benefits to bankruptcy trustee inasmuch as antiassignment provisions of 42 USCS §
407 were not impliedly repealed by Bankruptcy Code simply because 11 USCS § 522(b)(2)(A) and
(b)(10) permit social security payments to become part of debtor's estate only if he chooses to in-
clude them. In re Buren (1984, CA6 Tenn) 725 F2d 1080, 11 BCD 655, 10 CBC2d 236, CCH
Bankr L Rptr P 69582, cert den (1984) 469 US 818, 83 L Ed 2d 34, 105 S Ct 87.
It was error to dismiss under 11 USCS § 707(b) debtor's Chapter 7 petition on grounds that she
could pay her unsecured creditors with income from her monthly Social Security check, which is
exempt property from her bankruptcy estate under 11 USCS § 522. In re Brady (1987, WD Mo) 86
BR 616.
Pursuant to 11 USCS § 522(b)(2)(A), Social Security proceeds did not lose their exempt status
when they were placed in checking account with non-exempt retirement funds. In re Moore (1997,
BC DC Kan) 214 BR 628, 38 CBC2d 1823.
Exemption under 11 USCS § 522(d)(10)(A) of right to receive Social Security benefits does not
exempt accumulated Social Security benefits. In re Sluis (1998, BC MD Fla) 228 BR 775, 59 Soc
Sec Rep Serv 664, 12 FLW Fed B 98.
158. Veteran's benefits
While Congress failed to provide that Navy retirement pensions are free from levy and attach-
ment, or that they are not transferable and hence are property rights to extent that rights to benefits
are vested, they are designed to function as wage-substitute at some future period, and to support
basic requirements of life for debtor during that future period, and do not pass to trustee in bank-
ruptcy. In re Nunnally (1975, CA5 Tex) 506 F2d 1024, 34 ALR Fed 308, reh den (1975, CA5 Tex)
509 F2d 576 and reh den (1975, CA5 Tex) 509 F2d 576 and (superseded by statute as stated in In re
Goff (1983, CA5 Tex) 706 F2d 574, 10 BCD 986, 8 CBC2d 894, 4 EBC 1653, CCH Bankr L Rptr P
69301).
Veterans' retirement benefits, mailed directly to bankrupt's savings account and used by bank-
rupt for his support and maintenance, are exempt under 38 USCS § 3101. In re Phillips (1976, BC
DC Kan) 3 BCD 433.
In view of limited eligibility of life insurance policies issued by Veterans' Administration, lib-
eral construction accorded to veteran's legislation, and benefits policy affords to veteran, Chapter 7
debtor's life insurance policy is "benefit due" as contemplated by 38 USCS § 3101(a) and inclusion
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11 USCS § 522
in that section allows debtor to claim exemption in policy under provisions of both 11 USCS §
522(b)(2)(A) and Ohio law, which exempts property which is exempt under federal law; even in ab-
sence of Ohio law allowing exemptions under federal law, Ohio's opting out of federal scheme does
not preclude debtor from asserting exemption which is available under statutes other than § 522. In
re Szabo (1986, BC ND Ohio) 60 BR 144.
Funds in debtor's retirement account were exempt assets, and fact that some of funds came from
retirement fund that belonged to debtor's former spouse pursuant to QDRO rather than from debtor's
own employment did not change exempt character of funds. In re Farmer (2003, BC WD Wis) 295
BR 322.
159. Disability benefits
Obligation of insurance company to pay disability benefits exempt under former 11 USCS § 24
where state statute provided for exemption of life insurance policies or annuity contracts made for
benefit of, or assigned to, wife and/or children or dependent relatives but did not provide for exemp-
tion of disability benefits; disability benefits are not after-acquired property or future earnings but
are in essence annuity purchased and paid for prior to adjudication with benefits payable to bank-
rupt. Legg v St. John (1936) 296 US 489, 80 L Ed 345, 56 S Ct 336.
Arkansas statute providing unlimited exemption for life, health, accident and disability insur-
ance proceeds is unconstitutional as applied to Chapter 7 debtors because it is in direct conflict with
overriding $ 500 limitation on exempt personal property in Arkansas constitution. In re Holt (1990,
CA8 Ark) 894 F2d 1005, 22 CBC2d 337, CCH Bankr L Rptr P 73239.
Florida statute providing exemption for disability payments applies only to disability benefits
that have not yet been paid to beneficiaries; hence, lump-sum disability benefit paid to bankrupt
prior to bankruptcy is not exempt; alternatively, exemption will be denied because of dishonesty of
bankrupt, Florida law providing that exemptions are designed for honest debtor. In re Prestien
(1977, SD Fla) 427 F Supp 1003 (superseded by statute as stated in In re Ryzner (1997, BC MD
Fla) 208 BR 568, 10 FLW Fed B 351).
Chapter 7 debtor's claimed exemption in "Disability, 11 USCS 522(d)(10)C, 100 percent" is
claim for 100 percent of disability payment, despite debtor's argument that language means claim
for "one-hundred percent of future settlement as disability payment," where on exemption sheet,
debtor broke down his settlement into 4 different categories, and only plausible purpose and evident
meaning of breakdown is that debtor wanted to cover all his bases--whether settlement turned out to
be "disability" or "personal injury" or "future earnings," debtor would be able to claim exemption--
and, therefore, fact that trustee did not object to debtor's claimed exemption within 30 days does not
preclude turnover of remainder of $ 50,000 settlement, after payment to debtor of exempted amount
of $ 7,500 for personal bodily injury and $ 3,750 for so-called "catch-all" exemption pursuant to 11
USCS § 522(d)(5), since exemptions claimed were exactly what § 522(d) allows, and had trustee
filed objection it probably would have been without merit, and perhaps even constituted frivolous
pleading subject to Bankruptcy Rule 9011 sanctions. Mercer v Monzack (In re Mercer) (1994, DC
RI) 170 BR 759, affd (1995, CA1 RI) 53 F3d 1, 33 CBC2d 841, CCH Bankr L Rptr P 76484, cert
den (1996) 517 US 1103, 134 L Ed 2d 471, 116 S Ct 1317.
Insured was estopped from suing two insurance companies, alleging, inter alia, that they com-
mitted breach of contract when they denied her claim for benefits under two disability income pro-
tection policies, because she failed to list her claims against companies when she and her husband
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11 USCS § 522
filed pro se petition under Chapter 7 of Bankruptcy Code; it did not matter that disability benefits
were potentially exempt from insured's bankruptcy estate, pursuant to 11 USCS § 522(d)(10)(C) and
Tex. Ins. Code Ann. § 1108.051. Acuna v Conn. Gen. Life Ins. Co. (2008, ED Tex) 560 F Supp 2d
548.
Proceeds of disability insurance, subject to bankrupt's right to one claim of exemption of $ 1,000
allowed by state of bankrupt's domicile, owing and unpaid to bankrupt and all sums to accrue in fu-
ture, are nonexempt. In re Dent (1976, BC ND Ala) 2 BCD 462.
11 USCS § 522(d)(10) does not limit debtor to only one disability payment or benefit; debtor
who is receiving medical disability payments is not limited to claiming only one such payment as
exempt. In re Johnson (1981, BC ED Mo) 1 BAMSL 471.
Debtor's wife may claim value of interest in certain death benefits and dependent spouse's inter-
est in monies paid and payable as result of her husband's disability as her exempt property pursuant
to 11 USCS §§ 522(d)(10) and (11). In re Rotert (1981, BC ED Mo) 1 BAMSL 594.
Disability benefit granted debtor is exempt under both 11 USCS § 522(d)(10)(C) and 11 USCS §
522(d)(11)(E) since although order granting redemption award was signed prior to filing of volun-
tary bankruptcy petition it was not final until after petition was filed and there was no payment until
after filing. In re Lambert (1981, BC WD Mich) 9 BR 799, 7 BCD 508, 4 CBC2d 213 (criticized in
In re Williams (1995, BC WD Mich) 181 BR 298, 33 CBC2d 1118).
Partial permanent disability under state law comes within meaning of disability benefit under 11
USCS § 522(d)(10)(C) that is exempt where disability is satisfied by personal injury which detracts
from former efficiency of workman's body or its members in ordinary pursuits of life. In re Evans
(1983, BC DC NJ) 29 BR 336, 10 BCD 1037, 8 CBC2d 531, CCH Bankr L Rptr P 69395.
Temporary disability benefits received by debtor are exempt in entirety under 11 USCS §
522(d)(10)(C) where they represent partial substitute for loss of current wages. In re Evans (1983,
BC DC NJ) 29 BR 336, 10 BCD 1037, 8 CBC2d 531, CCH Bankr L Rptr P 69395.
Under opt-out state's exemption for disability payments reasonably necessary for support of
debtor and any dependent of debtor, a provision identical to 11 USCS § 522(d)(10(E), 50 year old
debtor receiving $ 3,108.44 per month in disability payments is entitled to exemption of $ 2,600 per
month for reasonable expenses; claimed expenses of $ 200 per month as grocery expenses for
grown son living with debtor, debtor's own expenses for long distance telephone, gifts, visitation
with daughter, vacations and entertainment, and monthly car payment of $ 335 are excessive; trus-
tee has power to sell right to excess income, hold open the case so as to collect income or reach
principal in order to administer excess funds. In re Bari (1984, BC DC Minn) 43 BR 253.
Treating physician and hospital claiming common law and statutory liens in proceeds of debtor's
settlement with insurance company arising out of automobile accident fail to meet burden under
Bankruptcy Rule 4003(c) of proving debtor's claimed exemption in proceeds is improper under 11
USCS §§ 522(d)(11)(D) and (E) where no evidence was presented that indicated all or part of pro-
ceeds was awarded for pain and suffering, and thus not subject to exemption, or that debtor was not
entitled to compensation for loss of future earnings. In re Harris (1985, BC ED Wis) 50 BR 157,
Chapter 7 debtor who is beneficiary of single incident disability policy which would be payable
should he become injured and unable to perform his duties as professional football player may
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11 USCS § 522
claim state exemption for property rights incident to this insurance policy in accordance with Flor-
ida opt-out exemptions; thus, debtor need not cancel policy and receive pre-paid premiums in un-
specified amount as requested by trustee. In re Dennison (1988, BC SD Fla) 84 BR 846.
Chapter 7 debtor is not required to claim as exemption from property of estate Social Security
disability benefits received before filing of bankruptcy petition if debtor is claiming exemptions
from property of estate provided by 11 USCS § 522(b)(1); debtor claiming exemptions under §
522(b)(1) is not required to turn over accumulated social security benefits to trustee in bankruptcy;
however, debtor may fund Chapter 13 plan through receipt and use of Social Security benefits. In
re Barron (1988, BC ND Ala) 85 BR 603.
Settlement of debtor's claim against employer under Federal Employers' Liability Act (45 USCS
§ 51) for disability that has prevented debtor from returning to work is disability benefit exemptible
under 11 USCS § 522(d)(10)(C). In re Albrecht (1988, BC DC Mont) 89 BR 859, 19 CBC2d 982.
Chapter 7 debtor may not exempt proceeds of personal injury lawsuit under Iowa exemption for
disability benefits because use of term "benefit" limits exemption to contractual entitlements, not
tort recoveries. In re Buchholz (1992, BC ND Iowa) 144 BR 443.
11 USCS § 522(d)(10)(C) does not permit Chapter 7 debtor to exempt from bankruptcy estate $
25,000 insurance disability payment received 9 days prior to filing of his petition, even though
payment remained segregated in debtor's bank account on date of filing, where on filing date, debtor
had no "right to receive" payment on which to base valid exemption, because right to receive logi-
cally terminated upon receipt and there is no allegation of special circumstances to justify exemp-
tion. In re Chapman (1994, BC DC Conn) 177 BR 161.
Although debtor's right to receive disability benefit is exempt under Florida law and 11 USCS §
522, and settlement proceeds deposited into bank continue to represent debtor's right to receive dis-
ability benefit and are exempt, interest paid while funds were on deposit is unrelated to right to re-
ceive disability benefit and is not exempt; however, amount of interest is known, and commingling
of non-exempt interest with exempt settlement proceeds does not affect exempt status of settlement
proceeds. In re Green (1995, BC MD Fla) 178 BR 533.
Insurance benefits paid to debtor upon loss of his eye were exempt under 11 USCS §
522(d)(11)(D) up to maximum allowed of $ 15,000, although they were not exempt under §
522(d)(10)(C) or § 522(d)(11)(E), since they were not analogous to worker's compensation or oth-
erwise in nature of compensation for lost future earnings. In re Chavis (1997, BC WD Pa) 207 BR
Exemption set forth at 11 USCS § 522(d)(10)(C) for debtor's right to receive disability payments
did not apply to funds debtor sets aside in savings account prior to filing of bankruptcy petition that
were directly traceable to such benefit, where provision governing restrictions on legal process
against federal employee disability benefits, 5 USCS § 8346, did not exclude bankruptcy law from
affecting exempt status of funds or preclude amendment by subsequent federal law in this case. Ma-
koroff v Panza (In re Panza) (1998, BC WD Pa) 219 BR 95, 39 CBC2d 1261.
Pursuant to 11 USCS § 522(d)(10)(E), debtor's private disability insurance proceeds could be
exempted only to amount found to be reasonably necessary for support of debtor and any depend-
ents. In re Wegrzyn (2003, BC DC Mass) 291 BR 2, 49 CBC2d 1972, CCH Bankr L Rptr P 78828.
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11 USCS § 522
Debtor's long term disability insurance benefit was found to be exempt from inclusion in her
bankruptcy estate, pursuant to Va. Code Ann. § 38.2-3406 and 11 USCS § 522(b)(1); objecting trus-
tee failed to show policy was not issued within state. In re Neal (2004, BC WD Va) 344 BR 456.
Where policy of disability insurance was initially maintained by debtor's employer, but debtor
later became policy-holder in her individual capacity, whether policy was exempt under Minn. Stat.
§ 550.37, subd. 24, depended on whether debtor became owner of policy before her date of disabil-
ity or after; if debtor became owner of policy before her date of disability, it was not exempt be-
cause benefit would not have derived from employment relationship; there were not enough facts
for court to make this determination. In re Reiland (2008, BC DC Minn) 382 BR 779.
Because Ohio exemption statute, Ohio Rev. Code Ann. § 2329.66(A)(6)(e), is substantially simi-
lar to corresponding federal bankruptcy provisions, 11 USCS § 522(d)(10), and because there is no
Ohio case law nor legislative history addressing same issue, federal court that is seeking to construe
state statute may look to intent of Congress in adopting similar exemption; court may then logically
infer intent of Ohio legislature in adopting similar exemption. Baumgart v Alam (In re Alam) (2006,
BAP6) 359 BR 142.
160. Worker's compensation
Bank's security interest in certificate of deposit representing proceeds from lump sum work-
men's compensation settlement is unenforceable under Kansas statute prohibiting assignment of
workmen's compensation benefits. In re Delgado (1992, CA10 Kan) 967 F2d 1466, 18 UCCRS2d
278.
New Hampshire Supreme Court would likely hold that exemption for workers' compensation
benefits was intended to and does extend to tangible assets purchased with benefit proceeds, and
therefore automobile would be exempt where it was unquestionably purchased with money identifi-
able and identified as debtor's compensation benefits. In re Williams (1994, DC NH) 171 BR 451.
Lump-sum workers' compensation settlement proceeds received prepetition are exempt under
Minnesota Workers' Compensation Act; because legislature has provided exemption in Workers'
Compensation Act, proceeds of workers' compensation lump-sum settlement are not types of claims
covered under Minnesota statute exemption statute. Gagne v Christians (1994, DC Minn) 172 BR
50.
Workers' compensation benefits are kind of future earnings for debtor where his ability to gen-
erate future earnings have been reduced or completely lost because of work related injury and entire
benefit may be exempted pursuant to 11 USCS § 522(d)(10)(C). In re La Belle (1982, BC DC Me)
18 BR 169, 8 BCD 1198.
11 USCS § 522(d)(11) is most reasonably interpreted as applying to general tort-related awards,
and not worker's compensation awards. In re Evans (1983, BC DC NJ) 29 BR 336, 10 BCD 1037, 8
Worker's compensation benefits received by debtor prior to filing Chapter 13 petition, and seg-
regated from other assets, are exempt from payment to unsecured creditors in view of Arkansas
statute providing for continuing exemption of worker's compensation proceeds after money has
reached hands of injured employee. In re Covey (1984, BC WD Ark) 36 BR 696, CCH Bankr L
Rptr P 69603.
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11 USCS § 522
Debtor cannot exempt workers' compensation benefits because these benefits are not included as
exempt property under Montana opt-out exemption statute, even though another state statute pro-
tects these benefits from levy and execution against all claims. In re Larson (1985, BC DC Mont)
56 BR 154.
Unclear New Mexico exemption for workmen's compensation benefits applies to lump sum
payment deposited in Chapter 7 debtor's checking account, because exemption applies not just to
claim, but to funds received after claim is resolved, as long as funds in question are, as here, trace-
able to claim, because court uses as guide general policy of 11 USCS § 522(d)(11)(E) in absence of
clear statement by New Mexico legislature. In re Nolen (1986, BC DC NM) 65 BR 1014, 15 BCD
387.
Debtor may exempt payment received in settlement of workers' compensation claim pursuant to
Missouri opt-out exemption statute which provides that debtor may exempt any property that is ex-
empt from attachment and execution, since Missouri law provides that workers' compensation,
whether awarded or due, is exempt from attachment, garnishment, and execution. In re Votruba
(1987, BC ED Mo) 4 BAMSL 3418.
Moneys received by Chapter 7 debtor under workers' compensation settlement are not wages
and cannot be exempt under Florida statute exempting money due for personal labor or services;
however, money in bank account that is directly traceable to workers' compensation settlement is
exempt under statute exempting workers' compensation "due and payable." In re Fraley (1992, BC
MD Fla) 148 BR 635, CCH Bankr L Rptr P 75049, 6 FLW Fed B 317 (criticized in Broward v Jack-
sonville Medical Ctr. (1996, Fla App D1) 673 So 2d 962, 21 FLW D 1232).
Chapter 7 debtor may not claim exemption in automobile purchased with proceeds traceable to
workers' compensation benefits where under Rhode Island law which exempts "claims or payments
due" for workers' compensation, claims are exempt only during period before they are actually paid
to claimant and once injured claimant receives lump-sum payments of workers' compensation bene-
fits, protection previously afforded ends. In re Bonzey (1993, BC DC RI) 153 BR 105.
Chapter 7 debtor may exempt workers' compensation action pursuant to Illinois statute exempt-
ing workers' compensation payments, claims, or awards from liens, attachments, and garnishments,
despite trustee's argument that both general Illinois exemptions and provision of Illinois law prohib-
iting use of federal exemptions in bankruptcy are included in Illinois Code of Civil Procedure and
that, therefore, any state law that is not in Code of Civil Procedure must specifically state that it is
available as exemption in bankruptcy in order to be so available, because Bankruptcy Code does not
allow states to prohibit use in bankruptcy of exemptions otherwise available under state law, and,
thus, if exemption is available under state law, it must be available in bankruptcy; Illinois statute,
while not employing words "exemption" or "exempt" does state that workers' compensation claims
shall not be "subject to" any lien, attachment, or garnishment, or be held liable in any way for any
lien, debt, penalty, or damages. In re McClure (1994, BC ND Ill) 175 BR 21.
Workers' compensation benefits are exempt under 11 USCS § 522(d)(10)(C), rather than §
522(d)(11)(D) and (E). In re Williams (1995, BC WD Mich) 181 BR 298, 33 CBC2d 1118, affd
(1995, WD Mich) 1995 US Dist LEXIS 17212.
Workers' compensation benefits claimed but not yet awarded at time of filing of chapter 7 peti-
tion were exempt under Florida law and 11 USCS § 522(d)(10)(C), since such benefits essentially
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11 USCS § 522
replaced employee's regular source of income, and disallowing exemption would deny him or her
ability to support family. In re Ladomer (1997, BC SD Fla) 215 BR 265.
In light of diminished importance of exemptions in Chapter 13 and plain language of 11 USCS §
1325(b)(2), worker's compensation proceeds not claimed as exempt under 11 USCS § 522(c) were
subject to disposable income analysis and distribution by trustee, where debtors did not offer evi-
dence that proceeds were reasonably necessary for their maintenance or support or that of their de-
pendents. In re Tolliver (2000, BC MD Fla) 257 BR 98, 45 CBC2d 833, 14 FLW Fed B 158 (criti-
cized in In re Graham (2001, BC MD Fla) 258 BR 286, 45 CBC2d 905, 14 FLW Fed B 165).
Workers' compensation awards, and tracing of those awards into certain specific items, are be-
yond scope of 11 USCS § 522(d)(11)(E). Szybist v Michael (In re Michael) (2001, BC MD Pa) 262
BR 296, 46 CBC2d 52.
Exemptions set forth in 11 USCS § 522(d)(10)(C) in debtor's right to receive disability, illness
or unemployment benefit do not apply to proceeds debtor sets aside prior to filing of bankruptcy
proceeding that are directly traceable to such benefit. Szybist v Michael (In re Michael) (2001, BC
MD Pa) 262 BR 296, 46 CBC2d 52.
Minn. Stat. Ann. § 176.175(2)did not provide exemption for debtor's proceeds of workers' com-
pensation settlement; debtor's rights in fund account was subject to administration for distribution to
her creditors. In re Johnson (2003, BC DC Minn) 300 BR 471, revd, exemption allowed (2004, DC
Minn) 314 BR 779.
Workers' compensation benefits invested in publicly-traded securities, such as stocks, bonds,
and mutual funds, retain their character as workers' compensation benefits "in hands of beneficiary,"
as defined by Broward, and are thus exempt pursuant to Fla. Stat. Ann. § 440.22. In re Harrelson
Pursuant to Fla. Stat. Ann. § 440.22, publicly-traded securities purchased with workers' com-
pensation benefits were exempt; therefore, Chapter 7 trustee's objection, to debtor's claim of exemp-
tion on bonds and mutual funds she bought with such benefits, was denied. In re Harrelson (2004,
Debtor's workers' compensation award did not lose its exempt status under Cal. Code Civ. Proc.
§ 704.160 because funds were invested in house; workers' compensation benefits were expected to
be put to useful purposes, such as buying food, clothing, shelter, transportation, and other necessi-
ties. In re Gardiner (2005, BC SD Cal) 332 BR 891.
Although debtors failed to initially list large lump sum settlement of workers' compensation
claim in their schedules, bankruptcy court found that debtors' actions were innocent, and debtors
were entitled to claim exemption of settlement under state law and 11 USCS § 522, subject to reim-
bursing trustee's costs and attorney's fees for trustee's challenge to exemption. In re McVay (2006,
BC ND Ohio) 345 BR 846.
Debtor's settlement made with debtor's former employer and its workers' compensation insur-
ance carrier did not meet requirements of settlement under Mich. Comp. Laws Serv. § 418.535(1),
because it was made before there had been any adjudication of amount that might be owed to debtor
for her alleged work-related injury; as such debtor could not claim workers' compensation settle-
ment proceeds as exempt under 11 USCS § 522(d)(10)(C), but could still claim exemption under 11
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11 USCS § 522
USCS § 522(d)(11)(E) to extent that proceeds were necessary for support of debtor and any depend-
ents of debtor. In re Sanchez (2007, BC WD Mich) 362 BR 342.
161. Other payments
Earned income tax credit payments under 26 USCS § 32 are not exempted from property of es-
tate by operation of Louisiana statute making all assistance exempt from levy or execution. Luster v
Collins (In re Collins) (1999, CA5 La) 170 F3d 512, 99-1 USTC P 50414, 83 AFTR 2d 1794, reh,
en banc, den (1999, CA5 La) 180 F3d 267 and (criticized in In re Tomczyk (2003, BC DC Minn)
295 BR 894, 2003-1 USTC P 50384, 92 AFTR 2d 6574).
Fuel assistance grants under Low Income Energy Assistance Program, paid directly to utility on
behalf of debtor recipient, are property of estate under 11 USCS § 541(a) and can be exempted from
distribution to creditors under 11 USCS § 522(d)(10) exemption for entitlement programs; thus util-
ity could not apply grant to debtor's pre-petition debt, but must use grant to meet debtor's post-
petition fuel costs despite restrictions on transfer in grant, because purpose of grant is not to assist
utilities in collecting otherwise uncollectible debts. Morris v Philadelphia Electric Co. (1984, ED
Pa) 45 BR 350, 12 BCD 897.
Under Ohio statute exempting pensions and annuities, which tracks language of 11 USCS §
522(d)(10)(E), court includes debtor's severance pay because it protects future earnings, is under
complete control of employer, and is not subject to withdrawal at will; thus, trustee cannot recover
prepetition payments and must turn over postpetition payments when all are reasonably necessary
for debtor's support. In re Phillips (1984, BC ND Ohio) 45 BR 529.
Under 11 USCS § 522(b)(1) and (d), state may prohibit debtor from exempting his unemploy-
ment benefits, but state may not compel debtor to exempt them or prohibit him from assigning these
benefits to Chapter 13 trustee: if state has not declared those benefits per se nonexempt, decision of
whether or not to exempt them rests with debtor, not state. In re Jenkins (1986, BC WD Mich) 58
BR 702, CCH Bankr L Rptr P 71063, affd (1986, WD Mich) 64 BR 195, 16 CBC2d 206.
Deficiency payments payable to Chapter 7 debtor from U.S. Department of Agriculture under
farm program entitlement programs are not exempt under applicable state law, nor under 11 USCS §
522(b)(2)(A), since anti-assignment provisions contained in 7 USCS § 1444e(k) and 16 USCS §
590h(g) invalidate only consensual assignments by debtor-beneficiary of payments under such pro-
grams and do not create true exemption cognizable in bankruptcy; nor does fact that creditor cannot
attach entitlement payment while in possession of U.S. Treasury due to government's sovereign
immunity make such payments exempt, because judgment debtor may not invoke sovereign immu-
nity on his own behalf. In re Pritchard (1987, BC DC Minn) 75 BR 877.
Feed and Grain Program payments which are part of debtor's estate are not exempt as wages un-
der Iowa law because payments are not equivalent to wages since there is no relationship between
program payments and farmer's labor. In re Mattice (1987, BC SD Iowa) 81 BR 504, 6 UCCRS2d
214.
Under Minnesota law, Chapter 7 debtor's right to postpetition payments from prepetition con-
servation reserve program contract are not earnings for purposes of exemption statutes. In re Holte
(1988, BC DC Minn) 83 BR 647.
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11 USCS § 522
Earned income credit is money grant to poor working families with dependent children, fitting
within definition of "public assistance" exempt under Kentucky law. In re Goldsberry (1992, BC
ED Ky) 142 BR 158, 81 AFTR 2d 1985.
Looking to Kentucky law to determine allowability under 11 USCS § 522(b)(2)(A) of exemption
of Chapter 7 debtor's federal earned income tax credit, Bankruptcy Court overruled trustee's objec-
tion to exemption of credit where court found that earned income tax credit is public assistance
grant program falling within definition of public assistance classified as exempt under state law. In
re Brown (1995, BC WD Ky) 186 BR 224, 81 AFTR 2d 1978 (criticized in In re Duvall (2002, BC
WD Ky) 281 BR 646, 90 AFTR 2d 5938).
Debtor's severance payments received from former employer did not qualify as "earnings" for
purposes of exemption under Kentucky state law since they were not compensation for personal
services nor payments pursuant to pension or retirement program. In re Johnson (1995, BC WD Ky)
199 BR 155.
Money debtor received from her uninsured motorist insurer for bodily injury she received as re-
sult of auto accident involving uninsured motorist was exempt from creditors under §
522(d)(11)(D), since she sustained substantial and permanent bodily injury, and fact that money was
payment made in fulfillment of her insurer's contractual obligation did not matter since it was re-
ceived on account of personal bodily injury. In re Martinez-Whitford (1996, BC DC Mass) 199 BR
74, 36 CBC2d 1130.
To extent state court awards "maintenance and cure," recovery available only to seamen and
analogous to workers' compensation benefits, it is also exempt under 11 USCS § 522(d)(10)(D). In
re Coltellaro (1997, BC SD Fla) 204 BR 640, 10 FLW Fed B 207 (criticized in Venn v Sherman (In
re Sherman) (2004, BC ND Fla) 322 BR 889, 18 FLW Fed B 173).
Although "earned income credit" may be exempt under state law, different policy and purpose
of child tax credit, and its availability to higher income taxpayers, force it outside reach of state law
exempting benefits received under public assistance legislation, and is not nondischargeable. In re
Dever (2000, BC DC Idaho) 250 BR 701, 2000-2 USTC P 50616, 87 AFTR 2d 1072.
There was no exemption for crop disaster payments made under 7 USCS § 1509 by virtue of 11
USCS § 522(b)(2), since § 1509 and attendant regulations protect covered funds for administrative
convenience of administering federal agencies, but do not create post-distribution property exemp-
tions in favor of beneficiaries. In re Burke (2000, BC DC Minn) 251 BR 720, CCH Bankr L Rptr P
78249.
Additional child tax credit under federal law for families with three or more children could not
be exempted under Idaho exemption for benefits individual is entitled to receive under public assis-
tance legislation. In re Steinmetz (2001, BC DC Idaho) 261 BR 32, 2001-2 USTC P 50477, 87 AFTR
2d 1915 (criticized in In re Koch (2003, BC CD Ill) 299 BR 523, CCH Bankr L Rptr P 78944, 92
AFTR 2d 6410).
Trustee's objection to debtors' claim that per capita Tribal casino proceeds were exempt under
11 USCS § 522(d)(10)(A), as violative of best interest of creditors test, 11 USCS § 1325(a)(4), was
sustained; however, Chapter 13 debtors could not be required to turn over distributions, given their
powers under 11 USCS § 1303. In re Hutchinson (2006, BC DC Kan) 354 BR 523.
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11 USCS § 522
malicious prosecution, and negligence, in connection with false arrest, trustee's objection to exemp-
tion under 11 USCS § 522(d)(10)(C) was sustained because exemptions under § 522(d)(10)(C) were
limited to benefits that were akin to future earnings, rather than tort awards. In re David (2004, BC
DC Dist Col) 2004 Bankr LEXIS 2245.
H.Stock Bonus, Pension, Profit-Sharing, Annuity or Similar Plans
Context of 11 USCS § 522(d)(10)(E) does not suggest that Congress deviated from ordinary
meaning of term "on account of;" thus, "on account of" in § 522(d)(10)(E) requires that right to re-
ceive payment be "because of" illness, disability, death, age, or length of service. Rousey v Jacoway
(2005, US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144, 34 EBC 1929, CCH Bankr L Rptr P
80263, 2005-1 USTC P 50258, 18 FLW Fed S 223.
Chapter 11 debtor may exempt pension plan, Keogh plan, and IRA pursuant to 11 USCS §
522(d)(10) to extent reasonably necessary for debtor's support or that of his dependents because
debtor, at age 66, enjoys present right to receive his interest in plans, and because plans are quali-
fied under IRC; for purposes of determining who are debtor's dependents, court will include debtor's
law-school and college-age children, even though none are under 19 or in secondary school as pro-
vided in state law governing aid to dependent children, where to do so does not produce different
result than if they were not included; further, just as expenses of debtor's wife will be considered in
support determination by virtue of her status as statutory dependent of debtor, so, too, will her in-
come and assets be considered in computation of basic-needs of debtor and dependents, but non-
debtor wife's income and assets should be considered under § 522(d)(1)(E) basic needs analysis
only in amount necessary to cover present and anticipated personal expenses of spouse as well as
that spouse's proportionate share of present and anticipated common expenses. In re Velis (1991,
DC NJ) 123 BR 497, 21 BCD 591, affd in part and revd in part on other grounds (1991, CA3 NJ)
949 F2d 78, 22 BCD 414, 25 CBC2d 1362, 14 EBC 1922, CCH Bankr L Rptr P 74329, reh den
(1991, CA3) 1991 US App LEXIS 30075 and (criticized in Reitmeyer v Gralka (In re Gralka) (1997,
BC WD Pa) 204 BR 184, 37 CBC2d 490, CCH Bankr L Rptr P 77301).
In action by client against law firm and attorney alleging that law firm and attorney committed
legal malpractice when they advised her to establish certain trust and transfer her property prior to
her husband's bankruptcy filing, law firm and attorney were granted summary judgment under Fed.
R. Civ. P. 56(c) where client's legal malpractice claim failed as matter of law because client failed to
show that any negligence by law firm or attorney caused her damages as client conceded that, if her
husband's creditors could have reached her assets prior to formation of trust, she could not demon-
strate that any alleged malpractice was proximate cause of her loss, and client failed to demonstrate
that, but for transfers to trust, her husband could meet this burden to establish his inability to pay
disgorgement order against him, and neither release executed in bankruptcy proceeding of client's
husband nor exemption of certain stock pursuant to 11 USCS § 522(c) in husband's bankruptcy pre-
vented Securities and Exchange Commission from either seeking to avoid transfers to client or from
pursuing some other direct claim against her or her assets. Steffen v Gray, Harris & Robinson, P.A.
(2003, MD Fla) 283 F Supp 2d 1272, 16 FLW Fed D 655.
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11 USCS § 522
Debtor's Keogh plan, pension and profit-sharing plan, and IRA are included in Kentucky statute
exempting stock bonus, pension, profit-sharing, annuity or similar plan to extent reasonably neces-
sary for support of debtor and his dependents. In re Fisher (1986, BC WD Ky) 63 BR 649.
Chapter 7 debtor may not exempt his interest in retirement or stock ownership plan where Mis-
souri exemption statute exempts only payments received and not corpus of trust. In re Wallace
(1986, BC ED Mo) 66 BR 834, 3 BAMSL 3153.
State opt-out exemption of pensions and annuities to extent reasonably necessary for support of
debtor must be valued according to: (1) debtor's present and anticipated living expenses, (2) debtor's
present and anticipated income from all sources, (3) age of debtor and dependents, (4) health of
debtor and dependents, (5) debtor's ability to work and earn, (6) debtor's skill, training, and educa-
tion, (7) debtor's other assets, including exempt assets, (8) liquidity of debtor's assets, (9) debtor's
ability to save for retirement, (10) special needs of debtor and dependents, and (11) debtor's finan-
cial obligations. In re McCabe (1986, BC ND Iowa) 74 BR 119 (criticized in In re Huebner (1992,
ND Iowa) 141 BR 405).
State opt-out exemption of payment under pension or annuity on account of age includes private
annuity, which, because of age of debtor-annuitant, is payable immediately upon purchase and
which is purchased shortly before, and apparently in contemplation of, filing bankruptcy proceed-
ings. In re McCabe (1986, BC ND Iowa) 74 BR 119 (criticized in In re Huebner (1992, ND Iowa)
141 BR 405).
Pursuant to Texas statute exempting pensions plans, profit-sharing plans, ERISA-qualified
plans, and other similar plans, all of Chapter 7 debtors' retirement plan, as expressed through their
various IRA accounts and profit-sharing account, is exempt; retirement plan may encompass more
than one account. In re Volpe (1989, BC WD Tex) 100 BR 840, affd (1990, WD Tex) 120 BR 843,
affd (1991, CA5 Tex) 943 F2d 1451, 25 CBC2d 1006, CCH Bankr L Rptr P 74319.
11 USCS § 522(d)(10)(E) is not limited to those funds which debtor is presently receiving under
stock bonus, pension, profit-sharing, annuity, or similar plan, but rather is limited only by debtor's
right to receive payments under plan. In re Cilek (1990, BC WD Wis) 115 BR 974, 11 UCCRS2d
937.
Pertinent inquiry under 11 USCS § 522(d)(10)(E) regarding potential for exemption is not
whether debtor is presently receiving payments from retirement plan or contract but whether debtor
is presently entitled to receive said payments on account of, for instance, age, or disability. Ma-
koroff v Booth (In re Booth) (2005, BC WD Pa) 331 BR 233.
If allowing 11 USCS § 522(d)(10) (E) exemption would confer windfall on debtor, it should be
disallowed. Walsh v Benson (In re Benson) (2007, BC WD Pa) 363 BR 415.
163. Extent reasonably necessary for support
Bankruptcy Court properly takes into account debtor-doctor's monthly income of $ 36,000 in
determining that debtor-doctor did not have right to exempt his contributions to retirement plans
under 11 USCS § 522(d)(10)(E) which gives debtor right to exempt pension plan to extent reasona-
bly necessary for support of debtor and his dependence. In re Kochell (1984, CA7 Wis) 732 F2d
564, 11 BCD 1174, 5 EBC 1289, CCH Bankr L Rptr P 69835.
Funds deposited in pension plans are not exempt under 11 USCS § 522(d)(10)(E) where debtor,
who is 44-year-old doctor, has shown neither present nor future conditions which demonstrate plans
Page 293
11 USCS § 522
are reasonably necessary for his support and that of his children as debtor has gross income of $
38,000 per month and debtor is neither disabled nor in failing health. In re Kochell (1983, WD Wis)
31 BR 139, 4 EBC 1942, affd (1984, CA7 Wis) 732 F2d 564, 11 BCD 1174, 5 EBC 1289, CCH
Reasonably necessary standard under 11 USCS § 522(d)(10)(E) requires that court take into ac-
count other income and exempt property of debtor, present and anticipated; appropriate amount to
be set aside for debtor ought to be sufficient to sustain basic needs, not related to his former status
in society or lifestyle to which he is accustomed but taking into account special needs that retired
and elderly debtor may claim. In re Kochell (1983, WD Wis) 31 BR 139, 4 EBC 1942, affd (1984,
CA7 Wis) 732 F2d 564, 11 BCD 1174, 5 EBC 1289, CCH Bankr L Rptr P 69835.
Chapter 11 debtor may exempt pension plan, Keogh plan, and IRA pursuant to 11 USCS §
522(d)(10) to extent reasonably necessary for debtor's support or that of his dependents because
debtor, at age 66, enjoys present right to receive his interest in plans, and because plans are quali-
fied under IRC; for purposes of determining who are debtor's dependents, court will include debtor's
law-school and college-age children, even though none are under 19 or in secondary school as pro-
vided in state law governing aid to dependent children, where to do so does not produce different
result than if they were not included; further, just as expenses of debtor's wife will be considered in
support determination by virtue of her status as statutory dependent of debtor, so, too, will her in-
come and assets be considered in computation of basic-needs of debtor and dependents, but non-
debtor wife's income and assets should be considered under § 522(d)(1)(E) basic needs analysis
only in amount necessary to cover present and anticipated personal expenses of spouse as well as
that spouse's proportionate share of present and anticipated common expenses. In re Velis (1991,
DC NJ) 123 BR 497, 21 BCD 591, affd in part and revd in part on other grounds (1991, CA3 NJ)
949 F2d 78, 22 BCD 414, 25 CBC2d 1362, 14 EBC 1922, CCH Bankr L Rptr P 74329, reh den
(1991, CA3) 1991 US App LEXIS 30075 and (criticized in Reitmeyer v Gralka (In re Gralka) (1997,
BC WD Pa) 204 BR 184, 37 CBC2d 490, CCH Bankr L Rptr P 77301).
In determining whether Chapter 11 debtor's pension plan, Keogh plan, and IRA are reasonably
necessary for support within meaning of 11 USCS § 522(d)(10)(E), expenses will be reduced by $
2,400 for vacation expenses, $ 2,040 for gift expenses, $ 1,200 for political and medical society
contributions, and $ 14,000 budgeted for younger daughter's college expenses since she has gradu-
ated; $ 17,820 annual expense for eldest daughter's law school education will cease after completion
of her last year, as will $ 16,520 expense of son's college education; because allowable budget of $
71,950 reflects only common expenses from which debtor and his nondebtor wife appear to benefit
equally, $ 35,975 will be offset against income and assets of wife; debtor's interest in plans is not
reasonably necessary where wife, who is in good health, who has no special needs at age 50, and
who earns after-tax income of $ 47,000 that can be expected to remain constant, can cover $ 35,975
in annual expenses, her proportionate share of common expenses, with her income and assets, and
remaining expenses can be satisfied from debtor's annual after-tax income of $ 56,000, which can
continue for as long as he remains in good health, and his other assets, including $ 200,000 equity in
home; furthermore, fact that debtor was able to accumulate $ 355,578 in pension and retirement
benefits between 1980 and 1988 suggests that with careful planning debtor can also provide for ba-
sic needs of retirement. In re Velis (1991, DC NJ) 123 BR 497, 21 BCD 591, affd in part and revd
in part on other grounds (1991, CA3 NJ) 949 F2d 78, 22 BCD 414, 25 CBC2d 1362, 14 EBC 1922,
CCH Bankr L Rptr P 74329, reh den (1991, CA3) 1991 US App LEXIS 30075 and (criticized in
Page 294
11 USCS § 522
Reitmeyer v Gralka (In re Gralka) (1997, BC WD Pa) 204 BR 184, 37 CBC2d 490, CCH Bankr L
Rptr P 77301).
Standard set forth in 11 USCS § 522(d)(10)(E) limiting pension payment exemptions to extent
reasonably necessary for support of debtor and any dependent of debtor requires that court take into
account other income and exempt property of the debtor, present and anticipated, and that appropri-
ate amount to be set aside for debtor ought to be sufficient to sustain basic needs, not related to his
former status in society or lifestyle to which he is accustomed, but take into account special needs
that retired and elderly debtor may claim; therefore where debtor has available total annual income
of $ 37,146.00 of which $ 29,226.84 represents pension payments, 50 percent of payments received
are not exempt, are part of estate, and may be collected by trustee from date of filing of debtor's pe-
tition. Warren v Taff (In re Taff) (1981, BC DC Conn) 10 BR 101, 7 BCD 493, 4 CBC2d 65, CCH
Debtor's pension fund assets are not exempt under 11 USCS § 522(d)(10)(E) when pension
funds cannot be considered necessary for support of debtor; if Congress intended exemption to be
broad enough to encompass all contingencies, it would not have included limiting words "reasona-
bly necessary for the support of the debtor". In re Kochell (1982, BC WD Wis) 26 BR 86, 9 BCD
1329, 4 EBC 1734, CCH Bankr L Rptr P 68942, affd (1983, WD Wis) 31 BR 139, 4 EBC 1942, affd
(1984, CA7 Wis) 732 F2d 564, 11 BCD 1174, 5 EBC 1289, CCH Bankr L Rptr P 69835.
Pension of teacher-debtor is not exempt under 11 USCS § 522(d)(10)(E) where it is not reasona-
bly necessary for debtor where debtor is 48 years old, employed full time, and in good health and
where plan falls under all 3 exceptions to 11 USCS § 522(c)(10)(E) in that (1) state, employer of
debtor, is insider, (2) payments are based on acquired years in service and thus falls within excep-
tion created by § 522(c)(10)(E)(II) and (3) fund fails to qualify under any applicable Internal Reve-
nue Code sections falling within third exception of § 522(d)(10)(E)(III). In re Werner (1983, BC
DC Minn) 31 BR 418, 10 BCD 1117, 9 CBC2d 371, CCH Bankr L Rptr P 69289.
Proper standard in deciding whether pension and profit sharing benefits are reasonably neces-
sary for support of debtor and dependents is to take into account income and exempt property of
debtor and compare to amount needed for sustaining basic needs, including any special needs of
debtor, but not prior life style. In re Grant (1984, BC ND Tex) 40 BR 612.
No part of lump sum payment under Chapter 7 debtor's pension plan is necessary for support of
debtor or his dependents because debtor has substantial postpetition income and enjoys moderate
amount of uncommitted income after expenses each month and therefore debtor may not claim ex-
emption under Illinois law; neither federal nor Illinois law permits debtor to exempt his entire inter-
est in lump sum distribution from pension plan but rather payment is exempt only to extent neces-
sary for support. In re Wilson (1985, BC ED Mo) 54 BR 796, 3 BAMSL 1737.
In deciding what is reasonably necessary for support of debtor and dependents for purposes of
Iowa pension plan exemption, court must look to debtor's existing income and other exempt prop-
erty in relation to basic needs; debtor wife's pension plan qualifies as exempt property under Iowa
pension plan exemption where (1) debtor became eligible to receive her entire portion of plan fund
upon her termination of employment, (2) most of assets exempted by debtors are needed for poten-
tial fresh start and high percentage are fixed assets not readily suited for liquidation, and (3) due to
debtor husband's disability, funds to meet everyday expenses are limited primarily to wife's income.
In re Pettit (1985, BC SD Iowa) 55 BR 394, affd (1985, SD Iowa) 57 BR 362.
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11 USCS § 522
Funds deposited by debtor in deferred compensation plan with her employer, the state, are ex-
emptible under Ohio pension plan exemption because plan provides for payments to begin on par-
ticipant's disability, death or retirement and minimal amount of $ 489.98 is reasonably necessary for
support of debtor where debtor has earned less than $ 12,000 in years prior to bankruptcy, owns no
real estate, has 12 year old car, minimal other personal property, and majority of her debts are for
medical expenses incurred in past 2 years. In re Osburn (1986, BC SD Ohio) 56 BR 867, 7 EBC
1136 (criticized in In re Mueller (2000, BC DC Md) 256 BR 445, CCH Bankr L Rptr P 78353).
Determination of whether debtor's interest in fund is reasonably necessary for his support, ren-
dering it exemptable, must be arrived at on case-by-case basis with workable standard based on
definite criteria, widely applicable to variety of circumstances, and consistent with purposes of
bankruptcy and state exemption law whose purposes are: (1) to provide debtor enough money to
survive, (2) to protect his dignity and his cultural religious identity, (3) to afford means of financial
rehabilitation, (4) to protect family unit from impoverishment, and (5) to spread burden of debtor's
support from society to his creditors; and to this end, court will look to debtor's present and future
needs as demonstrated by particular circumstances of each case. In re Flygstad (1986, BC ND
Iowa) 56 BR 884, CCH Bankr L Rptr P 70938.
In considering whether debtor's right to payment in profit-sharing or pension plan is reasonably
necessary for support, court will look to many factors, among them: (1) debtor's present and antici-
pated living expenses; (2) debtor's present and anticipated income from all sources; (3) age of
debtor and dependents; (4) health of debtor and dependents; (5) debtor's ability to work and earn
living; (6) debtor's job skills, training, and education; (7) debtor's other assets, including exempt as-
sets; (8) liquidity of other assets; (9) debtor's ability to save for retirement; (10) special needs of
debtor and dependents; and (11) debtor's financial obligations, e.g., alimony or support payments.
In re Flygstad (1986, BC ND Iowa) 56 BR 884, CCH Bankr L Rptr P 70938.
Because pension funds are to be exempted under Minnesota law only if reasonably necessary
for debtor's support, office expenses of Chapter 7 debtor will not be considered in determining what
amounts are necessary for debtor's support; exemption statutes are not intended to provide money
for setting oneself up in business. In re Schlee (1986, BC DC Minn) 60 BR 524, 14 BCD 526.
Chapter 7 debtor husband is not entitled to exempt under Minnesota law his vested interest in
profit sharing plan where debtors have no present need of plan benefits to support themselves or
their dependents and future need is speculative; further, there is no reason why postpetition accruals
vesting under plan, along with supplemental programs funded out of future income, cannot ade-
quately provide for potential disability and retirement needs of 36-year-old debtors. In re Loe
(1986, BC DC Minn) 63 BR 259, CCH Bankr L Rptr P 71405.
In absence of sufficient evidence of number of Chapter 7 debtor's dependents and his family's
current and future expenses, hearing will be scheduled to allow debtor to submit additional proof on
issue of what is reasonably necessary for support of himself and his dependents for purposes of de-
termining to what extent his interest in retirement plans is exempt under Kentucky law. In re Slezak
(1986, BC WD Ky) 63 BR 625.
To determine if debtor's interest in Keogh plan, pension and profit-sharing plan, and IRA are
reasonably necessary for his support and that of his dependents as required by Kentucky exemption
statute, court must examine all facts and circumstances including debtor's age, earning capacity,
present and future financial needs, ability to insure against future disruptions in earning capacity
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11 USCS § 522
and his ability to reestablish retirement fund; 61-year-old debtor's ability to reestablish retirement
fund is not great, and therefore debtor may exempt entire $ 69,072.86 net value of funds. In re
Fisher (1986, BC WD Ky) 63 BR 649.
Under New York law which allows Chapter 7 debtor to exempt profit or pension plans to extent
reasonably necessary for support of dependent of debtor, debtor cannot include as reasonably neces-
sary his funding of son's graduate education, since son is 21 years old and under New York law, no
longer legal dependent. In re Fill (1988, BC SD NY) 84 BR 332, 17 BCD 427 (superseded by stat-
ute as stated in In re Iacono (1990, BC ED NY) 120 BR 691, 20 BCD 1950) and (superseded by
statute as stated in In re Orlebeke (1992, BC SD NY) 141 BR 569).
Determination of what funds are reasonably necessary for support, for purposes of determining
entitlement to Illinois pension plan exemption, is factual determination, and court may consider
such factors as debtor's age, health, future earning capacity, and necessary expenditures in making
this determination; where debtor is relatively young and has present earning capacity, exemption is
generally denied. In re Boggess (1989, BC SD Ill) 105 BR 470, 21 CBC2d 1015.
Twelve thousand dollars is reasonable threshold below which it ordinarily should be presumed
that funds meet Missouri statutory requirement for exemption and therefore sum of $ 9,000 at issue
in present case which is being accumulated for debtor's retirement is reasonably necessary for
debtor's support. Rimmel v Ramirez (1992, BC ED Mo) 139 BR 220.
Although retirement benefits may not be currently necessary for support, court may consider fu-
ture needs of debtor in determining whether or not, or to what extent, retirement benefits are ex-
empt. In re Bowder (2001, BC DC Minn) 262 BR 919, 37 BCD 280, CCH Bankr L Rptr P 78470.
"Reasonably necessary" language that is contained in Ohio Rev. Code Ann. § 2329.662 and 11
USCS § 522 is not primarily designed to preclude high-salaried professionals and executives from
exempting retirement funds. In re Guikema (2005, BC SD Ohio) 329 BR 607.
Although husband debtor was not actually receiving payments from annuity and IRA, bank-
ruptcy court found these assets were exempt under 11 USCS § 522(d)(10)(E) because he was enti-
tled to receive distributions, and these assets were reasonably necessary for support given that hus-
band debtor was unemployable to due disability, his wife earned minimal income, and her ability to
earn living or to save for retirement would not have significantly improved prior to her retirement.
Makoroff v Booth (In re Booth) (2005, BC WD Pa) 331 BR 233.
If events occurring after petition date establish that 11 USCS § 522(d)(10)(E) exemption is not
necessary to enable debtor to avoid becoming destitute and hence public charge, exemption is not
required for "fresh start" and is not "reasonably necessary" within meaning of § 522(d)(10)(E); ob-
jection to such exemption should be sustained. Walsh v Benson (In re Benson) (2007, BC WD Pa)
363 BR 415.
2.ERISA Qualified Plans 164. Generally
Congress did not intend that Employee Retirement Income Security Act be regarded as federal
law upon which 11 USCS § 522(b)(2)(A) exemption could be based so as to allow debtor to exempt
benefits of plan governed by Act. In re Graham (1984, CA8 Iowa) 726 F2d 1268, 11 BCD 626, 10
CBC2d 111, 5 EBC 2573, CCH Bankr L Rptr P 69705.
Debtor's interest in pre-ERISA and ERISA-qualified portions of retirement fund are reasonably
necessary for his support and are therefore exempt under Iowa exemption statute where: (1) debtor's
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11 USCS § 522
other assets are not substantial, (2) if he retires on date of filing, he would be eligible to receive
monthly payments of $ 420 when he reached age 65, (3) monthly payment will vary depending on
how long he continues work and at what age he retires, (4) monthly amount even when coupled
with Social Security benefits is within contemplation of reasonably necessary standard, and (5) pre-
ERISA contribution of $ 1,015.50 to retirement fund which he can withdraw in lump sum upon
termination is also reasonably necessary for support; there is insufficient evidence, however, to de-
termine whether $ 40,000 in profit-sharing plan which could be payable to debtor in one lump sum
is reasonably necessary for support. In re Flygstad (1986, BC ND Iowa) 56 BR 884, CCH Bankr L
Rptr P 70938.
Under Indiana's opt-out scheme, Chapter 7 debtor's interest in ERISA profit-sharing plan, not
qualifying as spendthrift trust under Indiana law and therefore part of estate, is exemptible only as
part of $ 100 personal property exemption. In re McVade (1987, BC ND Ind) 72 BR 560.
Debtors' interest in pension and Keogh plans are exempt under New York law notwithstanding
trustee's argument that debtor husband is 100 percent owner of professional corporation sponsoring
plans, and conclusive presumption under New York law that ERISA-qualified plans are spendthrift
trusts forecloses trustee's argument to contrary. In re Shailam (1992, BC ND NY) 144 BR 626.
Funds received from qualified retirement account were not exempt from bankruptcy estate un-
der Mo. Rev. Stat. § 513.430(10)(e) because debtor no longer had "right to receive" funds, but in-
stead had actually received funds; plain meaning of "right to receive" in § 513.430(10)(e) and 11
USCS § 522(d)(10)(e) precluded court from exercising its equitable powers to construe phrase to
encompass funds already received pre-petition. In re McCollum (2002, BC ED Mo) 287 BR 750.
165. Exempt under "other federal law" under § 522(b)(2)(A)
Chapter 7 debtor's interest in his ERISA-qualified pension plan is included in bankruptcy estate
and is not exempt under 11 USCS § 522(b)(2)(A), since House and Senate reports on § 522(a)(2)(A)
contain list of exempt property and failure to include ERISA-qualified plan is highly indicative of
congressional intent that such are not exempt; additionally, enumerated exemptions under §
522(a)(2)(A) are federally created pensions or related to industries protected by federal government,
whereas ERISA pensions are privately established and privately funded. In re Gribben (1988, SD
Ohio) 84 BR 494.
ERISA plans do not fall within 11 USCS § 522(b)(2)(A) provision allowing exemption of "any
property that is exempt under Federal law " when debtors utilize state exemption system and there-
fore debtor's interest in ERISA profit-sharing plan is included in bankruptcy estate under 11 USCS §
541. In re O'Brien (1988, WD Mo) 94 BR 583.
Federal exemption for tax-qualified ERISA plan may be successfully claimed under 11 USCS §
522(b)(2)(A); although ERISA plan funds are not specifically mentioned in House Report, similarity
between provisions of those statutes that are recognized as constituting federal exemption and pro-
visions of 29 USCS § 1056 and 26 USCS § 401(a)(13) support conclusion that federal exemption
for ERISA plans was intended. In re Hinshaw (1982, BC DC Kan) 23 BR 233, 9 BCD 769, 7
CBC2d 323, 3 EBC 2535, CCH Bankr L Rptr P 69066, 83-1 USTC P 9104, 51 AFTR 2d 686.
Debtor's interest in profit sharing and trust plan is not exempt pursuant to 11 USCS §
522(b)(2)(a) since ERISA was enacted prior to Code yet Congress failed to include statutes in illus-
trative list of exempt statutes and each of listed exempt statutes directly precluded all benefits from
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11 USCS § 522
alienation or assignment while ERISA and 26 USCS § 401(a)(13) prohibit alienation merely as
condition for obtaining qualified tax status. In re Nichols (1984, BC MD Fla) 42 BR 772.
Private ERISA qualified pension and profit sharing plans are not exempt property under 11
USCS § 522(b)(2)(A). In re Gillett (1985, BC SD Fla) 46 BR 642.
Trust res of ERISA-qualified Keogh retirement plan may not be exempted under provision of 11
USCS § 522(b)(2)(A) for other "federal law." In re O'Brien (1985, BC ED Va) 50 BR 67, 13 BCD
97, 12 CBC2d 1161.
ERISA, 29 USCS § 1001, does not provide basis for additional exemption under 11 USCS §
522(b)(2)(A). In re Slezak (1986, BC WD Ky) 63 BR 625.
ERISA-qualified plans are not exempt under 11 USCS § 522(b)(2)(A) since statutes authorizing
such retirement plans are clearly distinguishable from other federal laws allowing exemptions con-
templated by Congress when enacting § 522(b)(2)(A). In re Ewald (1987, BC WD Tex) 73 BR 792.
ERISA-qualified employee pension plans, containing mandated anti-alienation language, are
available for exemption under 11 USCS § 522(b)(2)(A) as exempt under "other federal law." In re
Komet (1989, BC WD Tex) 104 BR 799.
Debtors in opt-out state such as Montana may look to 11 USCS § 522(b)(2)(A) to assert valid
exemption, either by way of state exemption or any nonbankruptcy federal exemption; but ERISA
statute is not federal exemption statute within § 522(b)(2)(A) and Chapter 7 debtor may not exempt
ERISA-qualified employee stock ownership plan pursuant thereto. In re Conroy (1990, BC DC
Mont) 110 BR 492.
Debtor's interest in ERISA-qualified pension benefit plan is exempt under "other federal law"
rubric of 11 USCS § 522(b)(2)(A); ERISA § 206(d)(1) establishes "federal law" exemption in ER-
ISA-qualified pension benefit plan available to debtor who elects to claim his exemptions under §
522(b)(2)(B). In re Messing (1990, BC ED Tenn) 114 BR 541, 20 BCD 819, 23 CBC2d 650, CCH
Bankr L Rptr P 73432, affd (1991, CA6) 1991 US App LEXIS 19755.
Even if ERISA-qualified plan is not excludable from estate, debtors may exempt their interest in
such plan under "other federal law" exemption contained in 11 USCS § 522(b)(2)(A). In re Majul
(1990, BC WD Tex) 119 BR 118.
Chapter 7 debtor's ERISA-qualified pension plans are protected by ERISA § 206(d)(1) (29
USCS § 1056) and therefore are property that is exempt "under federal law" within meaning of 11
USCS § 522(b)(2)(A). In re White (1991, BC DC Mass) 131 BR 526.
Massachusetts statute exempting ERISA-qualified annuity, pension, profit-sharing, or other re-
tirement plans and individual retirement accounts is preempted by ERISA; ERISA entirely pre-
empts statute, despite debtor's contention that its operation in bankruptcy should be saved because
otherwise election of state exemptions pursuant to 11 USCS § 522 would be impaired, because §
522 permits debtor to elect exemption provided by federal law other than Bankruptcy Code in addi-
tion to electing state exemptions, and antiassignment provision of ERISA is such law, so that § 522
is effective to permit claimed exemption even with preemption of Massachusetts statute. In re
Hennessey (1992, BC DC Mass) 135 BR 711.
166. Exempt under § 522(d)(10)(E)
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11 USCS § 522
ERISA qualified pension benefits constitute exemption under 11 USCS § 522(d)(10)(E); since
this section deals specifically with pension plans, § 522(d)(10)(E) must take precedence over gen-
eral language of 11 USCS § 541(c)(2); passage of Bankruptcy Code implicitly repealed antialiena-
tion requirement of ERISA. In re McLean (1984, DC SC) 41 BR 893, 11 CBC2d 406, 6 EBC 1273,
CCH Bankr L Rptr P 70022, revd on other grounds (1985, CA4 SC) 762 F2d 1204, 13 BCD 367, 12
CBC2d 1431, 7 EBC 1440, CCH Bankr L Rptr P 70578.
11 USCS § 522(d)(10)(E), exempting plans under Employee Retirement Income Security Act,
29 USCS §§ 1001 et seq., (ERISA) as well as many other types of support payments, is not incon-
sistent with interpretation of 11 USCS § 541(c)(2) excluding ERISA plans from property of estate
even though there may be overlap between 2 provisions in that one excludes plans from property
and other provides exemption but overlap does not constitute inconsistency. In re Pruitt (1983, BC
DC Colo) 30 BR 330, 10 BCD 760, 8 CBC2d 912, 4 EBC 2130, CCH Bankr L Rptr P 69355.
Employee savings and profit-sharing plan which is part of ERISA qualified plan is entitled to
exemption under 11 USCS § 522(d)(10)(E) only for retirement fund portion of plan. In re Berndt
(1983, BC ND Ind) 34 BR 515, 9 CBC2d 848, CCH Bankr L Rptr P 69467.
Debtor may change his exemptions from state exemptions under 11 USCS § 522(b)(2) to federal
exemptions under § 522(d)(10) so that he can claim as exempt his contributions to ERISA pension
plan and profit sharing plan to extent that exemptions are necessary for support; if debtor claims
exemption of contributions made to qualify pension and profit sharing plans, he is entitled to evi-
dentiary hearing to determine amount of contribution reasonably necessary for support of debtor
and debtor's dependents. In re La Fata (1984, BC ED Mich) 41 BR 842, 11 CBC2d 298, CCH
Chapter 7 debtors are not entitled to exempt, under 11 USCS § 522(d)(10)(E), ERISA-qualified
plan because trust is not akin to future earnings where debtor husband has effective control of trust
funds and can withdraw them at any time and where he has invested almost entire amount of trust
fund in joint venture owned by himself and his wholly-owned corporation, in contravention of trust
agreements, thereby treating trust funds as personal savings. In re White (1986, BC WD Wash) 61
BR 388.
In determining whether restriction on transfer of beneficial interest of debtor in trust is enforce-
able under applicable nonbankruptcy law, for purposes of USCS § 541(c)(2), "applicable nonbank-
ruptcy law" means state spendthrift trust law; application of state spendthrift trust law does not in
any way prejudice participants in ERISA-qualified plans since ERISA-qualified funds not excluded
under 11 USCS § 541(c)(2) can still be exempted if they meet criteria outlined in 11 USCS §
522(d)(10)(E); similarly, application of state spendthrift trust law is not inconsistent with 29 USCS
§ 1144(d), which provides that ERISA preempts state law, since this is not application of state law
to ERISA plan, but rather application of federal bankruptcy law, which happens to mandate use of
state spendthrift trust law. In re Hysick (1988, BC ED Pa) 90 BR 770.
Chapter 11 debtor is not entitled to exempt his interest in retirement plans under 11 USCS §
522(d)(10)(E) where funds are not needed to sustain basic needs of debtor and his dependents be-
cause debtor and his wife have total combined salary of $ 156,000, sufficient to provide comfortable
living for themselves and their family and education for their children. In re Velis (1989, BC DC
NJ) 109 BR 64, affd (1991, DC NJ) 123 BR 497, 21 BCD 591, affd in part and revd in part on other
grounds (1991, CA3 NJ) 949 F2d 78, 22 BCD 414, 25 CBC2d 1362, 14 EBC 1922, CCH Bankr L
Page 300
11 USCS § 522
Rptr P 74329, reh den (1991, CA3) 1991 US App LEXIS 30075 and (criticized in Reitmeyer v
Gralka (In re Gralka) (1997, BC WD Pa) 204 BR 184, 37 CBC2d 490, CCH Bankr L Rptr P
77301).
IRAs were property of bankruptcy estate, since they did not include spendthrift provisions en-
forceable under applicable nonbankruptcy law; debtors' IRA was not exempt under 11 USCS §
522(d)(10)(E), since they were not only allowed control over their IRA funds but in fact exercised
such control by withdrawing total of $ 17,000 from IRAs during two years prior to filing their
Chapter 7 petition. In re Zott (1998, BC ED Mich) 225 BR 160.
Debtor's interest in retirement plans could be exempted to extent reasonably necessary for her
support, even though her entitlement to payment in event of unforeseen emergency was not one of
events listed under 11 USCS § 522(d)(10)(E), since fact that payment could be triggered by addi-
tional factor did not destroy exemptability, so long as her right to receive payment under plan could
be triggered by one or more of five listed events. In re Lightbody (1999, BC ED Mich) 240 BR 545,
Unpublished: Pro se debtor was subject to court-imposed sanctions under 11 USCS § 105 for re-
peatedly refiling claim to proceeds of litigation paid to her bankruptcy estate in spite of adverse rul-
ing by court that claim proceeds were not excluded under 11 USCS § 522(d)(10). Goodheart v
Maggio (In re Goodheart) (2006, BC DC NJ) 2006 Bankr LEXIS 2290.
3.Other Plans 167. Annuities
Single premium immediate annuity is matured annuity and not reasonably necessary to support
Chapter 7 debtor and his spouse, and therefore is not exempt under California law where issue date
of annuity was June 28 and effective date was July 1, debtor chose to have payout period commence
on October 1, following filing of his bankruptcy petition on September 21, payout date chosen by
debtor cannot rationally be deemed to make policy unmatured as of date of bankruptcy filing, and
given debtor's assets, income, and living expenses, annuity payments are not reasonably necessary
for support. In re Moffat (1992, CA9) 959 F2d 740, 92 CDOS 2405, 92 Daily Journal DAR 3791,
Chapter 7 debtor may not exempt corpus of flexible premium annuities under Iowa statute ex-
empting rights in payment under pension, annuity, or similar plan or contract on account of illness,
disability, death, age, or length of service where debtor's present right to receive annuity payments
does not depend upon his having reached age 65, nor upon occurrence of any other triggering events
enumerated in statute such as illness, disability, or death, but rather, contracts give debtor unfettered
discretion to receive payments at any time under any of 3 payment options: (1) cash payment in any
amount up to cash value; (2) periodic payments for chosen length of time; or (3) periodic payments
for life of annuitant with guaranteed amount for chosen number of years; debtor's access and com-
plete control over timing of annuity payments mean that any payments received under contracts
would not be "on account of" his age. Huebner v Farmers State Bank (In re Huebner) (1993, CA8
Iowa) 986 F2d 1222, 28 CBC2d 1124, 16 EBC 1770, CCH Bankr L Rptr P 75132, cert den (1993)
510 US 900, 126 L Ed 2d 223, 114 S Ct 272.
Chapter 7 debtors may not exempt annuity, purchased with funds borrowed against equity in
their homestead 10 days before bankruptcy filing, as unmatured life insurance policy under Califor-
Page 301
11 USCS § 522
nia law where statute is limited to life insurance policies and, in this case, annuity provides guaran-
teed stream of income over term of contract, there are no contingencies that can divest debtors of
their right to receive payment, should debtor husband die during life of contract, all remaining pay-
ments will be made to his designated beneficiaries, and annuity of this type is investment, not life
insurance policy. Bernard v Coyne (In re Bernard) (1994, CA9 Cal) 40 F3d 1028, 94 CDOS 8793,
94 Daily Journal DAR 16364, 32 CBC2d 508, CCH Bankr L Rptr P 76206, cert den (1995) 514 US
1065, 131 L Ed 2d 559, 115 S Ct 1695.
Chapter 7 debtors may not exempt annuity, purchased with funds borrowed against equity in
their homestead 10 days prepetition, under California statute exempting individual retirement annui-
ties to extent necessary to provide support upon retirement, where debtor husband, who is now 60
years old, earns in excess of $ 200,000 annually, he can expect to earn this amount for several more
years, and debtors are entitled to substantial income from other sources upon retirement, including
Social Security and pension benefits. Bernard v Coyne (In re Bernard) (1994, CA9 Cal) 40 F3d
1028, 94 CDOS 8793, 94 Daily Journal DAR 16364, 32 CBC2d 508, CCH Bankr L Rptr P 76206,
cert den (1995) 514 US 1065, 131 L Ed 2d 559, 115 S Ct 1695.
Annuity policy is not life insurance within purview of Minnesota exemption statute since such
policy is primarily for benefit of insured and not for protection of dependents and cash surrender
value of retirement annuity vests in trustee in bankruptcy. In re Walsh (1937, DC Minn) 19 F Supp
567.
Debtor may not exempt retirement annuities under Iowa law exempting payments under annuity
contract on account of illness, disability, death, age, or length of service, where annuity contracts
provide that owner may withdraw all or part of cash value of certificate on any date while annuitant
is alive, annuitant may chose among several payment options including lump-sum cash payment,
periodic payments over period of time, or payment for life with guaranteed number of years, and
debtor's ability to withdraw from annuities is substantially unrestricted except for penalties estab-
lished by tax code and minor contractual restrictions established in one of annuities; further, "on
account of age" requirement is not satisfied merely because of debtor's expressed intent to begin
receipt of payments after his 65th birthday because although debtor may have personally intended
to begin payments from annuity when he reached age 65, his options under annuity were not so lim-
ited; "on account of" is more appropriately interpreted to mean "triggered by." In re Huebner (1992,
ND Iowa) 141 BR 405, affd (1993, CA8 Iowa) 986 F2d 1222, 28 CBC2d 1124, 16 EBC 1770, CCH
Bankr L Rptr P 75132, cert den (1993) 510 US 900, 126 L Ed 2d 223, 114 S Ct 272.
Both plain meaning of Vermont exemption statute and policies underlying it compel conclusion
that statute can apply to future as well as present income and that it does not limit debtor's right to
receive payments to which he is currently entitled. Delaney v Obuchowski (In re Delaney) (2001,
DC Vt) 268 BR 57.
Finding of bankruptcy court that annuity that bequeathed to wife under her mother's will did not
qualify for exemption under 11 USCS § 522(d)(10)(E) was affirmed where debtors could not have
satisfied requirement that wife's payments were replacement for lost income or akin to future earn-
ings and, thus, annuity did not qualify for exemption under § 522(d)(10)(E). Weidman v Shapiro
(2003, ED Mich) 299 BR 429.
Where state exemption statute requires determination of necessity of annuities and the like for
support of Chapter 7 debtor and debtor's dependents, determination can be made on basis of future
Page 302
11 USCS § 522
needs at time of retirement and consists of what income ought to be sufficient to sustain basic
needs, not related to debtor's former status in society or lifestyle to which debtor is accustomed but
taking into account special needs that retired and elderly debtor may claim; since debtor's expenses
exceed basic needs test, i.e., life insurance on her husband, mortgage payments in future where none
exist now, and excessive transportation expense, annuities are not reasonably necessary and claimed
exemption is disallowed. In re Sederstrom (1985, BC DC Minn) 52 BR 448.
Annuity purchased 4 years earlier by husband and wife, ages 63 and 56, which has paid monthly
dividends from date of purchase is exempt under liberal interpretation of Iowa statute providing for
exemption of rights in annuity on account of age, because to strictly interpret "on account of age" as
limited to annuity where rights accrue only upon reaching specified predesignated age would defeat
protective purposes of exemption laws intended to avoid impoverishment, enable survival, and af-
ford means of rehabilitation. In re Gilbert (1985, BC ND Iowa) 74 BR 1 (criticized in In re Hueb-
ner (1992, ND Iowa) 141 BR 405).
Debtor may not claim annuity as exempt under Minnesota statute which provides for exemption
of retirement annuities, despite fact that it may have been debtor's intention to provide income and
property for his retirement years, and that money to purchase annuity came from 5 other life insur-
ance policies which were canceled, where payments to debtor under annuity are not "on account of
illness, disability, death, age, or length of service," but, rather, payments he received are "on ac-
count of" his investment in annuity. In re Gagne (1993, BC DC Minn) 166 BR 362, affd in part and
revd in part on other grounds (1994, DC Minn) 179 BR 884.
Florida statute exempting proceeds of annuity contracts from reach of beneficiary's creditors ex-
empts annuity proceeds from claims of creditors of third-party beneficiaries who become entitled to
annuity proceeds upon death of annuitant, such as Chapter 7 debtor who received proceeds of annu-
ity following death of her uncle, not just from creditors of annuitant. In re Zeitz (1994, BC SD Fla)
171 BR 903.
$ 35,000 in annuity funds were not reasonably necessary for support of Chapter 7 debtors and
their dependents and thus could not be claimed as exempt under 11 USCS § 522(d)(10)(E) where
(1) debtors' had $ 29,148 annual excess income, (2) debtors could work for another 12 and 21 years
respectively before reaching age 65, (3) debtors would retain, after discharge, all their household
furnishings and wearing apparel as well as $ 250 in cash and $ 16,000 equity in their home, and (4)
debtors would have $ 349,776 excess upon husband debtor's retirement if they each retained their
current salaries until that time. In re Mann (1996, BC ED Mich) 201 BR 910.
Single premium annuity owned by debtor could not be exempted under Missouri statute as an-
nuity on account of illness, disability, death, age or length of service where annuity could be traced
directly back to testamentary gift from debtor's late aunt and thus amounted to nothing more than
nonexempt inheritance received in form of annuity. In re Collett (2000, BC WD Mo) 253 BR 452,
45 CBC2d 45.
Exemption of payments under annuity is intended to protect payments which function as wage
substitutes after retirement. In re Wallace (2001, BC ED Mo) 260 BR 482.
Debtor's annuity did not qualify as (1) stock bonus, (2) pension, (3) profitsharing, (4) annuity, or
(5) similar plan or contract as required by Bankruptcy Code, and therefore was not exempt. In re
Weidman (2002, BC ED Mich) 284 BR 837, affd (2003, ED Mich) 299 BR 429.
Page 303
11 USCS § 522
Sixteen-month period between debtor's withdrawal of funds from exempt retirement account
and debtor's subsequent purchase of annuity contract, combined with loss of tax deferred status, was
inconsistent with concept of transfer set forth in La. Rev. Stat. Ann. § 13:3881(D)(2); accordingly,
annuity contract was not exempt from bankruptcy estate. In re Roberts (2005, BC MD La) 96 AFTR
2d 5767.
Where debtor used distribution from tax deferred arrangement to buy annuity contract, annuity
purchase was not transfer protected by La. Rev. Stat. Ann. § 13:3881(D)(2); plain language of stat-
ute preserved exemption only if funds were transferred from one tax deferred arrangement to an-
other, or one annuity to another. In re Roberts (2005, BC MD La) 96 AFTR 2d 5767.
Annuity contracts purchased by Chapter 7 debtor are not exempt under California life insurance
exemption statute where annuity contracts involve no risks, contingencies, or unknown events and
thus are not life insurance policies, but rather are investments that debtor made under which sums
certain are payable at fixed dates for fixed periods. In re Pikush (1993, BAP9 Cal) 157 BR 155, 93
CDOS 6473, 93 Daily Journal DAR 11039, 29 CBC2d 747, CCH Bankr L Rptr P 75427, affd
(1994, CA9) 27 F3d 386, 94 CDOS 4462, 94 Daily Journal DAR 8257.
Facts that debtor who received inheritance at age 58 purchased annuity with single payment and
that there were no other contributors were not determinative nor deserving of great weight in deter-
mining whether annuity was exempt as wage substitute where debtor had no other opportunity to
obtain pension plan since her employer did not offer that benefit; accordingly, debtor's right to re-
ceive annuity payments constituted retirement plan within ambit of 11 USCS § 522(d)(10)(E). An-
dersen v Ries (In re Andersen) (2001, BAP8 Minn) 259 BR 687, 45 CBC2d 1251, CCH Bankr L
Rptr P 78390.
Where debtors purchased annuity from proceeds from sale of remainder interest in farm land
and used annuity to generate self-employment income, annuity was not exempt under Minn. Stat.
Ann. § 550.37(24) (2003). Martin v Bucher (In re Martin) (2003, BAP8) 297 BR 750, CCH Bankr L
Rptr P 78906.
Unpublished: Even though Fed. R. Bankr. P. 7024 applied only to adversary proceedings, court
used its discretion under Fed. R. Bankr. P. 9014 to allow issuer of annuity to intervene on permis-
sive basis, in interest of judicial economy, in contested matter brought by trustee to challenge
debtor's claimed exemption under 11 USCS § 522(d) of his interest in annuity. In re Quinn (2004,
BC WD Mich) 2004 Bankr LEXIS 2368.
Unpublished: When issuer of annuity was allowed to intervene, it had to accept case as it cur-
rently stood and could only seek determination under Fed. R. Bankr. AP. 9023 as to whether previ-
ous order finding debtor's interest in annuity as property of estate under 11 USCS § 541 and not ex-
empt under 11 USCS § 522(d) should be amended; although Mitch. Comp. Laws Serv. § 38.1683
restricted transfers of retirement interests, law was unenforceable under U.S. Const. art. VI as to
debtor's interest in annuity, where rights were found not held in trust, because 11 USCS § 541(a)(1)
required all of debtor's interests, including interests in retirement plans, to transfer to estate notwith-
standing applicable non-bankruptcy law. In re Quinn (2004, BC WD Mich) 2004 Bankr LEXIS
2368.
168.--Resulting from lawsuit settlement
Page 304
11 USCS § 522
Settlement agreement, which resolved debtor's lawsuit against employer and authorized em-
ployer to substitute annuity for its continuing obligation under noncompetition agreement, does not
preclude annuity from being exempt under Texas statute which exempts money and benefits to be
paid to insured or beneficiary under insurance policy or under any plan or program of annuities and
benefits in use by employer; although substitution of annuity for collateral was made possible by
settlement agreement, annuity payment represents employer's obligations under pre-existing non-
competition agreement, validity of which was simply reaffirmed by settlement agreement; parties'
agreement to treat debtor's employment as having terminated at earlier date, prior to settlement
agreement, and fact that employer waited until several months after agreement had been executed to
purchase annuity cannot change fact that annuity payments represent employer's obligations to
make monthly payments to debtor under noncompetition agreement which was ancillary to his em-
ployment; and, therefore, employer purchased annuity in its capacity as debtor's employer, thus sat-
isfying requirement that annuity was "in use by" employer as required under exemption statute.
Walden v McGinnes (In re Walden) (1994, CA5 Tex) 12 F3d 445 (criticized in In re Orso (1998, BC
MD La) 219 BR 402).
Annuity purchased by debtor's employer pursuant to settlement agreement is part of "plan or
program of annuities and benefits" as required under Texas exemption statute because it was one of
3 purchased by employer in order to arrange for accomplishment of particular "object" or "goal":
funding continuing/future noncompetition payments and securing release of its assets from liens
held by debtor and other 2 key employees as collateral for those payments; it is not necessary that
plan or program provide annuities for all employees, or that it be of particular type, and, therefore,
employer's provision of annuities to only 3 former employees does not make it any less "plan" or
"program" within meaning of statute. Walden v McGinnes (In re Walden) (1994, CA5 Tex) 12 F3d
445 (criticized in In re Orso (1998, BC MD La) 219 BR 402).
Under laws of Louisiana that establish exemptions from seizure, proceeds of annuity contracts
purchased by obligors to fulfill personal injury settlement structured to comply with 26 USCS §
104(a)(2) and 130 were exempt from claims of creditors of payee who was debtor in bankruptcy.
Canfield v Orso (In re Orso) (2002, CA5 La) 283 F3d 686.
Chapter 13 debtor may not exempt annuity which is part of structured tort settlement agreement
under Ohio exemption for pensions, annuities or similar plans, because that statute appears con-
cerned mainly with annuities as used in retirement and disability planning; debtor may exempt it
only under statute exempting payments on account of personal injury. In re Simon (1987, BC ND
Ohio) 71 BR 65.
Property settlement payments to debtor former spouse provided in judgment of dissolution of
marriage are not proceeds of annuity contract exempt under Florida law where it is clear from 4
corners of agreement that debtor and her former husband did not intend for settlement agreement to
be annuity because debtor and husband entered into contract and bargained for exchange of debtor's
half interest in their joint property for cash, bargain was structured so that former husband could pay
installments, and agreement refers to exchange as "equitable distribution" and refers to debtor and
her former husband as parties to contract, not as beneficiaries or payees; payment stream alone is
insufficient to establish annuity contract--some other indication of intention to create annuity must
be shown. In re Conner (1994, BC MD Fla) 172 BR 119, CCH Bankr L Rptr P 76153, 8 FLW Fed B
222.
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11 USCS § 522
Where Chapter 7 debtors discharges were revoked because they failed to disclose that debtor
husband received annual payments from settlement of lawsuit, debtors were denied leave to amend
their exemptions to add payments as exempt under 11 USCS § 522(d)(10)(E) because debtors
knowingly and fraudulently did not report husband's interest in annual payments. Walsh v Helsel (In
re Helsel) (2005, BC WD Pa) 326 BR 591.
Where Chapter 7 debtors sought leave to amend their exemptions to add annual payments from
settlement of lawsuit as exempt under 11 USCS § 522(d)(10)(E), leave was denied because, based
on their income and expenses as of commencement of bankruptcy case, payments were not rea-
sonably necessary for debtors' support. Walsh v Helsel (In re Helsel) (2005, BC WD Pa) 326 BR
591.
Although debtors did not own annuity contracts issued as part of structured settlement and thus,
could not claim exemption for them under 11 USCS § 522, La. Rev. Stat. Ann. § 13:3881(D) only
barred from exemption contributions made to annuity contracts within year prior to bankruptcy fil-
ing and clearly did not prohibit exemption under La. Rev. Stat. Ann. § 22:647(B), 20:33 for annuity
payments received by debtors within year preceding bankruptcy filing. In re Clement (2005, BC
MD La) 327 BR 249.
N.Y. Ins. Law § 3212 governed question of whether annuity payments Chapter 11 debtor re-
ceived were exempt property because New York State opted out of federal exemption scheme, pur-
suant to N.Y. Debt. & Cred. Law § 284, and debtor provided consideration to obtain annuities when
he settled personal injury action; although payments were at least partially exempt, § 3212(d)(2)
allowed court to order debtor to pay creditors portion of benefits he received if it appeared that
benefits exceeded amount that was reasonably necessary to meet his needs and his dependents'
needs, and court ordered hearing to determine extent to which payments could be exempted under §
3212(d)(2). In re Lyons (2008, BC SD NY) 381 BR 444.
169.--Lottery winnings
Debtor is not entitled under 11 USCS § 522(d)(10) to exempt winnings from lottery to be paid in
annuity installments in future years, where, although debtor's interest is future interest in some re-
spects, winnings became property of estate under 11 USCS § 541(a), restriction in § 541(c)(2) being
applicable to spendthrift trust, and where only form of annuity contract subject to exemption is one
provided by § 522(d)(10)(E). In re Miller (1982, BC DC Md) 16 BR 790, 8 BCD 833, CCH Bankr
L Rptr P 68643.
Chapter 7 debtors' lottery winning are not exempt under 11 USCS § 522(d)(10)(E) as in nature
of annuity or similar plan on account of illness, disability, death, age, or length of service, even
though debtors have difficult financial condition and personal health problems. Wallick v Rhode
Island State Lottery Com. (1992, BC DC RI) 144 BR 221.
Chapter 7 debtor, who won over $ 3 million in state lottery, may not exempt winnings which she
receives in annual payments pursuant to annuity contract purchased by state from insurance com-
pany under Florida statute exempting annuity contracts because annuity contract was issued to state,
and therefore fails to meet statutory requirement of issuance to citizen or residents of State of Flor-
ida, and because debtor is not beneficiary of contract but only nominee and her rights are solely
against state; nor are yearly payments paid to debtor exempt as annuity payments or proceeds
thereof; although debtor argues that annuity itself need not be issued to Florida resident if proceeds
are received by Florida resident, proceeds are not issued, contracts are issued, and even accepting
Page 306
11 USCS § 522
her interpretation, "proceeds" were not issued to debtor, but rather, only state has rights to monies
under contract; unpaid lottery winnings must be paid over to trustee. In re Pizzi (1993, BC SD Fla)
153 BR 357, CCH Bankr L Rptr P 75272, 7 FLW Fed B 69 (criticized in In re Bennett (1998, BC
MD Fla) 217 BR 654, 11 FLW Fed B 156).
Chapter 7 debtor's right to receive future lottery payments pursuant to lottery annuity was not
exempt from property of estate under 11 USCS § 522(d)(10)(E) as phrase "on account of illness,
disability, death, age, or length of service" modified "annuity" and not just "similar plan or contract"
as asserted by debtor, debtor's right to receive future payments was not triggered by any events set
forth in section, and equity favored result. In re Neto (1997, BC DC NJ) 215 BR 939, 31 BCD 1043
(criticized in In re Schuster (2000, BC DC NJ) 256 BR 701, 37 BCD 28, 45 CBC2d 956).
Installments in which state lottery winnings were paid to Chapter 11 debtor could not be ex-
empted as "annuity" payments under Florida exemption. In re Bruce (1998, BC MD Fla) 224 BR
505, CCH Bankr L Rptr P 77825, 12 FLW Fed B 29.
170. Debtor's participation interest in retirement system
Bankrupt's interest in city employee's retirement system was exempt from his creditors under
state law, which extended exemption not only to bankrupt but to any beneficiary, and therefore,
bankrupt's interest did not pass to trustee pursuant to former 11 USCS § 110(a); contention that
bankrupt had waived exemption by initially appointing his wife as beneficiary and by subsequently
reducing her interest in order to appoint creditor bank as beneficiary of stated sum in order to secure
note was without merit since scope of exemption would be determined by state law, and no state
decision had indicated any such consequence by reason of bankrupt's transfer. Negin v Salomon
(1945, CA2 NY) 151 F2d 112, 161 ALR 1005.
Chapter 7 debtor's private retirement plan was not so abused as to lose its retirement purpose
where debtor had taken unsecured loans from plan, because (1) debtor followed procedure set out in
Trust Agreement for obtaining loans, (2) debtor was charged reasonable rate of interest on loans, (3)
she regularly made interest payments due, over period of several years, (4) there is no indication
that debtor used plan to hide otherwise ineligible assets from bankruptcy administration; thus, plan
retains its exempt status under 11 USCS § 522(b). In re Bloom (1988, CA9) 839 F2d 1376, 9 EBC
1845.
"Self-employment retirement plans" within meaning of California exemption statute include
corporate plans in which one person controls corporation and plan; therefore, debtor who is sole
shareholder, director, and chief executive officer of professional corporation may fully exempt his
interest in corporate retirement plan as private retirement benefit, and is not limited to partial ex-
emption for self-employed retirement plans. In re Cheng (1991, CA9 Cal) 943 F2d 1114, 91 CDOS
6992, 91 Daily Journal DAR 10668, CCH Bankr L Rptr P 74229.
Although Florida has specifically vetoed exemptions contained in 11 USCS § 522(B)(1), so that
such federal exemptions are not applicable in such state, debtor's interest in employer's retirement
plan is exempt as enforceable spendthrift trust, in view of Florida case law holding bankrupt's equi-
table interest in trust is beyond reach of creditors where trustee is not required to turn property over
to bankrupt, as where employee has no right to withdraw contributions or benefits except upon
separation from company, retirement, death or disability. In re Nichols (1980, BC SD Fla) 1
CBC2d 765.
Page 307
11 USCS § 522
Debtor's participation interest in state retirement system, which only entitled debtor to receive
future payments and had no present right of access, is not property interest of debtor as of com-
mencement of bankruptcy case, and is exempt property under 11 USCS § 522(d)(10)(E). In re
Sheridan (1983, BC DC Vt) 38 BR 52.
Individual debtor's interest in retirement trust fund controlled and administered by state public
school employees' retirement system is excluded by 11 USCS § 541(c)(2) from becoming part of
bankruptcy estate and therefore is not as to be subject to federal exemption claims under 11 USCS §
522(d)(10)(E); debtor's interest retains its exempt status under state law, even though funds were
claimed and disallowed as federal exemption, because trust provides for debtor's future instead of
his present needs; right to take federal exemptions is in alternative with those provided under state,
local, or other federal law and even though debtor's claimed federal exemptions are disallowed he,
does not, on that basis alone, lose alternative right to claim exemptions under applicable state law.
In re Sawdy (1985, BC WD Pa) 49 BR 383, 13 BCD 140, 12 CBC2d 1143.
Minnesota exemption statute, which exempts from execution by creditors all funds that state's
teachers have in their teachers' retirement fund, is not unconstitutional under state constitution, even
though it contains no dollar limitation or limitation to "extent reasonably necessary," because con-
tributions to program are strictly limited to modest amount, teachers' salaries are inherently limited,
and that percentage limitation provides "reasonable amount" limitation. In re McKeag (1990, BC
DC Minn) 111 BR 815.
Because debtor timely filed exemption claim and no party in interest objected thereto, his re-
tirement accounts were exempt property and not property of debtor's bankruptcy estate, pursuant to
11 USCS § 522(d). In re O'Brien (2007, BC DC Mass) 367 BR 242.
171. Contributions to pension or retirement plan
Public school teacher's payments into state retirement system are exempt under 11 USCS § 522
where statute whereby retirement system was created provides for exemption; exemption right does
not need to be included in general state exemption statute to create exemption in bankruptcy. Hovis
v Wright (1985, CA4 SC) 751 F2d 714, 5 EBC 2763, CCH Bankr L Rptr P 70214.
Issue of whether Chapter 7 debtor's contributions to South Carolina Retirement System are ex-
empt property is governed by 11 USCS § 522(b)(2), and under this provision, exemptions estab-
lished by South Carolina Code § 9-1-1680 is valid and exempts funds held by Retirement System.
In re Wright (1983, DC SC) 39 BR 623, affd (1985, CA4 SC) 751 F2d 714, 5 EBC 2763, CCH
Bankruptcy Code permitted debtor to exempt certain property from bankruptcy estate, including
distribution from qualified retirement plan, and that exempt status remained for 60-day time period
that debtor had to rollover that distribution into another qualified retirement account; since debtor
directly distributed those withdrawn funds to another qualified retirement account within 60-day
period, trustee's objection that funds should not have been permitted to be listed on debtor's
amended exempt property schedule had to be rejected. Wolff v Gibson (In re Gibson) (2003, DC
Md) 300 BR 866, 31 EBC 2443, CCH Bankr L Rptr P 80003.
Lump-sum proceeds in Civil Service Retirement Fund are exempt from execution under 5 USCS
§ 8346(a) as exemption under 11 USCS § 522(b)(2)(A). In re Bizon (1983, BC DC Md) 28 BR 886,
affd (1984, DC Md) 42 BR 338, 5 EBC 2579.
Page 308
11 USCS § 522
Retirement contributions must be included in calculation of disposable income in Chapter 13

plan, except when failure to make retirement contribution would result in actual adverse conse-
quence such as loss of employment; retirement contributions are not, however, fatal to plan confir-
mation if debtor elects to extend plan term by sufficient number of months to assure that creditors
are paid as much as they would receive under 36-month plan in which retirement contributions are
included in calculation of disposable income. In re Mendoza (2002, BC DC Ariz) 274 BR 522.
172. Individual Retirement Accounts
Eighth Circuit erred in affirming bankruptcy court's conclusion that Individual Retirement Ac-
counts (IRA) of debtors, husband and wife, were not exempt from Chapter 7 bankruptcy estate un-
der 11 USCS § 522(d)(10)(E); Eighth Circuit erroneously concluded that even if debtors' IRAs were
"similar plans or contracts" to plans specified in § 522(d)(10)(E), their IRAs gave them no right to
receive payment "on account of age," but were instead savings accounts readily accessible at any
time for any purpose. Rousey v Jacoway (2005, US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144,
34 EBC 1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW Fed S 223.
Because 10 percent penalty under 26 USCS § 72(t) applies proportionally to any amounts with-
drawn from account that qualities as Individual Retirement Account (IRA) under 26 USCS § 408(a),
it prevents access to 10 percent that individual would forfeit should he withdraw early, and thus it
effectively prevents access to entire balance in IRA; penalty therefore limits individual's right to
"payment" of balance of his IRA; and because this condition is removed when accountholder turns
age 59 1/2, individual's right to balance of his IRA is right to payment "on account of" age within
meaning of 11 USCS § 522(d)(10)(E). Rousey v Jacoway (2005, US) 161 L Ed 2d 563, 125 S Ct
1561, 44 BCD 144, 34 EBC 1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW
Fed S 223.
IRA qualifies for exemption under statutory language tracking 11 USCS § 522(d)(10)(E), in-
cluding language of California exemption statute. Farrar v McKown (In re McKown) (2000, CA9)
203 F3d 1188, 2000 CDOS 1160, 2000 Daily Journal DAR 1655, 35 BCD 189, 23 EBC 2895, CCH
Bankr L Rptr P 78113 (criticized in In re Kramer (2000, BC ED Mich) 249 BR 147) and (criticized
in In re Skipper (2002, BC WD Ark) 274 BR 807) and (criticized in In re Rousey (2002, BC WD
Ark) 275 BR 307, 48 CBC2d 380).
Debtors were not entitled to claim exemption for portion of their individual retirement accounts
(IRAs) under 11 USCS § 522(d)(10)(E), which were rolled over from former employer pension
funds, when debtors had unlimited access to withdraw funds, subject only to tax penalties, and were
not required to show illness, disability, age, or length of service before making withdrawal. Rousey
v Jacoway (In re Rousey) (2003, CA8 Ark) 347 F3d 689, 31 EBC 1622, CCH Bankr L Rptr P
78934, reh den, reh, en banc, den (2004, CA8) 2004 US App LEXIS 493 and revd, remanded (2005,
US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144, 34 EBC 1929, CCH Bankr L Rptr P 80263,
2005-1 USTC P 50258, 18 FLW Fed S 223.
Debtor who filed for bankruptcy at age 58 could potentially exempt individual retirement ac-
count (IRA) from bankruptcy estate under 11 USCS § 522(d)(10)(E); fact that debtor had not
reached age when payments could be received from IRA without penalty at time of bankruptcy fil-
ing did not bar exemption; factual determination was needed as to whether debtor could establish
that right to receive payment under IRA was reasonably necessary to support debtor and debtor's
dependents. In re Krebs (2008, CA3 Pa) 527 F3d 82, CCH Bankr L Rptr P 81241.
Page 309
11 USCS § 522
IRA is exempt from bankruptcy estate under 11 USCS § 522(d)(10)(E). Hermes v Ribitwer (In
re Hermes) (1999, ED Mich) 239 BR 491, 42 CBC2d 1624 (criticized in In re Kramer (2000, BC
ED Mich) 249 BR 147).
Because debtor had not demonstrated right to receive payment from her individual retirement
account (IRA) based upon any of relevant statutory factors - age, illness, or disability - she, there-
fore, did not possess present right to payments from her IRA and, thus, could not exempt her IRA
from bankruptcy estate pursuant to 11 USCS § 522(d)(10)(E). Skiba v Auman (2006, WD Pa) 2006
US Dist LEXIS 4261 (criticized in Frank v Wiggins (In re Wiggins) (2006, MD Pa) 341 BR 506, 97
AFTR 2d 2241).
Whether debtor has present right to payment under her Individual Retirement Account (IRA) is
irrelevant to analysis of whether or not her IRA is exempt under 11 USCS § 522(d)(10)(E). Walsh v
Benson (2006, WD Pa) 56 CBC2d 869.
Although 11 USCS § 522 permits debtor to exempt Individual Retirement Accounts from prop-
erty of estate, former 11 USCS § 70a did not allow such exemption and debtor's interests in IRA's
passed to trustee in bankruptcy since funds in debtor's IRA's at date of filing of voluntary petition
became property of estate. In re Boderman (1980, BC ED Pa) 23 CBC 302.
Exemption claimed under state law by debtor is not available for individual retirement account
(IRA) established under 26 USCS § 408, where it can be distinguished as account, rather than pen-
sion or annuity plan or policy, it may be distributed in lump sum payment, and it is subject to con-
trol of depositor by arrangement with depository as opposed to contractual arrangement between
employer and employee. In re Talbert (1981, BC WD La) 15 BR 536, 8 BCD 768, CCH Bankr L
Rptr P 68425.
Debtors' interest in individual retirement accounts are not exempt under 11 USCS § 522(b)(2); §
522(b)(2) allows exemption from estate of property exempt under state law; although exemption
laws are to be construed liberally in favor of debtor, court is not at liberty to create exemptions
which do not exist; real nature of individual retirement accounts is tax deferment plan over which
debtors exercise great deal of control; since debtors have unlimited capacity to reach these funds, so
does bankruptcy trustee. In re Howerton (1982, BC ND Tex) 21 BR 621, 9 BCD 296, CCH Bankr L
Rptr P 68800.
Funds deposited in individual retirement accounts are nonexempt property of bankruptcy estate
since debtors have substantial control over funds and there is no guarantee that funds deposited in
account will be retained until retirement. In re Shackelford (1983, BC WD Va) 27 BR 372, 10 BCD
941.
Debtor's individual retirement account is not exempt under 11 USCS § 522(d)(10)(E), where
debtor may withdraw account funds at any time with no restriction except as to reservation of an
early withdrawal assessment, debtor may divert account proceeds from retirement purposes, debtor
may have access to funds in account at his election, debtor may use any funds withdrawn for any
purpose, there is no tie-in between access to funds and incidence of retirement, disability, death or
termination of employment, and there is no guaranty that account funds will be used for exclusive
purpose of providing benefits akin to future earnings for debtor or his beneficiaries. In re Pauquette
(1984, BC DC Vt) 38 BR 170.
Page 310
11 USCS § 522
Debtor's IRA annuity plan is not exempt under Ohio laws exempting annuities "upon life of any
person" or protections of future earnings payable because of "illness, disability, death age, or length
of service" because IRA is not equivalent of life insurance and debtor is "beneficiary" of IRA, IRA
is not paid for by employer, but by employee, who retains control of fund, and IRA is essentially tax
deferment plan, not traditional retirement plan. In re Fichter (1984, BC ND Ohio) 45 BR 534.
Monies in Individual Retirement Account do not constitute wages to head of family exempt
from claims of creditors under opt-out state's legislation because wages, once paid by employer and
deposited in bank, are not longer protected. In re Gillett (1985, BC SD Fla) 46 BR 642.
Under state's "opt-out" statute, where debtor had complete and unfettered control over Individ-
ual Retirement Account, fund is not an "annuity account issued to citizens or residents of state, upon
whatever form" and thus fund is available to satisfy claims of judgment creditors. In re Gillett
(1985, BC SD Fla) 46 BR 642.
Balances in Chapter 7 debtors' IRAs are not exemptible under 11 USCS § 522(d)(5) are not rea-
sonably necessary for support of debtors and their dependent children and therefore not exemption
under 11 USCS § 522(d)(10)(E); relatively young debtors with good health, substantial earning ca-
pacity, and current ability to meet his and his dependents' regular living expenses is not generally
entitled to exemption from retirement benefits. In re Montavon (1985, BC DC Minn) 52 BR 99, 14
Debtor's individual retirement account cannot be exempted under Wisconsin statute which by its
express terms exempts only those plans created by employer and debtor is not employer or self-
employed as required by statute. In re Woods (1986, BC WD Wis) 59 BR 221.
Chapter 7 debtor may not exempt entire corpus of IRA under California law because statute al-
lows only "payment" under stock bonus, pension, profit sharing, annuity or similar plan or contract
to be exempt; debtor can withdraw funds from IRA at any time and for any reason and this total
control over account distinguishes IRA's from traditional pension plans. In re Innis (1986, BC SD
Cal) 62 BR 659 (criticized in Rawlinson v Kendall (In re Rawlinson) (1997, BAP9 Cal) 209 BR 501,
97 CDOS 4819, 97 Daily Journal DAR 8585).
Under Iowa exemption statute very similar to 11 USCS § 522(d)(10)(E), debtor may not exempt
IRA where debtor has free access upon 10 percent penalty payment, and access is not conditioned
on illness, disability, death, age, or length of service, and debtor can use funds for any purpose. In
re Matthews (1986, BC ND Iowa) 65 BR 24, 14 BCD 1199.
Individual Retirement Account in state or federally chartered depository institution is within
purview of definition of cash and properly exemptible as cash if in accordance with other provisions
of New York's exemption scheme. In re Chasen (1987, BC ED NY) 78 BR 400.
Chapter 7 debtor's IRA is not exempt under 11 USCS § 522(d)(10)(E) because debtor has no
present right to receive payments from plan. In re Heisey (1988, BC DC NJ) 88 BR 47 (criticized in
In re Yuhas (1995, BC DC NJ) 186 BR 381, 34 CBC2d 594, CCH Bankr L Rptr P 76656).
Individual Retirement Accounts funded by self-employed persons are exempt under Wisconsin
statute exempting employees' benefit plans, pursuant to 11 USCS § 522. In re Staniforth (1990, BC
Page 311
11 USCS § 522
WD Wis) 116 BR 127, 20 BCD 962 (criticized in Hartje Lumber v Brach (In re Brach) (1995, BC
WD Wis) 195 BR 897) and (criticized in Hartje Lumber v Boshardy (In re Boshardy) (1995, BC WD
Wis) 1995 Bankr LEXIS 2043).
IRAs are included within 11 USCS § 522(d)(10)(E) exemption, subject to condition that debtor
must have present right to payment; debtor in present case has no right to present payment because
he has not reached retirement age set by IRC for unpenalized withdrawals from IRAs and he does
not allege disability. In re Chick (1991, BC DC Conn) 135 BR 201.
Individual retirement accounts are not exempt under New York law that exempts trusts, custo-
dial accounts, Keogh plans, and other plans established by corporations, because IRAs are not es-
tablished by corporations and are not qualified pension plans but rather are savings accounts con-
trolled by depositor from which funds can be withdrawn at option of depositor, subject to penalty
payment, and funds are not exempt from attachment by judgment creditors. In re Orlebeke (1992,
BC SD NY) 141 BR 569.
Chapter 7 debtors may not exempt individual retirement annuities into which individual retire-
ment accounts were rolled over under 11 USCS § 522(d)(10)(E) where funds are available to debt-
ors on demand, even though significant penalties may attach if they are cashed out, and even though
debtors assert that they will wait until retirement to draw upon funds. In re Moss (1992, BC WD
Mich) 143 BR 465, 27 CBC2d 918 (criticized in Hermes v Ribitwer (In re Hermes) (1999, ED Mich)
239 BR 491, 42 CBC2d 1624).
Individual Retirement Account is "similar plan" under 11 USCS § 522(d)(10)(E) because it is
substitute for future earnings. In re Hickenbottom (1992, BC WD Wash) 143 BR 931, 27 CBC2d
1467.
Chapter 7 debtor's interest in Individual Retirement Account (IRA) is exempt under 11 USCS §
522(d)(10)(E), despite assertions that debtor has no present right to receive payments, that IRAs are
not "similar plans" to stock bonus or profit-sharing plans or annuities, and that IRA payments were
not reasonably necessary for debtor's support, because debtor need not be presently receiving pay-
ments to qualify as exemption; IRAs are, in fact, "similar plans" since they are in same general
category as other retirement plans and enjoy similar tax benefits as pensions, profit-sharing and
stock bonus plans, and IRA valued at only $ 3,115 offers little chance of becoming so large that it
would generate stream of income greater than debtor's retirement needs. In re Yee (1992, BC DC
Mass) 147 BR 624.
Chapter 7 debtor may not exempt her Individual Retirement Account (IRA) under 11 USCS §
522(d)(10)(E), where IRA plan does not restrict debtor's right to receive payment except on account
of illness, disability, death, age, or length of service, although she has to wait until she is at least 59
and one-half to withdraw penalty-free as she presently has right to receive payment for IRA. In re
Evenson (1994, BC ED Mich) 165 BR 27 (criticized in Hermes v Ribitwer (In re Hermes) (1999, ED
Mich) 239 BR 491, 42 CBC2d 1624).
Self-directed individual retirement account (IRA) is "similar plan" within meaning of Maine ex-
emption statute exempting payment under stock bonus, pension, profit-sharing, annuity, or similar
plan or contract on account of illness, disability, death, age or length of service; IRC's provision for
treatment of IRAs supports conclusion that they are sufficiently "similar" to other plans aimed to
enable working taxpayers to accumulate assets during their productive years so that they might
draw on them during retirement; that debtor has control over and (penalty notwithstanding) access
Page 312
11 USCS § 522
to IRA assets before retirement does not defeat exemption, because, irrespective of such control,
IRA is "plan" providing "right to receive" "payments" on account of "age"; exemption does not re-
quire that plans within its scope be ironclad or irrevocable; exemption applies to debtor's right to
receive payments from IRA whether or not right is fully and freely exercisable on date of his or her
bankruptcy petition. In re Bates (1994, BC DC Me) 176 BR 104, 32 CBC2d 1269.
Chapter 11 debtors' IRA's did not qualify for exemption under 11 USCS § 522(d)(10)(E) in view
of Third Circuit authority that tax penalty for early withdrawal is sufficient to destroy debtor's "right
to receive" payment. In re Snyder (1996, BC MD Pa) 206 BR 347.
Chapter 7 debtors were not entitled to exempt individual retirement accounts (IRA's) under 11
USCS 522(d)(10)(E), even though IRA's are sufficiently similar to stock bonuses, pension, profit
sharing, or annuity plans or contracts to fall within scope of exemption, where debtors were not
presently entitled to receive payments since they did not meet prerequisites of age 59 and one-half,
death, or disability. Reitmeyer v Gralka (In re Gralka) (1997, BC WD Pa) 204 BR 184, 37 CBC2d
Debtor need not have present right to receive payments in order to exempt otherwise-qualified
IRA pursuant to state law. In re Outen (1998, BC DC SC) 220 BR 26, 10 Fourth Cir & Dist Col
Bankr Ct Rep 479.
Debtor may potentially exempt IRA annuities under 11 USCS § 522(d)(10)(E) since IRA is
similar to stock bonus, pension, profit-sharing, or annuity plan or contract and debtor, at time of fil-
ing of petition, had sufficiently present right to receive payment from IRA annuities; however, ex-
emption turns on whether IRA annuities are reasonably necessary for support of debtor and debtor's
dependents and trial is required. Pineo v Fulton (In re Fulton) (1999, BC WD Pa) 240 BR 854
(criticized in In re Haney (2004, BC ED Pa) 316 BR 827).
Term "individual retirement accounts" includes both IRA's and IRA annuities for purposes of
Iowa exemption, and annual dollar limit on tax-year contributions did not apply to debtors' annuity
which was individual retirement account created from transfer from ERISA-qualified retirement
plan so that Chapter 7 debtor was entitled to exempt entire value of annuity pursuant to 11 USCS §
522. In re Kemmerer (2000, BC ND Iowa) 245 BR 335, revd (2000, BAP8) 251 BR 50, 25 EBC
1624 (criticized in In re Pepmeyer (2002, ND Iowa) 273 BR 782, 47 CBC2d 1235).
Individual retirement account (IRA) is not payable on account of age or other statutory trigger-
ing event where debtor can withdraw funds at any time, even though withdrawals are subject to
penalty if made before specified age. In re Bowder (2001, BC DC Minn) 262 BR 919, 37 BCD 280,
In 11 USCS § 522(d)(10)(E), Congress intended to exempt 26 USCS § 408 IRAs to extent they
are similar plans or contracts, payable on account of illness, disability, death, age or length of ser-
vice, and reasonably necessary for support of debtor and any dependent of debtor. In re Rousey
(2002, BC WD Ark) 275 BR 307, 48 CBC2d 380, affd (2002, BAP8) 283 BR 265, 49 CBC2d 308,
28 EBC 2629, CCH Bankr L Rptr P 78726, 90 AFTR 2d 6467, affd (2003, CA8 Ark) 347 F3d 689,
31 EBC 1622, CCH Bankr L Rptr P 78934, reh den, reh, en banc, den (2004, CA8) 2004 US App
LEXIS 493 and revd, remanded (2005, US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144, 34 EBC
1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW Fed S 223.
Page 313
11 USCS § 522
Where IRA agreements established that debtors had right to withdraw from their IRAs at any
time subject only to 10 percent excise tax penalty, debtors' right to payment under IRAs was not
conditioned on account of illness, disability, death, age, or length of service; IRAs were not "similar
plans or contracts" within meaning of 11 USCS § 522(d)(10)(E) and not entitled to exemption. In re
Rousey (2002, BC WD Ark) 275 BR 307, 48 CBC2d 380, affd (2002, BAP8) 283 BR 265, 49 CBC2d
308, 28 EBC 2629, CCH Bankr L Rptr P 78726, 90 AFTR 2d 6467, affd (2003, CA8 Ark) 347 F3d
689, 31 EBC 1622, CCH Bankr L Rptr P 78934, reh den, reh, en banc, den (2004, CA8) 2004 US
App LEXIS 493 and revd, remanded (2005, US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144, 34
EBC 1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW Fed S 223.
Most harmonious interpretation of 11 USCS § 522(d)(10)(E) is that Congress intended to ex-
empt IRAs governed by I.R.C. § 408 to extent they are "similar plans or contracts," payable "on ac-
count of illness, disability, death, age or length of service," and "reasonably necessary for the sup-
port of the debtor and any dependent of the debtor;" this interpretation gives meaning to require-
ments of paragraph 11 USCS § 522(d)(10)(E), without ignoring mention of I.R.C. § 408 in subpara-
graph 11 USCS § 522(d)(10)(iii), and under this interpretation, no part of statute is surplusage. In re
Rousey (2002, BC WD Ark) 275 BR 307, 48 CBC2d 380, affd (2002, BAP8) 283 BR 265, 49 CBC2d
308, 28 EBC 2629, CCH Bankr L Rptr P 78726, 90 AFTR 2d 6467, affd (2003, CA8 Ark) 347 F3d
689, 31 EBC 1622, CCH Bankr L Rptr P 78934, reh den, reh, en banc, den (2004, CA8) 2004 US
App LEXIS 493 and revd, remanded (2005, US) 161 L Ed 2d 563, 125 S Ct 1561, 44 BCD 144, 34
EBC 1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW Fed S 223.
Bankruptcy court found that trustee failed to demonstrate that conditions of claimed individual
retirement account (IRA) exemption were not met and court exempted debtor's IRAs only to extent
it was reasonably necessary for debtor's support. In re Burkette (2002, BC DC Dist Col) 279 BR
388, 48 CBC2d 711.
Trustee could not prevail on assertion that, pursuant to ERISA, debtors' individual retirement
accounts were excepted from exemption under Ohio Rev. Code. Ann. § 2329.66(a)(10)(C), where
trustee failed to present copy of subject benefit plan. In re Fixel (2002, BC ND Ohio) 286 BR 638,
49 CBC2d 883.
Court examined Employee Retirement Income Security Act of 1974 (ERISA), 29 USCS § 1001
et seq., and its relation to federal bankruptcy law and found that (1) ERISA did not preempt Ohio
Rev. Code Ann. § 2329.66(A)(10)(c); and (2) debtors were entitled to related state bankruptcy ex-
emptions claimed in their individual retirement accounts. In re Buzza (2002, BC SD Ohio) 287 BR
417, 49 CBC2d 1651, 29 EBC 2948.
Funds that debtors placed in contract pursuant to state's Prepaid Affordable College Tuition
Program were property of debtors' children and for this reason were not property of debtors' bank-
ruptcy estate, as opposed to being merely exempt. In re Cheatham (2004, BC MD Ala) 309 BR 631.
Debtors were not entitled to claim their individual retirement accounts (IRA) as exempted prop-
erty from bankruptcy estate under Ohio Rev. Code Ann. § 2329.66(A)(10)(c) to extent that debtors
had pledged funds in their IRAs as security to guarantee certain business loans. In re Roberts (2004,
BC SD Ohio) 326 BR 424, 95 AFTR 2d 2972.
Where documents related to debtor's individual retirement accounts (IRA) contained no restric-
tion on alienation or transfer that was enforceable under non-bankruptcy law so as to exclude
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11 USCS § 522
debtor's interest in two funds from his estate, IRAs were part of bankruptcy estate. In re Thomas
(2005, BC WD Ark) 331 BR 798.
Property owned individually by debtor and co-owned with his non-debtor wife became part of
bankruptcy estate; accordingly, where debtor's non-debtor wife had filed for divorce post-petition
and state court had not entered divorce decree and divided marital property, wife could not claim
any rights or "exemptions" to debtor's retirement funds as wife's rights to retirement funds were in-
choate at best. In re Thomas (2005, BC WD Ark) 331 BR 798.
Trustee's objections to debtors' claim of IRA as exempt property, pursuant to 11 USCS §
522(d)(10)(E), was sustained because IRA amount, minus wild card exemption, was not reasonably
necessary for debtors' support, given debtors' age, education, experience, and disposable income
post-bankruptcy. In re Gosnell (2005, BC WD Ark) 336 BR 133.
The debtor's claim that individual retirement account was exempt property under 11 USCS §
522(d)(12) or Mo. Rev. Stat. § 513.430.1(10)(f), failed where debtor failed to raise arguments before
bankruptcy court in response to Chapter 7 trustee's objection, and could not present them for first
time on appeal. Walton v Sosne (In re Walton) (2008, BAP8) 391 BR 827.
173.--Deference to IRS determinations
Bankruptcy Court erred in not deferring to Internal Revenue Service's (IRS) determination that
Chapter 7 debtor's retirement plan was qualified and that rollover distribution was nontaxable, for
purposes of determining whether debtor's Individual Retirement Account (IRA) is exempt under 11
USCS § 522, since Bankruptcy Court does not have authority to answer question of whether plan is
"qualified" independently, where Texas legislature intended for bankruptcy courts applying Texas
law to defer to IRS in determining whether retirement plan is "qualified" under Internal Revenue
Code, and where IRS had already determined that plan, which was rolled over into IRA, was "quali-
fied," and did not tax debtor's distribution from retirement plan. Youngblood v FDIC (In re
Youngblood) (1994, CA5 Tex) 29 F3d 225, 74 AFTR 2d 5910, 94 TNT 170-5.
Texas legislature intended for its own state courts or Bankruptcy Courts applying Texas law to
defer to Internal Revenue Service (IRS) in determining whether retirement plan is "qualified" under
Internal Revenue Code, where there is no reason that legislature would want its courts, which are
inexperienced in federal tax matters, to second-guess IRS in such complex, specialized area, and it
is more reasonable to assume that legislature contemplated creating exemption from seizure for
debtor's retirement funds that could be simply and readily determined by referring to federal tax
treatment of those funds; moreover, Court of Appeals does not believe that legislature wanted to
adopt scheme that invites frequent, unseemly, conflicting decisions between state court or Bank-
ruptcy Court and IRS. Youngblood v FDIC (In re Youngblood) (1994, CA5 Tex) 29 F3d 225, 74
AFTR 2d 5910, 94 TNT 170-5.
174.--Particular accounts
Chapter 13 debtors may exempt 75 percent of entire balance of their IRAs under Colorado ex-
emption statute exempting "avails" of any pension or retirement benefits or deferred compensation
plan, and they are not limited to exempting accumulated interest. In re Kulp (1991, CA10 Colo)
Qualified IRA was exempt under 11 USCS § 522(d)(10)(E) as similar plan or contract to those
listed in § 522, even though it had no anti-alienation provision, since control of debtor over funds
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11 USCS § 522
was irrelevant to exemption once asset was included in estate. Carmichael v Osherow (In re Carmi-
chael) (1996, CA5 Tex) 100 F3d 375, CCH Bankr L Rptr P 77179 (criticized in In re Kramer (2000,
BC ED Mich) 249 BR 147) and (criticized in Dale v Puerner (2001, WD Mich) 264 BR 875, CCH
Bankr L Rptr P 78370) and (criticized in In re Skipper (2002, BC WD Ark) 274 BR 807) and (criti-
cized in In re Rousey (2002, BC WD Ark) 275 BR 307, 48 CBC2d 380) and (criticized in Rousey v
Jacoway (In re Rousey) (2002, BAP8) 283 BR 265, 49 CBC2d 308, 28 EBC 2629, CCH Bankr L
Rptr P 78726, 90 AFTR 2d 6467).
Chapter 7 debtor/surgeon against whom $ 4,000,629 malpractice judgment had been recovered
was entitled to Florida exemption in $ 2,546,319 in IRAs, notwithstanding line of Florida cases stat-
ing that its homestead exemption should not be applied so as to make it an instrument of fraud or
imposition upon creditors, where debtor conceded that IRAs were not acquired by surgeon with
proceeds of fraud perpetrated upon debtor, that IRAs did not represent transfer of nonexempt assets
into exempt assets on eve of bankruptcy and that "on their face" IRAs met description of assets ex-
empted under Florida statute. Sawczak v Goldenberg (In re Goldenberg) (2000, CA11 Fla) 218 F3d
1264, 13 FLW Fed C 862.
Oklahoma statute which specifically exempts Individual Retirement Accounts does not repre-
sent unconstitutional impairment of contract as to debts incurred prior to its effective date as debts
in instant case were incurred under broad view of exemption which has been legislatively restored
and no substantial impairment has occurred; exemption statute is not preempted by ERISA as these
retirement annuities are non-ERISA-qualified plans. In re Walker (1990, ND Okla) 139 BR 31, affd
(1992, CA10 Okla) 959 F2d 894, 22 BCD 1284, CCH Bankr L Rptr P 74528, 133 ALR Fed 577.
Although "on account of" factors in 11 USCS § 522(d)(10)(E) may serve as exclusive triggers
with respect to age, they cannot work to exclude those qualified IRAs permissibly exempted by
negative implication of § 522(d)(10)(E)(iii); accordingly, debtor's IRA which permitted penalty-free
withdrawals only after age 59 1/2 was exempt. Jurgensen v Chalmers (2000, WD Mich) 248 BR 94
(criticized in Dale v Puerner (2001, WD Mich) 264 BR 875, CCH Bankr L Rptr P 78370).
Funds held by debtors in IRA account are not exempt as wages under Florida statute, which ex-
empts wages of head of household, since at least initial deposit in account were monies earned
while living in another state and since funds were not sufficiently identified as monies derived from
earnings of head of household. In re Szuets (1982, BC MD Fla) 22 BR 805.
Individual Retirement Account of approximately $ 6,000 is includible as exempt under Ken-
tucky law. In re Worthington (1983, BC WD Ky) 28 BR 736.
Under Illinois legislation enacted pursuant to 11 USCS § 522, payments under any pension plan
of contracts may be exempted--not asset itself--and thus debtor's Individual Retirement Account
containing approximately $ 4,580, because it is asset and not payment, is not within exemption; in
addition, IRA differs from pension plan in that (1) IRA is savings account with tax benefits and gra-
tuitous contributions by debtor rather than plan or policy provided by employer or other party; (2)
annuities and pensions contemplate only future periodic payments whereas IRA is payable in lump
sum; (3) depositor/debtor has complete control over account rendering no guarantee that funds will
actually be complete until retirement or disability; and (4) IRA contemplates contractual arrange-
ment whereby debtor deals directly with depository institution rather than having fund provided by
employer or other third party; these characteristics of IRAs, allowing debtor control over funding
and lump sum withdrawal, support conclusion that IRA is not a pension plan and thus is not within
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11 USCS § 522
Illinois pension plan exemption. In re Kitson (1984, BC CD Ill) 43 BR 589, CCH Bankr L Rptr P
70120.
Debtor's exempt property worth $ 7,776 and his ability to work and earn living on date of filing
demonstrate that his IRA is not reasonably necessary for support of debtor and his dependents, and
thus debtor may not exempt IRA under Iowa law. In re Schwartz (1984, BC ND Iowa) 58 BR 606,
No monetary limit is placed on Wisconsin exemption statute by Wisconsin Constitution, which
requires that "reasonable amount of property" be exempted, nor can monetary limit be inferred as
matter of statutory construction and therefore debtor may exempt retirement account in which he
has vested amount of $ 84,110.70. In re Martinson (1986, BC WD Mo) 57 BR 560.
Debtor's entire interest in IRA is exempt under Iowa statute exempting pensions, annuities and
similar plans to extent they are reasonably necessary for support of debtor or his dependents where
46-year-old debtor's last contributions to plan made 3 years earlier were not made in contemplation
of bankruptcy and where debtor's expectable income does not indicate any realistic possibility to
provide for retirement needs at any time in foreseeable future. In re Pingel (1986, BC ND Iowa) 63
BR 652.
Chapter 7 debtor's $ 17,017.56 Individual Retirement Annuity is reasonably necessary for sup-
port of his dependents, rendering it exempt under 11 USCS § 522, where amount is small and debtor
has predeceased his wife since time of bankruptcy filing. In re Cilek (1990, BC WD Wis) 115 BR
974, 11 UCCRS2d 937.
Debtor may exempt under New York law funds that had been distributed to him under ERISA-
qualified plans following termination of his employment and that were rolled over into IRA which
is considered trust that is conclusively presumed to be spendthrift trust under New York law; since
funds that opened IRA account emanated from qualified trust funds that flowed from debtor's em-
ployer, res constituted valid spendthrift trust under state law and is excluded from property of es-
tate; dilution of IRA with nonqualified retirement moneys does not vitiate exempt status of entire
account; however, as to moneys that were later added to account and admittedly cannot be shown
by debtor to constitute qualified retirement moneys, these funds are not exempt; since debtor has
claimed no exemption as to real property and aggregate value of all exemptions claims is $ 830,
debtor is entitled to additional cash exemption in amount of $ 2,500 which may be utilized to offset
funds in account which would otherwise be nonexempt. In re Morgan (Smith v Affinity Group)
(1992, BC ND NY) 145 BR 760.
Chapter 7 debtors' IRA is reasonably necessary for support of debtors and their dependents pur-
suant to 11 USCS § 522(b)(1) and is therefore exempt under 11 USCS § 522(d)(10)(E), where
monthly expenses exceed monthly income, there appears no possibility that debtors will be able to
fund a new plan before retirement to meet future needs, debtor wife who underwent cancer surgery
will need continuing treatments, some of which are not covered by insurance policy, and cancer
may recur, and debtors support their 2 dependent children who live with them while attending high
school. In re Sisco (1992, BC WD Ark) 147 BR 495, CCH Bankr L Rptr P 75038.
Trustee's objection to Chapter 7 debtor's claimed exemption in his $ 33,239 individual retire-
ment account (IRA) pursuant to 11 USCS § 522(d)(10)(E) is sustained, despite debtor's claim that
he should be able to exempt entire declared value of IRA because it may be reasonably necessary in
future for his and his dependents' support, where (1) debtor does not have present right to receive
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11 USCS § 522
payments since debtor is not receiving any distribution from IRA and cannot do so without incur-
ring substantial tax penalty because he has not reached 59 1/2 years of age, and (2) amount claimed
is not reasonably necessary for his and his dependents' support even though debtor's sole source of
income, unemployment compensation, is expected to run out in near future given fact that debtor is
52 years of age and is in good health, it is reasonable to expect that he will be able to again find
gainful employment and to provide for his and his dependents' basic needs, and debtor's spouse
could find employment and contribute to her and debtor's support; debtor is attempting to retain all
of his assets, especially IRA, while relieving himself of liability for all unsecured debts by means of
general discharge; allowing trustee's objection will provide funds with which to pay debtor's unse-
cured creditors in full while still leaving approximately $ 15,000 which debtor could use for his and
his dependents' future support. In re Brewer (1993, BC WD Pa) 154 BR 209.
Chapter 7 debtor's IRA account funds are not reasonably necessary for support as required under
Ohio exemption law where, despite declining income, debtor has been able to maintain his suste-
nance without withdrawing money from his IRA; however, trustee is entitled to turnover under 11
USCS § 542 of only half of account balance where debtor's income barely exceeds his expenses at
present, if debtor's employer closes its doors, as contemplated, and debtor is forced to rely on un-
employment compensation, debtor's expenses will exceed his income, and debtor is in his mid-
forties and has no retirement benefits or passive sources of income. In re Metzner (1993, BC ND
Ohio) 157 BR 332.
Debtor's $ 5,545.09 IRA is reasonably necessary for her support and is exempt under 11 USCS §
522(d)(10)(E) where only source of 58-year-old debtor's income at retirement will include proceeds
from her pension and IRA, considering her age, training and educational experience, it is unlikely
that debtor will obtain other gainful employment, debtor owns no real estate, her only assets include
car and various items of jewelry, encumbrance on her car exceeds her monthly pension expectancy,
and while not needed for her present support, IRA is critical to future support; second IRA account,
valued at $ 2,083.41, is not exempt. In re Bogart (1993, BC ND Ohio) 157 BR 345, 29 CBC2d 780.
Chapter 7 debtors may not exempt IRA account with balance of $ 9,000 under 11 USCS §
522(d)(10)(E) where couple has no dependents, debtor wife is in good health, is 35, has masters de-
gree in nursing, and earns $ 750 per week, debtor husband, who holds 401(k) plan with balance of$
10,000, is 37, in good health, and earns $ 300 per week, couple has $ 11,000 worth of equity in their
residence, and had $ 312,888 in unsecured debt which will be discharged, and, thus, IRA is not rea-
sonably necessary for debtors' support; although debtors contend that their IRA is small enough
such that it would never generate stream of income greater than their retirement needs, age and
health of debtors, absence of any dependents, debtors' ability to work and earn living and to save
money toward retirement after bankruptcy discharge, and funds from exempt 401(k) plan indicate
that debtors still have adequate time and means to prepare for their retirement. In re Lima (1994, BC
DC Mass) 169 BR 486, CCH Bankr L Rptr P 75979.
Chapter 7 debtor's $ 15,000 in his Individual Retirement Account (IRA) may not be exempted
under 11 USCS § 522(d)(10)(E), despite fact that IRA was funded by rollover of lump-sum payment
made to debtor by his employer when employee pension plan terminated which plan would have
been exempt under § 522(d)(10)(E) had debtor retained interest in plan until petition was filed,
where general rule is that if property exempted by statute is exchanged for property not covered by
any applicable statute, exemption is lost; any funds due debtor under pension plan or contract lose
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11 USCS § 522
their exempt character once debtor receives funds. In re Cesare (1994, BC DC Conn) 170 BR 37, 31
CBC2d 680.
Chapter 7 debtor's claim of exemption in 1984 in IRA fund to which trustee did not timely ob-
ject is allowed and Chapter 7 trustee is directed to return fund moneys, along with all interest accu-
mulated thereon, to debtor, but debtor's request for compound interest or other damages is denied
inasmuch as debtor had it in his power to precipitate this issue at time of trustee's seizure of account
but delayed until 1992 in taking effective action; applying "middle-ground" approach, which in-
volves determining whether debtor had good-faith statutory basis for claimed exemption, debtor's
assertion in 1984 that his IRA account was exempt did have colorable or good-faith basis in law ex-
isting at time, since opinion that IRAs are not exempt had not been rendered at that time, and due to
uncertainty of law regarding exemptibility of IRAs from property of estate prior to that decision,
trustee had burden to object to debtor's claim of exemption and obtain ruling thereon, but trustee not
only failed to object, he also took almost 2 years to take any adverse action with respect to property
claimed as exempt; prior to that time, debtor had no way of knowing that trustee took issue with
debtor's claim of exemption regarding IRA funds, and during that time debtor was entitled to make
his future plans on assumption that IRA account was exempt; even if trustee's action in seizing ac-
count moneys was equivalent to objection, objection was untimely. In re Riso (Chapter 7) (1994,
BC DC NH) 170 BR 484.
Chapter 7 debtor has failed to establish that Individual Retirement Accounts (IRAs) are rea-
sonably necessary for his support, and, therefore, trustee's objection to debtor's claimed 11 USCS §
522 exemption in IRAs is sustained, where debtor has ability to prepare for his retirement without
prejudice to creditors of his bankruptcy estate, since: (1) debtor is 46-year-old attorney, in good
health, with ability to earn approximately $ 50-55,000 per year for next 10-15 years; (2) both he and
his wife are capable of working and saving for retirement; and (3) debtor's child is leaving private
school which will result in savings of $ 1,100 per month, leaving debtor with substantial excess in-
come with which to fund his retirement. In re Link (1994, BC DC Mass) 172 BR 707.
Although full amount of IRA account was property of estate, Debtor was granted exemption of
$ 75,000 from IRA, where he and his wife did not have substantial unencumbered assets which
could be applied to postpetition debts, including nondischargeable income taxes, they were older
and there was question as to their future health, and he did not conceal assets or lie about his finan-
cial condition. In re Hoppes (1996, BC ND Ohio) 202 BR 595.
IRA was exempt under Florida law and 11 USCS § 522, since monies used to open it could be
traced to 401(k) funds issued to debtor upon termination of employment, despite commingling and
transfer to third party prior to opening IRA. In re Hickox (1997, BC MD Fla) 215 BR 257, 11 FLW
Fed B 133.
Although debtor-wife's 401(k) funds lost their exempt status when she rolled them over into
IRAs, husband-and-wife debtors were entitled to exemption for "necessary support" in larger of two
IRA's under 11 USCS § 522(d)(10)(E), since they were nearing retirement age, had health problems,
and would not have time to fund new retirement plans. In re Savage (2000, BC ED Ark) 248 BR
573.
Debtor who has expressly claimed exclusion under ERISA and 11 USCS § 541(c)(2) of his/her
interest in ERISA-qualified 401(k) plan has "claimed an exemption under Federal law" within
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11 USCS § 522
meaning of Virginia retirement plan exemption and is therefore not entitled to unlimited IRA ex-
emption allowed by that Virginia statute. In re Gurry (2000, BC ED Va) 253 BR 406.
Chapter 7 debtor could only exempt small portion of funds in custodial account IRA under 11
USCS § 522(d)(5) because his other exemptions left little unused of maximum amount that could be
exempted under § 522(d)(5). Walsh v Galloway (In re Galloway) (2001, BC WD Pa) 308 BR 709.
Debtor's objection to Chapter 7 trustee's proposed final distribution was overruled because
debtor could not claim exemption in individual retirement account (IRA) under 11 USCS §
522(d)(10)(E), under law of Third Circuit, when debtor was not collecting payments from IRA at
time that petition was filed. In re Reutzel (2005, BC WD Pa) 2005 Bankr LEXIS 2759, affd, re-
manded (2006, WD Pa) 2006 US Dist LEXIS 37980 and (criticized in Frank v Wiggins (In re Wig-
gins) (2006, MD Pa) 341 BR 506, 97 AFTR 2d 2241).
Court declined to extend restraining order that prohibited debtor from spending funds in her in-
dividual retirement account (IRA), thus terminating order; even though money used to fund IRA
came from qualified domestic relations order, IRA was still exempt under Ohio Rev. Code Ann. §
2329.66(A)(10)(c), and because funds were exempt, per 11 USCS § 522(c), they would not be avail-
able to bank if it prevailed in its adversary proceeding against debtor; therefore, no harm could
come to bank from denying it preliminary injunction. Nat'l City Bank v Hartman (In re Hartman)
(2005, BC ND Ohio) 345 BR 826.
Debtors could claim exemption in their individual retirement account (IRA) to extent allowed
under 11 USCS § 522(d)(5), but could not claim exemption for additional amount pursuant to 11
USCS § 522(d)(10) because debtors were not receiving payments from IRA account at time they
filed their petition. Skiba v Andrzejewski (In re Andrzejewski) (2006, BC WD Pa) 337 BR 835.
Individual retirement account (IRA) inherited from someone other than spouse cannot be
claimed as exempt from debtor's bankruptcy estate under Tex. Prop. Code Ann. § 42.0021, since
IRA is not retirement plan despite temporary tax deferral; under U.S. Internal Revenue Code, debtor
cannot roll over or contribute to IRA, debtor can remove funds at any time, for any reason, and
without penalty, and debtor is required either to start taking lifespan-measured withdrawals within
one year or to take entire amount within five years, regardless of debtor's age. In re Jarboe (2007,
BC SD Tex) 365 BR 717.
Debtor could not exempt his interest in individual retirement annuity, to be distinguished from
individual retirement account, from property of his bankruptcy estate, under clear language of
Iowa's exemption provisions to which debtor was limited as Iowa resident. Huisinga v Kemmerer
(In re Kemmerer) (2000, BAP8) 251 BR 50, 25 EBC 1624 (criticized in In re Pepmeyer (2002, ND
Iowa) 273 BR 782, 47 CBC2d 1235).
Where debtors had unfettered ability to withdraw funds from individual retirement accounts
(IRAs) established by rolling over funds deposited into employer-created retirement plans, IRAs
were not "similar plans or contracts" exempted from bankruptcy estate, nor were payments under
IRAs on account of illness, disability, death, age or length of service; thus, IRAs were not exempt
property under 11 USCS § 522(d)(10)(E). Rousey v Jacoway (In re Rousey) (2002, BAP8) 283 BR
265, 49 CBC2d 308, 28 EBC 2629, CCH Bankr L Rptr P 78726, 90 AFTR 2d 6467, affd (2003,
CA8 Ark) 347 F3d 689, 31 EBC 1622, CCH Bankr L Rptr P 78934, reh den, reh, en banc, den
(2004, CA8) 2004 US App LEXIS 493 and revd, remanded (2005, US) 161 L Ed 2d 563, 125 S Ct
Page 320
11 USCS § 522
1561, 44 BCD 144, 34 EBC 1929, CCH Bankr L Rptr P 80263, 2005-1 USTC P 50258, 18 FLW
Fed S 223.
175. Keogh plans
Qualified Keogh plan of Chapter 7 debtor, self-employed physician, is not exempt from credi-
tor's claims under Oregon law since state exemption does not apply to pensions created by individ-
ual for his own benefit. Hebert v Fliegel (1987, CA9 Or) 813 F2d 999, 8 EBC 1652, CCH Bankr L
Rptr P 71746.
Qualified Keogh Plan is not exempt under § 11 USCS § 522(d)(10)(E) where holder of plan is
37 years old and is actively engaged in practice of medicine and payments are not "necessary for
support of debtor" and where debtor has no right to any present benefits from plan. In re Clark
(1982, BC ED Tenn) 18 BR 824, 8 BCD 1207, CCH Bankr L Rptr P 68780.
Trust res of ERISA-qualified Keogh retirement plan may not be exempted under provision of 11
USCS § 522(b)(2)(A) for other "federal law." In re O'Brien (1985, BC ED Va) 50 BR 67, 13 BCD
97, 12 CBC2d 1161.
Chapter 13 debtor's Keogh plan retirement trust is not exempt property under 11 USCS §
522(d)(10)(E) because federal exemptions are not available to Virginia debtors and because debtor
failed to file list of exempt property in accordance with 11 USCS § 522(1); similarly, property is not
exempt under Virginia law because debtor failed to record and file homestead deed as required. In
re O'Brien (1985, BC ED Va) 50 BR 67, 13 BCD 97, 12 CBC2d 1161.
Trustee's objection to Chapter 7 debtor's claim of exemption pursuant to 11 USCS § 522 in his
Keogh account is overruled when trustee has failed to discharge his burden under Bankruptcy Rule
4003(c) of proving that debtor's Keogh account is not, and will not, be reasonably necessary for
support of debtor and his wife; in dispute over exemption of pension rights involving elderly debtor,
court must consider debtor's future needs for support and not merely debtor's employment status and
income as of date of filing. In re Rosen (1985, BC DC Minn) 52 BR 96.
Keogh plan can be exempted as matter of law as "pension, annuity, or similar plan or contract"
pursuant to Iowa exemption statute in Chapter 7 proceeding; in instant case, because funds are rea-
sonably necessary for support of debtor and his dependents-in that debtor is 58 years old and he and
his wife, who is disabled, earn only $ 10,000 per year-they are exemptable. In re Lawrence (1986,
BC ND Iowa) 57 BR 727.
Chapter 7 debtor's Keogh plan may be exemptable under Minnesota statute exempting stock bo-
nus, pension, profit sharing, annuity, or similar plan, and, in determining whether such plan is, in
fact, exemptable, court will consider present and/or future needs of debtor. In re Schlee (1986, BC
DC Minn) 60 BR 524, 14 BCD 526.
Chapter 7 trustee who, as objector to debtor's claim of exemption under Minnesota law, has bur-
den of proving that debtor's Keogh plan is not reasonably necessary for support of debtor, has failed
to meet that burden where debtor's income will soon be reduced to $ 1,000 per month and this in-
come does not supply debtor's family needs at present, nor does it allow debtor to amass any retire-
ment funds to provide for future family needs. In re Schlee (1986, BC DC Minn) 60 BR 524, 14
BCD 526.
Chapter 7 debtor's interest in KEOGH plan is not exempt under Illinois statute exempting
debtor's right to receive payment under pension plan to extent necessary for support of debtor,
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11 USCS § 522
where debtor has introduced no evidence to establish that funds in pension plan are needed for her
future support. In re Sundeen (1986, BC CD Ill) 62 BR 619.
To determine if debtor's interest in Keogh plan, pension and profit-sharing plan, and IRA are
reasonably necessary for his support and that of his dependents as required by Kentucky exemption
statute, court must examine all facts and circumstances including debtor's age, earning capacity,
present and future financial needs, ability to insure against future disruptions in earning capacity
and his ability to reestablish retirement fund; 61-year-old debtor's ability to reestablish retirement
fund is not great, and therefore debtor may exempt entire $ 69,072.86 net value of funds. In re
Fisher (1986, BC WD Ky) 63 BR 649.
Debtor's interest in Keogh retirement plans is not exempt from property of estate under 11 USCS
§ 522(b)(2)(A) as property exempt under "other federal law." In re Kerr (1986, BC DC Utah) 65 BR
Interest in Keogh retirement plan will be exempt from property of estate under Utah exemption
provisions enacted pursuant to 11 USCS § 522(d)(10)(E) if property is reasonably necessary to sup-
port of debtor or his dependents; factors court may consider in determining what is reasonably nec-
essary for support of debtor and dependents will include, without limitation, debtor's age, health,
future earnings capacity, and necessary expenditures. In re Kerr (1986, BC DC Utah) 65 BR 739,
15 BCD 160, CCH Bankr L Rptr P 71544.
Chapter 11 debtor's interest in Keogh plan is exempt under 11 USCS § 522(d)(10)(E) only to ex-
tent that "present right" to receive payments exists and then only to extent needed to sustain debtor's
basic needs. In re Velis (1989, BC DC NJ) 109 BR 64, affd (1991, DC NJ) 123 BR 497, 21 BCD
591, affd in part and revd in part on other grounds (1991, CA3 NJ) 949 F2d 78, 22 BCD 414, 25
CBC2d 1362, 14 EBC 1922, CCH Bankr L Rptr P 74329, reh den (1991, CA3) 1991 US App LEXIS
30075 and (criticized in Reitmeyer v Gralka (In re Gralka) (1997, BC WD Pa) 204 BR 184, 37
CBC2d 490, CCH Bankr L Rptr P 77301).
Debtors' interest in pension and Keogh plans are exempt under New York law notwithstanding
trustee's argument that debtor husband is 100 percent owner of professional corporation sponsoring
plans, and conclusive presumption under New York law that ERISA-qualified plans are spendthrift
trusts forecloses trustee's argument to contrary. In re Shailam (1992, BC ND NY) 144 BR 626.
Keogh pension plan that does not provide nonkey employees with minimum benefits required
under 26 USCS § 416(c)(1) is not qualified top-heavy plan under 26 USCS § 401 and is not exempt;
although debtor argues that plan need not contain provisions providing minimum benefits to nonkey
employees where there are no nonkey employee participants, there is no provision in plan that alters
minimum benefits to nonkey employees in event nonkey employees participate; holding that trust
funds deposited under plan are not exempt shall be stayed pending IRS approval of plan as IRS rul-
ing would be enlightening and, similarly, debtor might be given opportunity to amend plan to in-
clude required provisions, or to delete disqualifying provisions, rendering plan qualified. In re
Feldman (1994, BC ED NY) 171 BR 731.
176. Pension or profit-sharing plans
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11 USCS § 522
Debtors' interest in profit-sharing plan is exempt under Iowa law. In re Pettit (1985, SD Iowa)
57 BR 362.
Debtors are entitled to exempt their interest in profit-sharing plan, even though they had volun-
tarily sought to transfer their interest as preference to bank, because no assignment occurred: at-
tempted assignment was rejected by bank and plan prohibited assignment. In re Pettit (1985, SD
Iowa) 57 BR 362.
Iowa exemption applies to all assets in profit sharing fund, not just present payments due, be-
cause interest in future payments necessarily includes interest in present assets from which those
payments will be made. In re Pettit (1985, SD Iowa) 57 BR 362.
Pension or profit sharing plan can be exempt, if otherwise qualified, under "spillover" or "wild
card" provisions of 11 USCS § 522(d)(5). In re Grant (1984, BC ND Tex) 40 BR 612.
Pension or profit sharing plan is exempt under 11 USCS § 522(d)(10((E) where beneficiary is
not insider, to extent necessary to support debtor and dependents. In re Grant (1984, BC ND Tex)
40 BR 612.
Debtor's right to payment in profit-sharing plan conforms to Iowa exemption statute requirement
that right be on account of illness, disability, death, age, or length of service, where terms of plan
provide that debtor may receive payments only upon his death, disability, or termination. In re
Flygstad (1986, BC ND Iowa) 56 BR 884, CCH Bankr L Rptr P 70938.
Under Iowa pension plan exemption statute, debtor need not be actually receiving payments
from plan in order to claim exemption. In re Flygstad (1986, BC ND Iowa) 56 BR 884, CCH Bankr
L Rptr P 70938.
Any monies which Chapter 7 debtor might receive from pension plan upon termination of his
employment would not be within Ohio pension fund exemption statute because payment would not
be made as result of debtor's disability, death or age, but payable upon termination of employment,
which is not event which effectuates right to exempt payments from pension fund. In re Wiggins
(1986, BC ND Ohio) 60 BR 89, 14 CBC2d 1136.
Chapter 7 debtor's interest in pension plan is not exempt under Tennessee opt-out provisions
where debtor can accelerate payments under plan or receive funds therein in one lump sum. In re
Faulkner (1987, BC ED Tenn) 79 BR 362.
Chapter 7 debtors' interests in employer's profit sharing retirement plan are not exempt assets of
bankruptcy estates under federal nonbankruptcy law under 11 USCS § 522(b)(2)(A). In re Bowen
(1987, BC DC SD) 80 BR 1012, 16 BCD 1315.
In state that has opted out of federal exemptions under 11 USCS § 522(d), Bankruptcy Court
hearing Chapter 7 case regarding exemptions for pensions and profit sharing plans is girded by de-
cisions under federal statute in light of dearth of state case law, where language of state law and
Code are virtually identical. In re Fill (1988, BC SD NY) 84 BR 332, 17 BCD 427 (superseded by
statute as stated in In re Iacono (1990, BC ED NY) 120 BR 691, 20 BCD 1950) and (superseded by
statute as stated in In re Orlebeke (1992, BC SD NY) 141 BR 569).
Chapter 7 debtor's interest in deferred contribution plan may not be exempted under 11 USCS §
522(d)(10)(E), which exempts payments from certain plans to extent reasonably necessary for sup-
port, because that subsection only applies where debtor has present right to receive payments from
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11 USCS § 522
pension plan; furthermore, even if court were to consider matter of debtor's future need for funds,
record does not support finding that "reasonably necessary" standard has been met. In re Tisdale
(1990, BC DC Conn) 112 BR 61.
Even if Bankruptcy Code has effect of discriminating in favor of public employees with respect
to pension rights under 11 USCS § 522(b)(2), such discrimination is rationally related to legitimate
governmental interest of maintaining quality public sector work force. In re Enfield (1991, BC WD
Mo) 133 BR 515.
Profit sharing plan does not qualify as exempt property under Florida exemption provision se-
lectively opting-back to federal exemptions since plan does not qualify for exemption under USCS
§ 522(d)(10)(E) where it was established by and under auspices of insider that employed debtor so
as not to meet requirements of § 522(d)(10)(E)(i) and did not qualify under applicable provisions of
Internal Revenue Code pursuant to § 522(d)(10)(E)(iii). In re Harris (1995, BC MD Fla) 188 BR
444, CCH Bankr L Rptr P 76851, 9 FLW Fed B 176, affd (1997, CA11 Fla) 116 F3d 1492, cert den
(1997) 522 US 950, 139 L Ed 2d 288, 118 S Ct 370.
11 USCS § 522(d)(10)(E) does not require debtor to begin receiving payments under pension
plan before petition was filed in order to qualify for exemption under statute. In re Marsella (1995,
BC DC RI) 188 BR 731.
Debtor's interest in employee profit sharing retirement plan is exempt from estate under 11
USCS § 522 where plan constitutes pension under state law. In re West (1987, BAP9) 81 BR 22, 16
177.--Particular plans and payments
Real estate properties allegedly held by Chapter 11 debtor exclusively for investment purposes
could not be exempted as "private retirement plan" under California law since more than debtor's
illusory intentions and dictionary definitions were necessary to satisfy court that property was ac-
quired as part of private retirement plan. Smith v Kennedy (In re Smith) (2000, CA9 Cal) 221 F3d
1101, 2000 CDOS 6581, 2000 Daily Journal DAR 8721, 36 BCD 150, CCH Bankr L Rptr P 78240,
reh gr, op withdrawn (2000, CA9 Cal) 234 F3d 483.
Bankruptcy court properly determined that portion of debtor's I.R.C. § 403(b) retirement plan
account, which he had pledged to secure his payment of alimony pursuant to divorce decree, was
not exempt under 11 USCS § 522(b), which incorporated exemption authorized under Tex. Prop.
Code Ann. § 42.0021: (1) § 42.0021 incorporated federal tax treatment of distributions from retire-
ment accounts; (2) pursuant to I.R.C. § 72(p)(1)(A), (p)(1)(B), pledge was considered to be loan to
debtor and was also deemed to be distribution to him; and (3) pledged portion of account was not
exempt under Tex. Prop. Code Ann. § 42.0021 because deemed distribution of pledged amount de-
stroyed tax qualification of that portion and rendered it non-tax qualified under I.R.C. § 403(b).
Coppola v Beeson (In re Coppola) (2005, CA5 Tex) 419 F.3d 323, 35 EBC 1641, CCH Bankr L
Rptr 80324, 2005-2 USTC 50503, 96 AFTR 2d 5375.
Chapter 7 debtor husband may not exempt interest in pension and profit sharing plan under Ore-
gon law because debtor's employer corporation of which debtor is sole shareholder and office has
sole discretion as to estimation of net profits and amount of contribution to plan and plan allows
employer to terminate plan at any time; debtor wife is person different from person granting pension
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11 USCS § 522
because there is no evidence that she controlled pension and profit sharing plan. In re Ott (1986,
DC Or) 69 BR 1.
Under 11 USCS § 522, Chapter 7 debtor's ERISA-qualified pension plan is not exempt under
Florida law as annuity contract exempt from attachment since debtor is not entitled to receive fixed
sum at stated intervals as defines annuity, but rather debtor's payments are based on fair market
value of assets in plan which are revalued annually, and company had absolute discretion over
amount of contributions to plan. In re Gribben (1988, SD Ohio) 84 BR 494.
Debtor's beneficial interest in profit sharing plan is not valid spendthrift trust under state law and
thus is not excluded from estate under 11 USCS § 541 and is not exemptible property under 11
USCS § 522 where debtor's ability to require trustee of plan to convey entire interest in plan to
debtor, together with debtor's prior course of conduct in connection with administration of plan,
show that debtor had absolute dominion and control over assets held for his benefit in plan; 29
USCS § 1144(a) does not preempt this rule. In re Mumm (1985, BC SD Fla) 52 BR 140.
Debtors' interest in profit sharing plan maintained by professional corporation of which husband
debtor is sole shareholder is not exempt under Oregon law because there is no truly separate, dis-
tinct employer-employee relationship and debtors may withdraw plan funds and/or other assets at
any time. In re Ott (1985, BC DC Or) 53 BR 388, affd in part and revd in part on other grounds
(1986, DC Or) 69 BR 1.
Debtor's profit-sharing plan is plan or contract similar to pension plans and annuities within
meaning of Iowa exemption statute where (1) plan was established by debtor's employer and in-
tended for her retirement, (2) fund management and distribution is out of debtor's control, except
upon certain events which are consistent with purpose of providing future support for debtor or her
dependents, and (3) distribution events are related to age, disability, death, or length of service;
amendment to Iowa exemption statute to include exemption for profit-sharing plan does not impair
contractual relationship between debtor and debtor's former employer, who created pension plan
and who was creditor of debtor, because federal law precludes enforcement against assets of plan
qualifying under ERISA, 29 USCS § 1001, and because general creditor of debtor could not have
reached benefits under plan outside of bankruptcy in any event. In re Pettit (1985, BC SD Iowa) 55
BR 394, affd (1985, SD Iowa) 57 BR 362.
In terms of control exercisable by debtor, profit-sharing plan in which debtor's interest of $
40,000 can be withdrawn in lump sum, is pension or other plan as contemplated by Iowa exemption
statute because debtor can gain access to his vested interest in plan by quitting his job, and, for 54-
year-old man with limited skills and modest income, this is extreme act that cannot be equated with
withdrawal from savings account. In re Flygstad (1986, BC ND Iowa) 56 BR 884, CCH Bankr L
Rptr P 70938.
Chapter 7 debtor's vested interest in pension fund is not reasonably necessary for his support or
that of his dependents, now or in future, and therefore is not exempt under Missouri law where: (1)
debtor is 41, his wife is 38, and their children are 17, 14, and 13; (2) debtor is in good health and
currently employed full-time; (3) in 2 years previous to filing debtor's income was $ 80,000 and $
52,000; (4) debtor's health and earning capacity for future appear to be good; and (5) debtor has ap-
proximately 25 years before retirement within which to accumulate additional retirement funds. In
re Bartlett (1986, BC WD Mo) 67 BR 455.
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11 USCS § 522
Chapter 7 debtor's interest in pension and profit sharing plans is not spendthrift trust under Ne-
vada law and is property of estate under 11 USCS § 541, not exemptable under 11 USCS § 522,
where debtor could take distribution under plans or terminate them at any time and where plans
were not established by "separate entity" for benefit of debtor because debtor is sole shareholder
and director of employer corporation. In re Shuman (1986, BC DC Nev) 68 BR 290, affd (1987,
BAP9 Nev) 78 BR 254, 16 BCD 755.
Florida statute exempting from execution pension established for police officers funded by con-
tributions of foreign casualty insurance companies does not apply to retirement fund to which Chap-
ter 13 debtor retired police officer and city employer have made joint contributions. In re Harring-
ton (1987, BC SD Fla) 70 BR 301, 15 BCD 809.
Chapter 7 debtor/attorney's 100 percent vested interest in qualified retirement plan is exempt
under New York law, but only to extent benefits are necessary to meet debtor's and his family's pre-
sent basic needs; where debtor's present net income is just under $ 3000 per month, and his ex-
penses would decrease as result of bankruptcy, and he has substantial equity in his residency, de-
termination that only 30 percent of $ 116,137 in retirement plan is necessary for his and his family's
support is reasonable and only that portion of benefits is exempt, notwithstanding fact that debtor is
58 years old, since attorney can be expected to work well beyond average retirement age without
significant diminishment of earning capacity or income. In re Woodford (1987, BC ND NY) 73 BR
675.
Ohio exemption statute expressly prohibits Chapter 7 debtor from exempting his interest in
profit-sharing plan, and debtor's interest in pension plan is exempt only to extent reasonably neces-
sary for his or his dependent's support; debtor who listed his income as physician as $ 155,000 and
$ 160,808 in 2 years preceding filing of his petition could not therefore claim his pension interest as
exempt in absence of evidence indicating likelihood of reduction of debtor's future earnings and
could not exempt his interest in profit-sharing plan. In re Hotchkiss (1987, BC ND Ohio) 75 BR
115.
Chapter 7 debtors' interests in profit sharing plan are not exempt under South Dakota opt-out
provision which exempts proceeds of life or health insurance, or proceeds of endowment policy,
because plan is not policy of insurance; neither are interests in plan exempt under provision which
exempts any benefits, rights, privileges and options under annuity contract because interests in plan
cannot be construed as annuity contracts on date of filing petitions because debtors have not elected
to receive plan proceeds as annuity. Further, plan interests are not exempt under provision which
exempts contributions and benefits accruing to debtor under South Dakota Retirement System be-
cause debtor's employer is not participant in system and neither are its employees. In re Bowen
(1987, BC DC SD) 80 BR 1012, 16 BCD 1315.
Chapter 7 debtor may exempt portion of his pension plan under Illinois wild card exemption but
because remainder of amount is not necessary to debtor's support and because debtor is 39 years
old, in good health, earns in excess of $ 40,000 per year, and has many years of future employment
to look forward to, it is not exempt under pension plan exemption statute. In re Boggess (1989, BC
SD Ill) 105 BR 470, 21 CBC2d 1015.
Trustee is entitled to turnover of proceeds from Chapter 7 debtor's profit-sharing plan under 11
USCS § 542 where plan is not exempted from estate under 11 USCS § 541(c)(2) because it is not
spendthrift trust, debtor may not exempt property under 11 USCS § 522(d), which does not exempt
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11 USCS § 522
ERISA-qualified plan, and although profit sharing plan falls within Florida exemption statute, that
statute is preempted by ERISA. In re Hadnot (1992, BC MD Fla) 138 BR 637, 6 FLW Fed B 58.
Chapter 7 debtor may exempt her interest in former husband's profit-sharing plan account under
New York exemption law, despite creditor's objection that debtor's interest in plan awarded to her
under qualified domestic relations order constitutes nothing more than future interest of debtor in
cash payment which cannot be considered exempt property and contention that because funds be-
came immediately payable to debtor, they are no longer protected, where interest to which debtor
became entitled under order is in nature of ownership interest in distinguishable pool of retirement
funds, and where under New York exemption law, which provides for 100 percent exemption of
both principal and interest from qualifying retirement plans from application by creditors to satis-
faction of money judgments, any payment debtor receives pursuant to order will fall within such
exemption; contention that order constitutes transfer of trust funds to third-party nonbeneficiary in
whose hands such funds are no longer exempt is without merit as debtor is recognized beneficiary
under plan. In re Abbata (1993, BC ND NY) 157 BR 201, 29 CBC2d 773.
Although corpus of debtor's pension plan is not part of debtor's bankruptcy estate because of re-
striction upon its transferability, $ 7000 transferred from plan by debtor to debtor's checking ac-
count became part of debtor's bankruptcy estate upon filing of his bankruptcy petition. In re
Bresnahan (1995, BC SD Ohio) 183 BR 506, 33 CBC2d 1592.
178. Savings and investment plans
Employee savings and profit-sharing plan which is part of ERISA qualified plan is entitled to
exemption under 11 USCS § 522(d)(10)(E) only for retirement fund portion of plan. In re Berndt
(1983, BC ND Ind) 34 BR 515, 9 CBC2d 848, CCH Bankr L Rptr P 69467.
Debtor's savings and investment plan is qualified exemptible profit-sharing plan under Wiscon-
sin law where assets of plan are derived from employee and matching employer contributions, all
assets are held in trust for exclusive benefit of employee participants and their beneficiaries, no in-
terest in plan or payments made under plan may be assigned, and certain restrictions on employee
withdrawals exist; proceeds of plan are also exempt under Wisconsin law and proceeds did not lose
exempt status when debtor rolled them over into individual retirement account. In re Woods (1986,
Chapter 7 debtor's savings plan may not be exempted under 11 USCS § 522(d)(10)(E) where it
allows beneficiary to withdraw funds at any time subject to penalty of loss of nonvested employer
contributions and 3-month suspension from plan, thus making it a present savings plan; trustee is
thus entitled to turnover under 11 USCS § 542. In re Pettit (1986, BC WD Wash) 61 BR 341, 14
CBC2d 1111.
Chapter 7 debtor's individual retirement account (IRA) was exempt under Neb. Rev. Stat. § 25-
1563.01 where account agreement and IRS determination letter showed that IRA complied with all
of requirements of 26 USCS § 408 and debtor's testimony, account records, investment history, and
other testimony showed that funds that had accumulated in IRA were result of deposits within le-
gally authorized limits and market growth. In re Rosen (2004, BC DC Neb) 318 BR 166.
Based on Chapter 7 debtor's income, necessary living expenses, litigation costs, and other cir-
cumstances, bankruptcy court found that portion of individual retirement account was necessary to
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11 USCS § 522
meet debtor's monthly expenses and cover litigation costs that had not been paid. In re Rosen (2004,
BC DC Neb) 318 BR 166.
Regardless of fact that debtor had not separated from service and was not presently entitled to
receive distribution under 401(k) plan, interest could be exempted, pursuant to 11 USCS §
522(d)(10)(E), provided, and to extent, that such interest was shown at evidentiary hearing to be
reasonably necessary for support of debtor or his dependents. Cardiello v Seaton (In re Seaton)
(2006, BC WD Pa) 346 BR 389.
179. Simplified Employee Pension plans
Like Individual Retirement Accounts (IRAs), Simplified Employee Pension (SEP) plans are
"similar plans or contracts" under 11 USCS § 522(d)(10)(E). In re Kellogg (1995, BC DC Mass) 179
BR 379, 33 CBC2d 245, CCH Bankr L Rptr P 76448.
Bankruptcy trustee objecting to debtor's claimed exemption in Simplified Employee Pension
(SEP) plan under 11 USCS § 522(d)(10)(E) on ground that it does not conform to requirements of
26 USCS § 401(a), has not met its burden of production under Bankruptcy Rule 4003, since subsec-
tion (E) of 11 USCS § 522(d)(10) is satisfied if SEP plan complies with 26 USCS § 408, and trustee
has not demonstrated why § 408 is inapplicable. In re Kellogg (1995, BC DC Mass) 179 BR 379, 33
180. Miscellaneous
Fact that debtor loaned more than half of the funds in her retirement plan to herself without se-
curity does not constitute such an abuse of the plan as to cause it to lose its retirement purpose and
exemption under California law. In re Bloom (1988, CA9) 839 F2d 1376, 9 EBC 1845.
Ten-year stream of income payable to Chapter 7 debtors pursuant to noncompetition agreement
obtained when husband/debtor sold his business and which he intended to use for retirement was
not exempt as "private retirement plan" under California statute. Lieberman v Hawkins (In re Lie-
berman) (2001, CA9 Cal) 245 F3d 1090, 2001 CDOS 2951, 2001 Daily Journal DAR 3657, 25 EBC
Debtor's interest in spendthrift trust may not be claimed as exempt under 11 USCS § 522. In re
Kelleher (1981, BC MD Fla) 12 BR 896.
Chapter 7 debtor's interest in employee stock ownership plan is not exempt under Georgia stat-
ute exempting pension, annuity, or similar plans because Georgia legislature, by enacting statute
which adopts verbatim language of federal statute except for omission of words "stock bonus" and
"profit sharing", intended that such stock bonus or profit sharing plans were not to be included as
exempt and that words "or similar plan" were not to be extended to such plans; clear purpose of
debtor's plan is not to provide employee with pension or annuity, but rather is to give employee
ownership interest in company. In re Gillespie (1985, BC ND Ga) 63 BR 124.
Debtor may not exempt patronage refunds due from creamery association as employee benefit
because (1) these dividends do not fit any category of exemptible employee benefits, i.e., plan holds
monies of members in order to prevent budget shortfalls but no contributions are made based upon
wages and debtor is not employee of association, having received no wages, and (2) refunds are not
reasonably necessary for debtor's support since debtor's truck driving and crop farming should pro-
duce sufficient income. In re Schuette (1986, BC DC Minn) 58 BR 417.
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11 USCS § 522
Chapter 7 debtor cannot exempt under New York opt-out provisions vested interest in money
deposited in tax-deferred savings account maintained by deceased spouse where such is not "cash"
as required by statute and no distribution was made to debtor until after filing of petition. In re
Sykes (1987, BC ND NY) 76 BR 924.
Debtor may exempt severance pay under Ohio opt-out provisions to extent reasonably necessary
for support of debtor or dependents where severance pay fund is: (1) funded by employer; (2) dis-
tributed under definite formula; and (3) not available to debtor employee prior to distribution. In re
Bell (1987, BC ND Ohio) 80 BR 97.
Stock certificates actually distributed to debtor under employee stock ownership program may
not be exempted from bankruptcy estate under Missouri opt-out provision exempting debtor's right
to receive such payment where right to receive terminates upon actual possession. In re McGoy
(1988, BC ED Mo) 86 BR 174, 4 BAMSL 4177.
Trustee's own rights and powers as levying creditor arise as of date when bankruptcy petition is
filed; as representative of unsecured creditors who extended credit to debtor before enactment of
Oklahoma statute exempting tax-qualified retirement plans, trustee has standing to litigate issue of
statute's constitutionality; to extent that statute declares that all tax-qualified retirement plans and
accounts are exempt from execution in enforcement of state court judgment and from beneficiaries'
bankruptcy estates, regardless of whether amount so reserved is more than reasonably necessary for
beneficiaries' support, regardless of whether beneficiaries have de facto control over and ready ac-
cess to funds for any purpose of their own, and even if plan or accounts are otherwise-forbidden
self-settled revocable spendthrift trusts, statute constitutes impairment of obligation of contracts as
to debts incurred before its enactment, in violation of United States and Oklahoma constitutions. In
re Garrison (1989, BC ND Okla) 108 BR 760, 22 CBC2d 387.
Wages voluntarily contributed by Chapter 7 debtor to state employees deferred-compensation
program prepetition, and to which debtor has access, are property of debtor's estate under 11 USCS
§ 541, and not exemptible where debtor has not claimed any exemption under Ohio law. In re
Leadbetter (1990, BC ND Ohio) 111 BR 640, 12 EBC 1217, affd without op (1991, CA6 Ohio) 946
F2d 895, reported in full and affd, on reconsideration (1993, CA6) 1993 US App LEXIS 10544.
State employee's deferred compensation plan may be exempted under 11 USCS § 523(d)(10)(E)
even though plan allows payments for reasons not specifically enumerated in statute where plan
administrator construed term "unforeseeable emergency" in plan as restricting payments to those
needed to provide future earnings in time of need, which is comparable to disability, illness or age
for which statute permits payments to be made. In re Destremps (1996, BC DC Mass) 193 BR 85.
Where Chapter 7 debtor's qualified 401(k) plan required disbursement of account within 60 days
after end of his employment, fact that traceable 401(k) proceeds were placed in checking account
after his employment terminated had no bearing on exempt status of those funds under Florida law
so that they would be held exempt where trustee did not challenge qualification of plan or allege
lack of traceability regarding proceeds. In re Ladd (2001, BC ND Fla) 258 BR 824, 37 BCD 115, 45
CBC2d 1183, 14 FLW Fed B 200.
Retired debtor/police officer's tax-qualified deferred compensation plan payments were exempt
under New York law as plan or contract similar to "stock bonus, pension, profit sharing, or similar
plan or contract." In re Ruffo (2001, BC ED NY) 261 BR 580, 26 EBC 1884, 87 AFTR 2d 2150.
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11 USCS § 522
Where bankruptcy debtor claimed exemptions in lawsuits with insurers to recover under policies
insuring life of debtor's parent, exemptions were improperly claimed under 11 USCS §
522(d)(10)(E) since policies did not provide substitute for wages and thus were not similar to profit-
sharing, stock bonus, pension, or annuity plans. Opel v Daly (In re Daly) (2005, BC MD Pa) 344 BR
304.
Debtor's thrift savings fund account was exempt under D.C. Code § 15-501(a)(9), but even if
account could not be exempted under District of Columbia law, debtor could still claim account as
exempt under 11 USCS § 522(b)(3) even if debtor elected not to utilize exemptions available under
11 USCS § 522(d). In re Gill (2007, BC DC Dist Col) 100 AFTR 2d 6356.
In New Hampshire exemption accorded "any interest in a retirement plan or arrangement quali-
fied for tax exemption purposes," phrase "qualified for tax exemption purposes" modifies "plan or
arrangement" rather than "interest"; exception in statute for pre-existing extensions of credit and
debts is preempted by Bankruptcy Code. Premier Capital, Inc. v DeCarolis (In re DeCarolis)
(2001, BAP1) 259 BR 467 (criticized in In re Friedlander (2002, BC DC Mass) 284 BR 525, 40
BCD 96).
I.Other Property 181. Generally
Debtor may not exempt property under 11 USCS § 522(b) where debtor did not comply with
mechanisms provided by state law for claiming personal property exemptions. In re Norton (1983,
Right of exemption under 11 USCS § 522 is personal privilege and court will therefore carefully
see that exemption laws are not construed so as to make them instruments of fraud; for example,
where property sought to be exempted is determined to be fruit or instrumentality of crime or where
property to be exempted was fraudulently concealed by debtor both before and after filing, exemp-
tion will not be allowed. In re Hanson (1984, BC DC ND) 41 BR 775.
Wyoming exemption for entireties property, authorized by 11 USCS § 522(b)(2)(B), extends to
personalty under state common law, but only if survivorship right is expressly created, and person-
alty is capable of joint possession; thus Chapter 7 debtor husband of nonfiling wife (1) can exempt
interest in contracts for deed given to "husband and wife," (2) cannot exempt stock certificates
which are held by debtor and wife designated only by their proper names, (3) cannot exempt trust
interest in condominium created only in proper names, and (4) cannot exempt household goods and
artwork where no documents describing form of ownership exist. In re Anselmi (1985, BC DC
Wyo) 52 BR 479, 13 BCD 573.
For purposes of 11 USCS § 522(d)(11)(B), relevant time when one must be dependent of de-
ceased individual is not time of individual's death; rather, relevant time when one must be depend-
ent to qualify under statute is after individual's death. Walsh v Hendrickson (In re Hendrickson)
(2002, BC WD Pa) 274 BR 138.
Phrase "a payment" in 11 USCS § 522(d)(11)(B) indicates that one must look to debtor's right to
receive particular payment and determine whether debtor would have been dependent of deceased at
that time had deceased not died; thus, exemption is properly taken under statute only if debtor
would have been dependent of deceased individual when right to receive particular payment arises.
Walsh v Hendrickson (In re Hendrickson) (2002, BC WD Pa) 274 BR 138.
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11 USCS § 522
Bankruptcy court found that where debtor filed his bankruptcy petition and elected state exemp-
tions as single person rather than federal exemptions under 11 USCS § 522, and testified that he was
not married when he filed his bankruptcy petition, then debtor was not entitled to personal property
exemption found in Ark. Const. art. 9, § 2; Ark. Code Ann. § 16-66-218(b)(2). In re Hunter (2003,
BC WD Ark) 295 BR 882.
Race horse could not be claimed as exempt by bankrupt under state law exempting team work
horses. In re Libby (1900, DC Vt) 103 F 776.
For bankrupt to claim exemption for horses used in team work, as provided by state law, he
must make selection before sale is made by trustee. In re Grady (1905, DC Vt) 138 F 935.
Where debtors voluntarily transferred their interest in cattle to extent of lien, upon granting of
security interest in livestock to bank, debtors are not entitled to exemption as claimed under 11
USCS § 522(g)(1) and even if security interest did not control, transfer of cattle for sale by debtor
was voluntary transfer, and that transfer was accomplished by aid provided by debtors and by their
lack of resistance; mere fact that debtors disliked having to transfer livestock for sale does not obvi-
ate voluntariness of transaction. In re McQueen (1982, BC DC Vt) 25 BR 592.
Under Missouri law, debtor dairy farmers may not exempt cows used for commercial or produc-
tion purposes under statute allowing exemption for animals used for personal, family, or household
use, nor may they exempt them under tools of trade exemption because term "tool" does not en-
compass livestock, but instead refers to inanimate devices such as instrument or apparatus that
augments or extends limits of human physical ability or power; since cows are not exempt, liens on
them may not be avoided under 11 USCS § 522(f). In re Eakes (1987, BC WD Mo) 69 BR 497.
Thirteen Holstein and six beef cattle are not animals owned for personal use and therefore pro-
ceeds from sale of animals cannot be claimed as exempt by Chapter 11 debtors under Missouri per-
sonal property exemption, particularly where debtors had already exempted 8 cattle by self-help,
presumably to fill their personal milk and meat requirements; however, wild card and head of
household exemptions may be applied to exempt portion of sales proceeds. In re Searcy (1987, BC
WD Mo) 75 BR 149, 4 UCCRS2d 1247.
183. Art
Where there is no evidence that oil paintings belonging to bankrupt and hanging in Los Angeles
athletic club are either family portraits or drawn or painted by any member of family, they are not
exempt as hanging pictures under California law or under former 11 USCS § 24 which allowed
bankrupts exemptions prescribed by law of state of their domicile. Hamaker v Heffron (1945, CA9
Cal) 148 F2d 981, cert den (1945) 326 US 737, 90 L Ed 440, 66 S Ct 46.
Although artist is not entitled to exemption as family pictures art works which are not represen-
tations of bankrupt's family or friends, he is entitled to exemption for art works used in his occupa-
tion up to value of $ 1000 less any other business exemption. In re Teachout (1975, BC WD Mich)
1 BCD 1271, 5 CBC 511.
they may not claim; however, camera, golf clubs or exercise bike. In re Lucas (1986, BC SD Cal)
Page 331
11 USCS § 522
242.
184. Causes of action
Debtors may claim causes of action under federal and state truth-in-lending acts as exempt un-
der 11 USCS § 522. In re Smith (1981, CA7 Ill) 640 F2d 888, 7 BCD 419, 3 CBC2d 827, CCH
Dismissal of class action suit for lack of standing was erroneous even if debtor's portion of
claim would put her above state's personal property exemption ceiling, since she was entitled to ex-
empt $ 900 of claim's fair market value as of date she filed bankruptcy petition. Polis v Getaways,
Inc. (In re Polis) (2000, CA7 Ill) 217 F3d 899, reh den (2000, CA7 Ill) 2000 US App LEXIS 18226,
complaint dismd, judgment entered (2001, ND Ill) 2001 US Dist LEXIS 2021.
All of debtor's motions and correspondence at time in question stressed fact that jurors in his
lawsuit against city had told him no award was made for future lost wages; having taken that posi-
tion before district court several months earlier, he could not take opposite stance and, therefore,
bankruptcy court correctly found judgment to be non-exempt. Pequeno v Schmidt (2004, SD Tex)
307 BR 568 (criticized in Copper v Copper (In re Copper) (2004, BAP6) 314 BR 628, CCH Bankr L
Rptr P 80171, 2004 FED App 7P) and affd (2005, CA5 Tex) 126 Fed Appx 158.
Debtor may claim as exempt monies received in remuneration for loss of future earnings, 11
USCS § 522(d)(11)(E), and once property is claimed to be exempt, there is presumption that exemp-
tion has been correctly claimed; therefore, any party contesting exemption has burden to show that
it was improperly claimed and, once objecting party has satisfied burden, debtor must come forward
with unequivocal evidence that exemption is proper. Pequeno v Schmidt (2004, SD Tex) 307 BR 568
(criticized in Copper v Copper (In re Copper) (2004, BAP6) 314 BR 628, CCH Bankr L Rptr P
80171, 2004 FED App 7P) and affd (2005, CA5 Tex) 126 Fed Appx 158.
Real and personal property, or either, to be selected by bankrupt including money, debts due
him, and choses in action may be set apart as exempt under Virginia law. In re Wilkes (1976, BC
WD Va) 2 BCD 957, 9 CBC 801.
Debtor's interest in unliquidated tort claim is distinct from interest in insurance proceeds so that
where debtors had not filed suit by date of their bankruptcy filing or by date of conversion of their
case from Chapter 13 to Chapter 7, they had no right to payment under insurance policy and thus
could not exempt insurance proceeds. In re Kollar (1998, BC ED Pa) 218 BR 349, 39 CBC2d 956,
affd (1998, ED Pa) 223 BR 288, CCH Bankr L Rptr P 77774, affd (1999, CA3 Pa) 176 F3d 175.
Florida's $ 1,000 personal property exemption for general intangibles or choses in action could
be used to exempt $ 600 portion of value of Chapter 7 debtor's class action lawsuit. In re Kelsey
Property of estate under 11 USCS § 541(a)(1) includes choses in action, even if contingent and
unliquidated and thus not subject to attachment under state law; Bankruptcy Code was intended to
go beyond limits of creditor process law in defining property of estate so that debtor's exemption
rights in property cannot be based solely on that property's insulation from attachment, levy, and
sale. Howe v Richardson (In re Howe) (1999, BAP1 RI) 232 BR 534, affd (1999, CA1) 193 F3d 60,
cert den (2000) 529 US 1021, 146 L Ed 2d 315, 120 S Ct 1424.
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Unpublished: Debtor's claim that Chapter 7 trustee had improperly failed to exercise her 11
USCS § 544 power to avoid transfers for benefit of estate was properly rejected by bankruptcy court
because claims to which debtor was referring were contingent claims of estate based on possible
position outcome in litigation involving quit claim deed, not secured claims of creditors, with result
that Chapter 7 trustee's general authority under § 544 was simply inapposite, nor was debtor entitled
to relief on alternate theory that he was entitled to avoid transfer under 11 USCS § 522(h); § 522
does not afford debtor unfettered power to step into trustee's shows and exercise avoidance power
but conditions exercise of such powers on showing that property at issue would be subject of
debtor's statutory claim of exemption, which was not case at bar. Lewis v McCallum (In re Lewis)
(2007, BAP10) 2007 Bankr LEXIS 2500.
185.--Personal injury actions and awards
Debtor's claim for personal injury, whether unliquidated when petition was filed, or settled dur-
ing proceeding, are property of bankrupt estate when case begins; pursuant to Virginia law, debtor
is entitled to claim exemption for such claim under homestead exemption statute, but not as com-
mon law exemption nor as an unassignable cause of action unreachable by creditors. Tignor v
Parkinson (1984, CA4 Va) 729 F2d 977, 11 BCD 965, 10 CBC2d 729, CCH Bankr L Rptr P 69772
(superseded by statute as stated in Cassell v Krippendorf (In re Cassell) (1994, CA4 Va) 6 Fourth
Cir & Dist Col Bankr Ct Rep 665, 6 Fourth Cir & Dist Col Bankr Ct Rep 814) and (superseded by
statute as stated in In re Sherman (1995, BC ED Va) 191 BR 654).
Chapter 7 debtor's personal injury cause of action cannot be considered exempt from his bank-
ruptcy estate, despite immunity of tort cause of action from sequestration where Wisconsin legisla-
ture did not include right within its general list of exemptions and failed to identify it with reason-
able certainty as exemption, prior to amendment to exemption statute to exempt specifically pay-
ments for personal injury claims. In re Geise (1993, CA7 Wis) 992 F2d 651, CCH Bankr L Rptr P
75226.
Chapter 7 debtor who listed lawsuit at value of one dollar is entitled to entire value of personal
injury lawsuit, whatever it turned out to be, despite trustee's argument that debtor is entitled to only
one dollar, where debtor exempted full reported value of lawsuit, and neither trustee nor any other
interested party objected, where trustee has conceded that he knew debtor used nominal one dollar
value to signify asset with contingent value, and trustee specifically denied having been misled into
believing debtor's lawsuit had actual value of one dollar. Allen v Green (In re Green) (1994, CA11
Ala) 31 F3d 1098, 31 CBC2d 1449, CCH Bankr L Rptr P 76098, 8 FLW Fed C 606.
Employer, sponsor and administrator of health benefits plan with reimbursement provision, had
equitable lien on personal injury settlement proceeds received by employee after she filed for bank-
ruptcy; employer had security interest in proceeds and nothing prevented employer from foreclosing
on that interest. Wal-Mart Stores, Inc. v Carpenter (In re Carpenter) (2002, CA4 Va) 36 Fed Appx
80, 28 EBC 2043.
Sponsor and administrator of employee health benefits plan with reimbursement provision had
enforceable equitable lien on personal injury settlement proceeds received by its employee from
third-party tortfeasor after employee filed for bankruptcy; because plan administrator was seeking
equitable relief via lien on particular property in hands of plan beneficiaries, rather than legal relief,
its actions were authorized by 29 USCS § 502 (a)(3) and exemption under 11 USCS § 522(b)(2) did
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11 USCS § 522
not apply to bar plan administrator's actions. Wal-Mart Stores, Inc. v Carpenter (In re Carpenter)
(2002, CA4 Va) 36 Fed Appx 80, 28 EBC 2043.
Under both state and federal rules, debtor was required to disclose settlement from her personal
injury suit as asset of her estate, contingent or otherwise, and then seek exemption under Utah Code
Ann. § 78-23-5 (2005); bankruptcy court's determination that debtor met neither of safe havens to
establish inadvertence, that debtor intentionally concealed her potential litigation interest, and that
concealment prejudiced trustee's administration of estate were not clearly erroneous because
debtor's shifting explanations of why she failed to disclose asset and her failure to give trustee
timely notice of accident settlement suggested bad faith. Gillman v Ford (In re Ford) (2007, CA10)
There is sufficient proof to sustain Chapter 7 debtor's personal injury exemption under 11 USCS
§ 522(d)(11)(D) where although judgment does not differentiate among damages for wages, bodily
injury, or pain and suffering, award for personal injury was far below that requested by debtor in
state court action, rendering it unlikely that entire award was for pain and suffering, and since there
is no proof that judgment was only for pain and suffering, the form of personal injury that may not
be exempted, debtor is entitled to $ 7,500 exemption; debtor is not entitled to exemption under §
522(d)(11)(E), which exempts compensation for loss of future earnings to extent reasonably neces-
sary for support, because award was not in compensation for loss of future earnings since debtor is
capable of working and schedules indicate that debtor receives social security and veteran's benefits
in excess of listed expenses. In re Russell (1992, ED Ark) 148 BR 564.
Statutory language of D. C. Code § 15-501(a)(11)(D) did not create exemption for proceeds of
personal injury settlement, despite some similarity to 11 USCS § 522(d)(11)(D), which created par-
tial exemption; as drafted, D.C. statute was so ambiguous court could discern no clear meaning.
Howell-Robinson v Albert (2008, DC Dist Col) 384 BR 19.
Personal injury claims are exempt personal property under Wisconsin law, and even in absence
of specific statutory exemption, 11 USCS § 522(b)(2)(A) allows Wisconsin debtors to claim per-
sonal injury action and thereby remove such actions from their bankruptcy estates created under 11
USCS § 541. In re Brandstaetter (1984, BC ED Wis) 36 BR 369, 11 BCD 527.
Personal injury claim was exempt under 11 USCS § 522(b)(2) pursuant to applicable (Minne-
sota) state law, and fact that claim was settled constituted only an executory accord, not substitute
contract where no payment was made on release signed. In re Carlson (1984, BC DC Minn) 40 BR
746, 12 BCD 210.
While under state law unliquidated tort claim for personal injuries is not subject to writ of exe-
cution but is, nevertheless, not exempt from claims of creditors, such claim may not be exempted
pursuant to 11 USCS § 522(b)(2) and therefore is part of estate under 11 USCS § 541. In re Mills
(1985, BC SD Fla) 46 BR 525.
Chapter 7 debtor may not exempt personal injury judgment proceeds because Nevada legislature
has determined that neither personal injury actions nor recoveries are exempt from execution and
levy by judgment creditors. In re Richards (1986, BC DC Nev) 57 BR 662.
Under Georgia's opt-out statute, identical to 11 USCS § 522(d)(11)(D), debtor may claim as ex-
empt up to $ 7,500, after deducting amounts for medical expenses and property damage (which may
not be exempted), and any recovery from unliquidated claim resulting from Chapter 7 debtor's
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11 USCS § 522
automobile accident 8 months prior to filing; that personal injury claims are nonassignable in Geor-
gia does not affect amount of exemption nor does any "increase" in claim due to alleged pain and
suffering, since value of claim at time of filing would estimate future damage and therefore claim's
value remains constant from time of filing. In re Geis (1986, BC ND Ga) 66 BR 563.
Exemption in 11 USCS § 522(d)(11) for personal injury awards is supplemental to other exemp-
tions, not limit on them; thus fact that debtor claims more than § 522(d)(11) allows has no effect on
availability of homestead exemption to debtor. In re Wheeling (1986, BC WD Pa) 68 BR 388.
Where under applicable state law, in state which has opted out under 11 USCS § 522(d), debtors'
unliquidated claim for personal injuries is not subject to levy or assignment, such claim is retained
by the debtors as exempt property in Chapter 7 proceeding. In re Mitchell (1987, BC ED Mo) 73
BR 93, 4 BAMSL 3673.
Chapter 7 debtor may exempt under 11 USCS § 522(d)(11)(D) interest in proceeds he hopes to
receive from medical malpractice action in which debtor is plaintiff to extent recovery is for actual
bodily injury, but may not exempt proceeds for pain and suffering, unless only recovery is for pain
and suffering, or recovery is disproportionate to bodily injury suffered. In re Sidebotham (1987, BC
ED Pa) 77 BR 504, 17 CBC2d 923.
Provision in Minnesota opt-out provisions limiting exemptions to "reasonable amount of prop-
erty" will not limit exemption of general damages portion of personal injury right of action, where
such damages represent monetary restoration of physically and mentally damaged person; such pro-
vision does restrict exemption for special damages. In re Bailey (1988, BC DC Minn) 84 BR 608.
Minnesota statute exempting rights of action for injuries to person of debtor or of relative
whether or not resulting in death, and which imposes no monetary limit on amount of recovery, is
unconstitutional because it is contrary to Minnesota constitution which provides that reasonable
amount of property shall be exempt and that amount of such exemption shall be "determined by
law," which requires that amount of exemption must be made on face of statute. In re Medill (1990,
BC DC Minn) 119 BR 685.
When Chapter 7 case is filed before judgment is entered on right of action for injuries to person
of debtor or relative: (1) claim for special damages that accrued before case is filed is not exempt
because Minnesota statutory exemption for prepetition special damages is unconstitutional as ap-
plied under Minnesota Constitution; (2) claim for special damages that accrue after case is filed is
exempt because statutory exemption for postpetition special damages is constitutional; (3) claim for
general damages is exempt because statutory exemption is constitutional; and (4) claim for punitive
damages is not exempt either because statutory exemption is unconstitutional as applied or because
such claim does not come within scope of exemption statute. In re Cook (1992, BC DC Minn) 138
BR 943.
Although Chapter 7 debtor's unliquidated medical malpractice claim is not subject to garnish-
ment under Kansas law, claim is property of estate and cannot be claimed as exempt. In re Garrity
(1992, BC DC Kan) 144 BR 895.
Proceeds from personal injury settlement that are paid and received in full prior to filing of
bankruptcy petition are property of estate and are not exempt under Minnesota statute (Minnesota
Statutes § 550.37(22)) exempting rights of actions for injuries to person of debtor or of relative,
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11 USCS § 522
whether or not resulting in death, from any attachment, garnishment, or sale on any final process
issued from any court. In re Procter (1995, BC DC Minn) 186 BR 466.
Nothing in Bankruptcy Code requires debtor to choose one exemption under which to claim all
aspects of single personal injury award; accordingly, Chapter 13 debtor could exempt portion of
personal injury settlement under 11 USCS § 522(d)(11)(D) and remainder under § 522(d)(11)(E). In
re Bova (1997, BC ED Pa) 205 BR 467.
Debtor was allowed to amend his Schedule C exemptions, revising his 11 USCS § 522(d)(5) ex-
emption to apply to proceeds of his medical malpractice claim, since Rule 1009 permits debtor to
amend his schedules at any time before case is closed, and exemptions are one-time benefits con-
ferred upon debtor by statute which should be used to fullest extent possible. In re Scotti (2000, BC
DC NJ) 245 BR 17, 43 CBC2d 1405.
Debtor who owns multiple rights to receive payment on account of personal bodily injury aris-
ing from separate and distinct incidents, is entitled to claim 11 USCS § 522(d)(11)(D) exemption for
each such payment right. In re Comeaux (2003, BC ED Tex) 305 BR 802.
Because debtors who owned multiple rights to receive payment on account of personal bodily
injury arising from separate and distinct incidents were entitled to claim 11 USCS § 522(d)(11)(D)
exemption for each such payment right, bankruptcy trustee's objection to debtors' multiple claims of
exemption under § 522(d)(11)(D) was overruled. In re Comeaux (2003, BC ED Tex) 305 BR 802.
Where husband's wife suffered personal injury in accident, husband could take exemption in
their joint chapter 13 bankruptcy, to extent, because wife's personal injury claim arose in commu-
nity property state in which they lived. In re Bippert (2004, BC WD Tex) 311 BR 456.
Debtor's claim to exempt share of settlement fund under 11 USCS § 522(d)(11)(D) that arose
from compromised personal injury claim was subject to proration for tracing method where bank-
ruptcy trustee and debtor were both blameless under facts. In re Rauser (2004, BC DC Conn) 312
BR 461, 52 CBC2d 998.
Exempt portion of debtor's undiscounted personal injury claim was reduced to statutory maxi-
mum of $ 17,425.00 because amount "traced" and, thus, exempted under 11 USCS § 522(d)(11)(D)
was not capped by statutory maximum but, rather, it was statutory maximum, or some lesser
amount, that had to be "traced" under statute. In re Rauser (2004, BC DC Conn) 312 BR 461, 52
CBC2d 998.
In Chapter 7 bankruptcy case, trustee's objection to debtor's claim of exemption in anticipated
proceeds of pending personal injury lawsuit, on ground that debtor had not shown that she had per-
manent bodily injuries, lacked merit because 11 USCS § 522(d)(11)(D) is not limited to permanent
injuries. In re Lawton (2005, BC DC Conn) 324 BR 20.
Personal bodily injury, within meaning of 11 USCS § 522(d)(11)(D), does not have to be per-
manent to be within scope of exemption. In re Lawton (2005, BC DC Conn) 324 BR 20.
Debtor wife was not entitled to receive any portion of settlement proceeds under 11 USCS §
522(d)(11)(D) where settlement had compensated her for her actual pecuniary losses suffered as
result of automobile accident. Walsh v Kelin (In re Kelin) (2006, BC WD Pa) 341 BR 521.
Debtor husband was not entitled to receive any portion of settlement proceeds from pre-petition,
personal injury lawsuit where lawsuit had been brought by and settled on behalf of his wife and as
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11 USCS § 522
result, he had no property interest in his own right in lawsuit. Walsh v Kelin (In re Kelin) (2006, BC
WD Pa) 341 BR 521.
Debtor wife was not entitled to receive any portion of settlement proceeds under 11 USCS §
522(d)(11)(E) where there was nothing in record to indicate that wife's earning capacity had been
diminished in any way as result of automobile accident and as result, no portion of settlement pro-
ceeds was compensation for future earnings wife lost as consequence of her injuries. Walsh v Kelin
(In re Kelin) (2006, BC WD Pa) 341 BR 521.
Debtor could utilize "personal bodily injury" exemption found at 11 USCS § 522(d)(11)(D), so
he could exempt annuities at issue from property of estate; documents and other evidence produced
by debtors adequately set forth basis for exemption under § 522(d)(11)(D) and injuries sustained by
debtor, on their own, were extensive enough to account for settlement award he received; undis-
puted record was that debtor's bodily injury has been so severe that he was physically precluded
from performing work that was his livelihood prior to accident. Walsh v Reschick (In re Reschick)
(2006, BC WD Pa) 343 BR 151.
Where portion of debtor's original malpractice claim and resulting settlement was for personal
injury in form of emotional distress, defendant was entitled to exempt proceeds of claim pursuant to
state law personal injury exemption to extent they were necessary for support. Sylvester v Hafif (In
re Sylvester) (1998, BAP9) 220 BR 89, 98 CDOS 2728, 98 Daily Journal DAR 3750.
Under Cal. Civ. Proc. Code § 704.140, Chapter 7 debtors were required to show that settlement
proceeds from their medical malpractice action were necessary for their support to claim proceeds
exempt in their bankruptcy case. Gose v McGranahan (In re Gose) (2004, BAP9) 308 BR 41.
California Legislature did not intend Cal. Civ. Proc. Code § 704.140(a) to exempt personal in-
jury claims in their entirety, without reference to necessity for support; rather, § 704.140(a) merely
allowed debtor to exempt personal injury claims without having to make formal claim. Gose v
McGranahan (In re Gose) (2004, BAP9) 308 BR 41.
186.----Multiple causes of action
Chapter 7 debtor may not claim more than $ 15,000 in exemption for payment received on ac-
count of personal bodily injury under 11 USCS § 522(d)(11)(D), even though she had three personal
injury claims from three separate pre-petition accidents. Christo v Yellin (In re Christo) (1999, CA1)
192 F3d 36, CCH Bankr L Rptr P 78002 (criticized in In re Comeaux (2003, BC ED Tex) 305 BR
802).
11 USCS § 522(d)(11)(D) entitles Chapter 7 debtor who has sustained personal bodily injuries
in 2 separate prepetition accidents to 2 exemptions of $ 7,500. In re Marcus (1994, BC DC Conn)
172 BR 502.
Nothing forecloses bankruptcy debtor from properly asserting multiple exemptions under 11
USCS § 522(d)(11)(D) for multiple property interests in personal injury lawsuits which are separate
and distinct. Opel v Daly (In re Daly) (2005, BC MD Pa) 344 BR 304.
Debtor should be allowed only one exemption in amount of $ 15,000 on account of personal
bodily injury under 11 USCS § 522(d)(11)(D); bankruptcy court decision limiting Chapter 7
debtor's exemption to $ 15,000 even though debtor has three separate tort actions pending as result
of three separate pre-petition automobile accidents is affirmed. Christo v Yellin (In re Christo)
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11 USCS § 522
(1999, BAP1 Mass) 228 BR 48, 41 CBC2d 310, CCH Bankr L Rptr P 77885, affd (1999, CA1) 192
F3d 36, CCH Bankr L Rptr P 78002 (criticized in In re Comeaux (2003, BC ED Tex) 305 BR 802).
187.----Particular causes of action
Pennsylvania statute permitting exemption of net amount payable under any accident or disabil-
ity insurance does not apply to debtor's prospective tort judgment despite fact that such judgment
might be paid by tort defendant's insurance carrier; thus, Chapter 7 debtors' potential recovery for
slip and fall in retail store, valued by debtors at $ 500,000 to $ 750,000, could not be exempted
since (1) exemption at issue is insurance exemption, not personal injury or tort exemption, and pol-
icy proceeds will be paid to retailer rather than debtors, (2) debtors have no "property or other
rights" as required for proceeds to be exempt under Pennsylvania statute, and (3) it is illogical as
well as potentially disruptive of bankruptcy process for right to exemption under state law to turn on
possibility that tort judgment will be paid by defendant's insurer which approach would enable tort
defendant to defeat exemption by deciding to pay any judgment out of its own pocket. Kollar v
Miller (In re Kollar) (1999, CA3 Pa) 176 F3d 175.
Alleged conduct that gave rise to his complaint involved actions prior to his filing for bank-
ruptcy, and under 11 USCS § 541(a)(1), all of debtor's legal claims became property of bankruptcy
estate at time he filed his Chapter 7 petition; consequently, debtor had no standing to bring subject
legal claims since trustee had not abandoned any of property of estate under 11 USCS § 554(a),(d)
and debtor's legal claims were not exempted from bankruptcy estate under 11 USCS § 522(d)(1)
where no part of that or any other statutory provision recognized exemption of kind of legal claims
for alleged violations of federal statutes for concealing nature of loan terms and for race, national
origin, and gender discrimination. Augustin v Danvers Bank (2007, DC Mass) 486 F Supp 2d 99.
Personal injury cause of action representing contingent and unliquidated claim for damages
against railroad, which is neither assignable nor subject to reach of creditors under state law, is ex-
empt property pursuant to 11 USCS § 522. In re Musgrove (1981, BC WD Va) 7 BR 892, 3 CBC2d
Award for loss of consortium because of personal injury to spouse is payment "on account of
personal bodily injury . . . of debtor or individual of whom debtor is dependent" and may be ex-
empted pursuant to provisions of 11 USCS § 522(d)(11)(D). In re Lynn (1981, BC WD Wis) 13 BR
361, 7 BCD 1379, CCH Bankr L Rptr P 68287 (criticized in Owen v Vieira (2002, SD Ill) 2002 US
Dist LEXIS 5910).
Secured creditor has not established as matter of fact or law that monies received from settle-
ment of state court lawsuit for personal injury and property damage to car only represent recovery
for pain and suffering so as to make money not exempt property pursuant to 11 USCS §
522(d)(11)(D); further factfinding must be conducted as it cannot yet be determined whether debtor
can claim entire amount as exempt or whether secured creditor is entitled to receive some portion
pursuant to its security interest in proceeds of car. In re Territo (1983, BC ED NY) 32 BR 377, 11
BCD 20, 36 UCCRS 1762.
Compensation debtor may have already received in form of direct payments from his own in-
surer under provisions of state no fault insurance law does not count towards $ 75,000 exemption
pursuant to 11 USCS § 522(d)(11)(D) where such compensation is actually not debtor's to have, but
was rather trust from which his medical expenses and other compensable losses were paid; despite
any pain and suffering that presumably accompanied debtor's injury, where injury alone was exten-
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11 USCS § 522
sive enough to account for all of money received in settlement of debtor's state court action less that
amount attributable to damage to vehicle, debtor may claim such sum as exempt property; likewise,
portion of money debtor received from state court settlement arising out of automobile accident
could reasonably be attributed to lost earnings and retained as exempt property on that basis where
prior to accident debtor served as assistant manager at salary of $ 12,000 per year and where his in-
come since time of accident has never exceeded 80 percent of level it was at time he was injured
and where further because of continuing disability it is unlikely that debtor will attain former in-
come level once again without some form of job retraining. In re Territo (1984, BC ED NY) 36 BR
Debtor is entitled to full exemption of $ 7,500 under 11 USCS § 522(d)(11)(D), for personal in-
jury settlement, without offset of $ 3,083.50 paid to debtor's doctors by insurance company. In re
Estate of Shahan (1984, BC ND Tex) 40 BR 608.
Where state court judgment for debtor in personal injury action was by general verdict, which
exceeded amount allowed under Tennessee exemption for personal injury recoveries after deducting
non-exempt amount for actual pecuniary loss, debtor is entitled to entire $ 7,500 exemption because
it is impossible to distinguish between amounts awarded for exemptible elements of recovery and
non-exempt elements such as pain and suffering; and court awards remainder of judgment to dis-
abled debtor under subsection allowing exemption of award for lost future earnings. In re Haga
(1985, BC ED Tenn) 48 BR 492.
Under Bankruptcy Rule 4003, without proof by creditor hospital that debtor accepted part of tort
recovery in trust for payment of medical services, as opposed to payment for bodily injury, creditor
cannot bring amount owed for medical services outside of debtor's right to exempt tort recovery un-
der 11 USCS § 522(d)(1)(D), despite contrary conclusion in 3 Colliers § 522.20. In re Wheeling
(1986, BC WD Pa) 68 BR 388.
Chapter 7 trustee's objection to exemption claimed by debtor relating to $ 14,000 recovered in
personal injury settlement must be overruled, where state exemption statute places limit of $ 7,500
on account of personal injuries, but permits unlimited exemption for award for pain and suffering,
for actual pecuniary loss, and for loss of future earnings, because elements of total net settlement
are not specified, particularly where evidence establishes that debtor sustained 40 percent perma-
nent partial disability and incurred $ 50,000 in medical bills. In re Blizard (1988, BC WD Ky) 81
BR 431.
Chapter 7 debtor may not exempt legal malpractice claim for untimely filing of bankruptcy peti-
tion resulting in foreclosure of debtor's home and loss of homestead exemption as personal injury
cause of action under California exemptions. In re Haaland (1988, BC SD Cal) 89 BR 845, 19
CBC2d 811, affd in part and remanded in part on other grounds (1989, SD Cal) 172 BR 74.
Although automobile accident claim proceeds were not entitled to exemption under state law,
property was deemed exempt where no objections to claim were filed, and proceeds could not be
considered disposable income. In re Ferretti (1996, BC SD Fla) 203 BR 796, 37 CBC2d 473, 10
FLW Fed B 139 (criticized in In re Springer (2005, BC ND Ga) 2005 Bankr LEXIS 760) and (criti-
cized in In re Launza (2005, BC ND Tex) 2005 Bankr LEXIS 1017).
Debtor was entitled to exemption under 11 USCS § 522(d)(11)(D) for personal injury settlement
proceeds, where he suffered appreciable or cognizable injury when his treating physician inadver-
tently injected needle into his spinal cord, causing temporary paralysis and headaches; debtor may
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11 USCS § 522
also exempt proceeds under 11 USCS § 522(d)(11)(E), where trustee failed to disprove his claim for
lost wages. In re Scotti (2000, BC DC NJ) 245 BR 17, 43 CBC2d 1405.
Settlement paid Chapter 7 debtor in sexual harassment suit against former employer was exempt
under Maryland personal injury exemption statute as claim for "injury of the person." In re Dobbins
(2000, BC DC Md) 249 BR 849.
Debtor's settlement of sexual harassment claim against former employer is exemptible where
claim can be construed as "injury to the person" under state law. In re Dobbins (2000, BC DC Md)
249 BR 849.
Self-funded ERISA medical benefits plan administered by employer of Chapter 7 debtor who
was injured in automobile accident did not have superior right in her personal injury lawsuit on
grounds of subrogation, equitable lien, or constructive trust, so as to furnish basis for objection to
debtor's claimed exemption of her cause of action, where (1) accident information form did not even
purport to grant plan subrogation rights but only right of reimbursement to any recovery and plan
document would not establish subrogation rights since such rights would still be defeated by "make-
whole rule," (2) principles underlying "make-whole rule" applied with equal force in determination
of equitable lien, and (3) record did not establish that debtor had taken any action prejudicial to
plan's alleged interest and, even if she were found have duty to convey lawsuit and/or its proceeds
to plan, constructive trust claim was not ripe since debtor had never had possession of any property
which might, in theory, be rightful property of plan. In re DeLucia (2001, BC DC Conn) 261 BR
561.
Worker's compensation lien was statutory lien under Illinois law and therefore was not avoid-
able pursuant to 11 USCS § 522(f), nor could it be subordinated to debtors' personal injury exemp-
tion under any other provision of Bankruptcy Code; thus debtors' attempt to assert personal injury
exemption against workers' compensation lien failed. Rieman v Allied Ins. (In re Rieman) (2002, BC
SD Ill) 289 BR 120.
Trustee had not met burden of proof to show that proceeds of settlement in personal injury ac-
tion were not properly exemptible as loss of future earnings under 11 USCS § 522(d)(11)(E) where:
(1) evidence that was offered at hearing consisted mostly of allegations regarding damages and
there was no evidence of any kind involving damages for pain and suffering or husband's loss of
consortium, (2) most telling about trustee's argument was that trustee did not identify in brief any
specific, non-exemptible portion of settlement based on evidence of damage other than amount that
it would have taken to pay estate in full or to pay trustee's fees, and (3) based on record, court could
have only speculated as to proper portion of award that was attributable to loss of future earnings. In
re Whitson (2005, BC ED Ark) 319 BR 614, CCH Bankr L Rptr P 80230.
Balance of settlement funds from personal injury action were reasonably necessary for support
of debtors (husband and wife) under 11 USCS § 522(d)(11)(E) where: (1) debtors' amended sched-
ules showed that even with additional medical benefit and Social Security payment, debtors' basic
expenses exceeded their income by $ 800 or $ 900 month, (2) even with Medicare coverage, wife
had incurred higher medical costs because she could have no longer taken less-expensive, over-the-
counter drugs for her fibromyalgia due to damage to her liver that was caused by her initial drug
therapy, (3) wife's transportation costs had increased because she had to travel to consult with heart
specialist in addition to two other physicians who treated her on regular basis, (4) since petition fil-
ing, husband was diagnosed with diabetes and had incurred increased medical expenses, and (5)
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11 USCS § 522
husband's income as truck driver was reduced because of layoffs and he currently worked 40 hours
or less week at job that grossed only $ 1845 month. In re Whitson (2005, BC ED Ark) 319 BR 614,
Debtor could claim exemption for net proceeds he received for personal injury settlement, pur-
suant to 11 USCS § 522(d)(11)(D), because amount received was intended to compensate debtor for
injuries he sustained to his neck and back as result of automobile accident. Skiba v Andrzejewski (In
re Andrzejewski) (2006, BC WD Pa) 337 BR 835.
malicious prosecution, and negligence, in connection with false arrest, trustee's objections to ex-
emption under 11 USCS § 522(d)(11)(D) and § 522(d)(11)(E) were sustained on grounds that, be-
cause suit was still pending, it was unclear whether debtor's recovery would be capable of exemp-
tion under § 522(d)(11)(D) and § 522(d)(11)(E); debtor was permitted to later demonstrate that any
award he actually received was exemptible. In re David (2004, BC DC Dist Col) 2004 Bankr LEXIS
2245.
188.--Other particular actions and awards
Chapter 7 debtors properly claimed their contract and tort cause of action against bank as ex-
empt under West Virginia wildcard exemption, notwithstanding their failure to assign particular
value to it at time of their bankruptcy filing; however, by claiming value less than statutory maxi-
mum, or by claiming no value at all, entire cause of action does not become exempt--West Virginia
statute does not provide for revesting of entire cause of action in debtor, but only for exemption of
debtor's interest up to $ 7,900 each, less other exemptions claimed; amount of debtors' exemption
represents present, substantial interest and provides necessary standing for debtors to pursue action,
even though debtors placed question marks on schedules to indicate value of cause of action; how-
ever, trustee would have to abandon cause of action under 11 USCS § 554 in order for debtors to
have interest in any recovery above their exemptible interest. Wissman v Pittsburgh Nat'l Bank
(1991, CA4 W Va) 942 F2d 867, 3 Fourth Cir & Dist Col Bankr Ct Rep 712, 21 BCD 1697, 25
CBC2d 605, CCH Bankr L Rptr P 74225 (criticized in In re Forti (1998, BC DC Md) 224 BR 323,
10 Fourth Cir & Dist Col Bankr Ct Rep 593, 40 CBC2d 1025).
Although debtor's causes of action against insurer for alleged negligence and breach of fiduciary
duty resulting in loss of bankruptcy exemption in IRA did become property of bankruptcy estate,
they were exempt under Texas law, despite fact that IRA itself was not, since it would have been
had insurer's wrongdoing not caused its defectiveness, and causes of action were to replace lost IRA.
State Farm Life Ins. Co. v Swift (In re Swift) (1997, CA5 Tex) 129 F3d 792, CCH Bankr L Rptr P
77572.
Debtor could only exempt cause of action against creditor for violation of certain consumer
fraud laws up to remaining value of her state "wildcard" exemption of $ 900, since cause of action
remained asset of estate controlled by estate, where its value was speculative but not zero, and set-
tlement offer, though problematic as workable valuation tool, was $ 1500. Polis v Getaways, Inc.
(1998, ND Ill) 242 BR 653, revd, remanded (2000, CA7 Ill) 217 F3d 899, reh den (2000, CA7 Ill)
2000 US App LEXIS 18226, complaint dismd, judgment entered (2001, ND Ill) 2001 US Dist LEXIS
2021.
Page 341
11 USCS § 522
Debtor will be permitted exemption in $ 3,000 in unpaid child support where evidence indicates
that she is taking steps to attempt to collect some portion of unpaid moneys. In re Crippen (1983,
BC ED Mo) 36 BR 7, 2 BAMSL 577.
State court action for conversion is not exempted under Minnesota statute enacted pursuant to
11 USCS § 522(b)(2), identical in scope to federal exemption contained in 11 USCS § 522(d)(11),
because statute contemplates exemption for actual bodily injury, such as cut, bruise, or broken limb,
as distinguished from injury to property; action in conversion for damages to property is not "bodily
injury" which may result in death. In re Babcock (1984, BC DC Minn) 44 BR 521.
Under New York opt-out provisions, damages sought to be recovered in cause of action for
conversion of Chapter 7 debtor's automobile are not independently exempt under cause of action
exemption and may be claimed as exempt only to extent such automobile qualifies as "necessary
working tool." In re Lauterbach (1987, BC ND NY) 74 BR 627.
Debtors' interest in lender-liability cause of action is not exempt under Missouri law. In re
Jones (1989, BC WD Mo) 112 BR 975.
Civil Liberties Act of 1988, which provides for restitution payments to those individuals of
Japanese ancestry who were interned in relocation camps during World War II, contains no provi-
sion exempting restitution payments from attachment or execution by creditors or from administra-
tion by bankruptcy estate, even though restitution payments are protected from taxation as income;
nor is restitution payment exempt under Minnesota statute exempting rights of action for injuries to
person because debtor's claim is barred by Federal Tort Claims Act since his claim would be time-
barred and he has not exhausted his administrative remedies, and Act itself creates no new right of
action, and because restitution payment is not one for "injury to the person" as required under Min-
nesota statute. In re Ezaki (1992, BC DC Minn) 140 BR 747, 22 BCD 1626, 26 CBC2d 1506, affd
(1992, DC Minn) 181 BR 385.
Any recovery that Chapter 7 debtor realizes against bank and insurance company, in action aris-
ing from bank's payment of check on which debtor's signature had been forged, for humiliation and
embarrassment he suffered, damages to credit reputation, and emotional and mental anguish, is ex-
empt under Missouri law from inclusion in bankruptcy estate as unliquidated personal injury claims,
although claim for actual and punitive damages arising from forgery is not personal and belongs to
bankruptcy estate; allegation of some personal injuries as result of defendant's conduct will not con-
vert nonpersonal cause of action into cause of action for personal injuries, but fact that underlying
cause of action is nonpersonal should not subject claims for personal injuries sustained by debtor to
creditors' claims. In re Shahzad (1992, BC ED Mo) 147 BR 34.
Discharged Chapter 7 debtor had interest in her pending workers' compensation cause of action,
not in final agency approved contested case settlement, as of petition date so that interest in that
cause of action could be claimed as exempt regardless of whether applicable Iowa exemption for
workers' compensation would have encompassed settlement. In re Robinson (1999, BC SD Iowa)
246 BR 373.
Where bankruptcy debtor claimed exemptions in lawsuits with insurers, fact that lawsuits al-
leged breach of contract did not preclude exemptions under 11 USCS § 522(d)(10)(E), (d)(10)(C),
(d)(11)(E), mere fact that there was dispute as to ownership of assets did not change nature of ex-
emption; only issue was whether exemptions were properly claimed in any resultant recovery that
might arise from matter being litigated. Opel v Daly (In re Daly) (2005, BC MD Pa) 344 BR 304.
Page 342
11 USCS § 522
Where bankruptcy debtor claimed exemption under 11 USCS § 522(d)(10)(C), 522(d)(11)(E) in

lawsuit with insurer to recover terminated disability benefits, pre-petition termination of insurance
policy by insurer was immaterial since only issue was whether debtor possessed present right to re-
ceive benefits provided for under policy. Opel v Daly (In re Daly) (2005, BC MD Pa) 344 BR 304.
Cause of action arising under Consumer Credit Protection Act, 15 USCS §§ 1601 et seq., comes
within term "any property" which may be claimed as exempt by debtor under 11 USCS § 522(d)(5),
and to extent that debtor has unused exemption under § 522(d)(5), it may be claimed against value
of cause of action under Act. In re La Flamme (1981, BAP1) 14 BR 21, 7 BCD 1416, 4 CBC2d
Phrase "any property" in 11 USCS § 522 does not refer only to property actually mentioned; to
extent that debtor has any unused exemption under § 522(d)(5), it may be claimed against value of
cause of action under Consumer Credit Protection Act. In re La Flamme (1981, BAP1) 14 BR 21, 7
Under 11 USCS § 553, landlord of Chapter 7 debtors may set off claim for damage to rental
property against debtor's claim for breach of rental contract, even though debtors have exempted
their claim under California opt-out provisions or 11 USCS § 522. In re Pieri (1988, BAP9 Cal) 86
189. Damages and restitution
While purpose of Bankruptcy Code and state exemption statutes is to provide debtor with fresh
start, quid pro quo for debtor's discharge is distribution of assets of debtor not needed for fresh start;
since primary purpose of exemplary damages is to punish wrongdoing, such damages are not neces-
sary for debtor's fresh start but instead result in windfall to debtor, exemplary damages are not ex-
empt under either Colorado legislation or 11 USCS § 522. In re Keyworth (1985, DC Colo) 47 BR
Debtor, who was eligible for restitution under Civil Liberties Act of 1988 (50 USCS Appx §§
1989 et seq.) because he had been born in relocation camp established in 1940's for purposes of in-
terning individuals of Japanese ancestry during pendency of World War II, could not exempt his
right to restitution payment from claims of bankruptcy trustee pursuant to 11 USCS § 522(b)(2), be-
cause restitution was not exempt under provisions of Act itself, and restitution was not for injuries
to person of debtor within meaning of state exemption statute. Ezaki v Bergquist (1992, DC Minn)
181 BR 385.
Term "any property" under 11 USCS § 522 is broad enough to include interest which debtor has
in common law arbitration award on date he filed Chapter 7 petition so that debtor may claim as
exempt under § 522 interest in arbitration award, which is represented by fund held by state court
and may, therefore, avoid garnishment lien of judgment creditor in that fund. In re Laird (1980, BC
ED Pa) 6 BR 273, 6 BCD 998, 2 CBC2d 1299.
Debtor's claim of exemption under 11 USCS § 522(d)(11)(E) of vacant lot is allowed where
property is traceable to tort claim settlement, where trustee has adduced no evidence contradicting
debtor's characterization of settlement as compensation for loss of future earnings, and where lot,
and capital it represents, is necessary for debtor's future support as debtor's current income is limited
to social security disability benefits and debtor has limited prospects for any immediate improve-
ment in his situation. In re Miller (1984, BC DC NM) 36 BR 420, 11 BCD 673.
Page 343
11 USCS § 522
Although trustee did not object to Chapter 7 debtor's claimed $ 1,000 objection in proceeds of
lawsuit, entire proceeds of lawsuit are not exempt, but rather, only $ 1,000 of proceeds are exempt,
while all proceeds of lawsuit above $ 1,000 claim of exemption belong to trustee and may be used
for benefit of debtor's creditors. In re Shoemaker (1992, BC ND Ala) 155 BR 552.
Should Chapter 7 debtor recover award for her unliquidated sexual harassment claim, any re-
covery that she realizes for embarrassment, medical expenses, emotional distress, or similar harms
to person is exempt from bankruptcy estate under 11 USCS § 522; however, any recovery she real-
izes for loss of wages and punitive damages constitutes property interest and will be included in
bankruptcy estate under 11 USCS § 541 for distribution to creditors. In re Kininson (1995, BC ED
Mo) 177 BR 632, 67 BNA FEP Cas 381.
Should Chapter 7 debtors recover award for debtor husband's claims pending before state Hu-
man Rights Commission for alleged discriminatory treatment and alleged retaliatory discharge, any
recovery that he realizes for emotional distress or similar harms to person is exempt from bank-
ruptcy estate under 11 USCS § 522; however, any recovery he realizes for loss of wages and puni-
tive damages constitutes property interest and will be included in bankruptcy estate under 11 USCS
§ 541 for distribution to creditors. In re Barnes (1995, BC ED Mo) 177 BR 635.
Exemptions set forth in Georgia statute, O.C.G.A. § 44-13-100(a)(11)(A), were identical to
those set forth in 11 USCS § 522(d)(11)(A); debtors were not permitted to exempt from bankruptcy
estate money that was restitution for wrongful conversion of their property because they had not
shown that restitution was being made to compensate them for future loss of earnings or for per-
sonal injury. In re Seymour (2002, BC ND Ga) 285 BR 57.
190. Equipment
Farm equipment does not come under Texas personal property exemption statute; thus Chapter
7 debtor farmers cannot exempt equipment and avoid valid consensual lien on it. In re Rodgers
(1986, ND Tex) 68 BR 17.
Amendment increasing Iowa opt-out exemption for farm equipment from $ 5,000 to $ 10,000
applies to all bankruptcy cases filed after effective date of amendment, regardless of when lien on
farm equipment may have arisen; such application does not violate contracts or takings clause of
Iowa or federal constitution because impairment of reasonable contractual expectations of lenders
who made loans prior to amendment is justified by state's interest in coordinating value of farm
equipment with rising market prices. In re Van Hove (1987, ND Iowa) 78 BR 917.
Heavy farming equipment exempted under spillover provision of 11 USCS § 522(d)(5) is eligi-
ble for lien avoidance provisions of § 522(f). In re Falconer (1987, WD Mich) 79 BR 283.
Chapter 7 debtors may exempt mower-conditioner and hay baler pursuant to Wisconsin statute
exempting mowers and hayloaders since these items serve same basic function as those items
named in statute. In re Brzezinski (1985, BC WD Wis) 65 BR 336.
Chapter 7 debtors may claim exemption in farm equipment and animal feed and may avoid liens
on same where: (1) at time of filing, debtors were in possession of animal feed and machinery, even
though 17 days later at voluntary auction, machinery and feed were sold; and (2) debtor husband,
who had been forced to take on another type of employment due to financial difficulties, testified
that he had been farming his whole life and desired to farm again as soon as possible; exemption
Page 344
11 USCS § 522
rights are determined by circumstances present at time of filing and changes occurring after filing
are not relevant. In re Brzezinski (1985, BC WD Wis) 65 BR 336.
Chapter 7 debtors' avoidance of liens on farm equipment exempt under Wisconsin law is not
limited to $ 750 amount contained in 11 USCS § 522(d)(6). In re Brzezinski (1985, BC WD Wis) 65
BR 336.
Secured creditor's lien on debtor's combine extends to equipment added by debtor to keep com-
bine running and improve its performance, in hope of using it in reorganization effort, before case
was converted to Chapter 7, because debtor's additions did not improve value of combine beyond
creditor's lien interest, which might have excepted those additions under 11 USCS § 522; rather, ad-
ditions merely maintained value of collateral, as debtor is required to do under 11 USCS § 361, and
did not improve creditor's position. In re Knaus (1986, BC WD Mo) 68 BR 8.
Wisconsin opt-out provision exempting livestock, implements, and automobiles is not limited to
items specifically listed in exemption but applies to modern versions of equipment, such as culti-
packer, bug killer, welder, drill press, small tools and equipment, blower, and manure spreader. In
re Werner (1986, BC WD Wis) 79 BR 819.
Modern farm implements may be exempt, notwithstanding fact that they are not specifically de-
scribed in state statute providing exemption for many obsolete farm implements, if they are succes-
sors of antiquated exempt implements, and therefore debtor may avoid nonpossessory, nonpur-
chase-money security interests in such property under 11 USCS § 522(f). In re Sutheimer (1986,
Semitractor is equipment included with Iowa opt-out exemption for implements and equipment
reasonably related to normal farming operation; exemption for semitractor is not improper by rea-
son of debtor's claiming as exempt multiple motive power sources including 2 trucks and 2 tractors
in addition to semitractor. In re Erickson (1987, BC SD Iowa) 76 BR 136.
Debtor's Third Amended Schedule C listed 1993 Guthrie Trailer under heading, "Machinery,
Fixtures, Equipment and Supplies Used in Business"; as such, 1993 Guthrie Trailer did not qualify
as "real or personal property that debtor or dependent of debtor uses as residence" and was, there-
fore, not properly claimed exempt under 11 USCS § 522(d)(1). In re Victor (2006, BC DC NM) 341
BR 775.
Court could properly conclude that irrigation equipment repossessed by creditors was not fixture
attached to farmland found to be exempt as homestead under 43 USCS § 175, where equipment
could be removed by loosening bolts and removing couplings; hence, if there was conversion when
equipment was repossessed, right of action for conversion passed to trustee, such equipment having
retained their character as personalty; also, bankrupt was properly denied claim for consequential
damages allegedly resulting from liability to raise and harvest crops after repossession of irrigation
equipment. Duff v Draper (1977) 98 Idaho 379, 565 P2d 572.
191. Income tax refunds
Income tax refunds are property of bankrupt for purposes of former 11 USCS § 110(a)(5) and no
part of refunds would be exempt for purposes of former 11 USCS § 24 by reason of Consumer
Credit Protection Act. In re Brissette (1977, CA9 Cal) 561 F2d 779, reh den (1977, CA9) 568 F2d
473.
Page 345
11 USCS § 522
Federal appeals court ruled that under state's opt-out statute, Mo. Rev. Stat. § 513.427, state resi-
dents were restricted to bankruptcy exemptions available under state law and under federal statutes
other than 11 USCS § 522(d), rejecting debtors' arguments that their anticipated federal income tax
returns fell outside their Chapter 7 estates. Benn v Cole (In re Benn) (2007, CA8) 491 F3d 811,
Debtor's tax refund is property of estate and debtor is under duty to turn it over to trustee and
seek to have it exempted if he needs it for necessities of life; however, fact that debtor spent refund
before turnover order is not dispositive of issue of whether discharge should be revoked. In re
Guerrero (1983, ND Ind) 30 BR 463.
Exemption statute will not be extended to include class of persons not provided for by state leg-
islature; hence, bankrupt divorced woman with two dependent minor children is not entitled, in lieu
of homestead, to $ 500 exemption from federal income tax refund on income taxes withheld from
her wages which would be exempt under state law to husband and wife living together, widow liv-
ing with unmarried child, and every widow and every unmarried female having custody of minor
child of deceased relative. In re Jaynes (1977, BC SD Ohio) 3 BCD 355.
Exemption for federal income tax refund and savings account is allowable under federal exemp-
tions, but not under Idaho exemption law. In re Mertsching (1980, BC DC Idaho) 4 BR 519, 6 BCD
445, 2 CBC2d 301.
Under general exemption in any property provided for by 11 USCS § 522, debtor may exempt
income tax refund and wage withholdings, to extent of $ 400 plus unused portion of homestead ex-
emption, notwithstanding that such property would not be exempt under state law, where debtor
chooses federal, rather than state exemption, since such exemption is not limited to property which
would normally be exempt under state law. In re Nichols (1980, BC ED Mich) 4 BR 711, 6 BCD
Bankruptcy Court will construe state statute, which allows debtor to exempt only $ 400 in tax
refunds, but permits additional exemption of $ 400 in any property, as permitting exemption of total
of $ 800 from tax refund, where such statute is ambiguous as to whether or not such exemption
would be permissible. In re Smith (1980, BC SD Ohio) 5 BR 227, 6 BCD 644, CCH Bankr L Rptr P
67656.
Provisions of Ohio Statute, enacted under state's power under 11 USCS § 522 to opt out of fed-
eral exemption scheme, which provide that exemption of up to $ 400 due debtor as tax refund is ap-
plicable only in bankruptcy proceedings, and is not available to nonbankrupt debtor, is constitu-
tional and in conformance with Bankruptcy Code. In re Bloom (1980, BC ND Ohio) 5 BR 451, 6
BCD 831, 2 CBC2d 838.
Exemption provision of 11 USCS § 522(d)(5) must be liberally construed and words selected by
Congress "any property" mean just that and this largesse variously described as "spillover, grub-
stake, wildcard, and unfilled bin" includes $ 3,500.00 in income tax refunds and $ 7,500.00 remain-
der owing on contract for deed in case of joint debtors who are each entitled to federal exemption of
$ 7,900.00; although it may be argued that stacking of 2 exemptions is unjust and windfall to debt-
ors and for some debtors such benefits may be unwarranted to others same relief may be essential
element of fresh start envisioned by Congress. In re Schuler (1981, BC DC Mont) 13 BR 478, 7
BCD 503.
Page 346
11 USCS § 522
Income tax refund of wife who has joined in joint petition of bankruptcy with husband, which is
construed as community property under state law, becomes part of consolidated estate in bank-
ruptcy, and husband may therefore claim entire amount of refund as exempt property under 11
USCS § 522(d)(5); therefore, trustee may not require that each debtor exempt one-half of refund in
order that trustee may challenge validity of wife's state law exemption which wife had claimed for
same refund on joint schedule. In re Barnes (1981, BC ND Tex) 14 BR 788, 8 BCD 290, CCH
Debtor may exempt income tax refund held in custody of trustee under 11 USCS § 522 where
debtor failed to disclose income tax refund on original petition and where there has not been any
significant reliance by trustee or creditor in failure to claim income tax refund and evidence dis-
closes no change of position by any party in interest on failure to claim exemption prior to date it
was claimed. In re Schmidthuber (1982, BC DC Neb) 18 BR 129.
Where under state law spouse has no interest in tax withholdings and refunds derived solely
from other spouse's wages, spouse, codebtor in Chapter 7 proceeding, is not entitled to claim tax
refund as exempt under 11 USCS § 522 notwithstanding fact debtors filed joint tax return. In re
Honomichl (1987, BC SD Iowa) 82 BR 92, 16 BCD 1288.
Any part of Chapter 7 debtors' state and federal income tax refunds under control of "friend of
the court" due to debtor husband's failure to comply with order requiring him to pay confinement
costs of birth of child are not subject to debtor's right to exemption under 11 USCS § 522, even
though income tax refund is part of debtor's estate and is generally exempt asset since exemptions
do not protect property from liability for child support as described under 11 USCS § 523(a)(5). In
re Rouse (1992, BC WD Mich) 145 BR 546.
Chapter 7 debtor may not exempt 75 percent of his tax refunds due from IRS and state tax
commission which arose from moneys withheld from his wages/earnings in 90 days prior to bank-
ruptcy filing pursuant to Oklahoma statute exempting 75 percent of all current wages or earning
earned during last 90 days because tax refunds are not "wages" earned. In re Miles (1993, BC ND
Okla) 153 BR 72, 28 CBC2d 1431.
Chapter 7 debtor's federal tax refund is not exempt under Florida law, and therefore trustee is
entitled to turnover of refund, where pursuant to Florida statute, once debtor's wages are paid over
to Internal Revenue Service, moneys are no longer properly identified as wages, and where exemp-
tion only applies to bank accounts, not to moneys traceable to wages. In re Lancaster (1993, BC SD
Fla) 161 BR 308, 30 CBC2d 390.
Where husband and wife were both debtors in bankruptcy proceeding and had history of paying
household expenses through joint account and filing joint tax returns, tax refund that was due to
debtors was held by them jointly for purposes of how it should be treated in bankruptcy estate, and
debtors could aggregate exempt portion of refund. In re Hejmowski (2003, BC WD NY) 296 BR 645,
92 AFTR 2d 6027.
Trustee's objection, 11 USCS § 522(1), to debtor's claim that tax refund was exempt property
under Colo. Rev. Stat. § 13-54-102(1)(o) was sustained, and trustee's motion for turnover of prop-
erty was granted; tax refund based in part on credit for adoption expenses, 26 USCS § 23(b)(4), was
not equivalent of earned income tax credit refund, 26 USCS § 32. In re Walsh (2003, BC DC Colo)
298 BR 894, 92 AFTR 2d 6132.
Page 347
11 USCS § 522
In matter of first impression in state, bankruptcy court found that pursuant to 735 Ill. Comp.
Stat. 5/12-1001(g)(1) of state personal property exemption statute, additional federal child tax credit
under 26 USCS § 24, refunded to taxpayers of limited financial means, could be claimed exempt in
bankruptcy as public assistance benefit; debtor's claim of exemption in child tax credit was there-
fore allowed as to additional child tax credit claim and denied as to general child tax credit, and
trustee's motion for turnover of refunds was granted. In re Koch (2003, BC CD Ill) 299 BR 523,
CCH Bankr L Rptr P 78944, 92 AFTR 2d 6410.
Bankruptcy court held that non-refundable federal income general child tax credit under 26
USCS § 24 could not be claimed exempt as public assistance under 735 Ill. Comp. Stat. 5/12-
1001(g)(1) where key factor was refundability of credit; if credit was not refundable, further inquiry
was not necessary and general child tax credit, which only reduced debtor's tax liability, could not
be claimed as exempt. In re Koch (2003, BC CD Ill) 299 BR 523, CCH Bankr L Rptr P 78944, 92
AFTR 2d 6410.
Where debtor claimed tax refunds as exempt under Cal. Code Civ. Proc. § 703.140(b) and IRS
failed to object to claimed exemption within applicable time period in Fed. R. Bankr. 4003(b), IRS
was barred from challenging validity of exemption; accordingly, IRS was not granted relief from
automatic stay of 11 USCS § 362 to permit it to offset, pursuant to 11 USCS § 553 and 26 USCS §
6402(a), pre-petition income tax liabilities owed by debtor against pre-petition income tax refunds.
In re Gould (2008, BC ND Cal) 389 BR 105.
192.--Based upon earned income tax credit
Plain meaning of language of Ala. Code § 38-4-8, standing alone, indicates that federal earned
income tax credit payments, which constitute public assistance payments to needy persons, shall not
pass to trustee in case of bankruptcy as part of state's opt-out exemptions under 11 USCS § 522(d);
moreover, conclusion that federal earned income tax credit payments constitute "public assistance"
for purposes of Ala. Code § 38-4-8 exemption is unaffected by state-only limitation in Ala. Code §
38-4-1. Hamm v James (In re James) (2005, CA11 Ala) 406 F3d 1340, CCH Bankr L Rptr P 80268,
2005-1 USTC P 50367, 95 AFTR 2d 2122, 18 FLW Fed C 445.
Federal earned-income tax credit constituted "public assistance" which could be exempted under
Alabama statute. Brasher v McGregor (In re Brasher) (2000, MD Ala) 253 BR 484, CCH Bankr L
Rptr P 78304.
Debtor was not entitled to exemption of portion of her income tax refund attributable to federal
earned income tax credit since Ohio exemption provision, which once included "poor relief pay-
ments," has been drastically narrowed and earned income tax credit did not fall within it. In re Ku-
rilich (1996, BC ND Ohio) 199 BR 161.
Pursuant to 11 USCS § 522(b) Illinois has opted out of federal schedule of exemptions, and
earned income credits are exempt as "public assistance benefit" under Illinois law, and Chapter 7
Trustee's objection to exemption of debtor's earned income tax credit is denied. In re Brockhouse
(1998, BC CD Ill) 220 BR 623.
Payments due on Chapter 7 debtor's anticipated income tax refunds based on earned income
credits, withholding, and dependent and child care credits were property of estate and were not ex-
empt under New York's exemptions for $ 2,500 cash or for social security benefits, unemployment
compensation, or local public assistance benefits; whether payments were truly tax refunds or pay-
Page 348
11 USCS § 522
ment of earned income or other credits was inconsequential. In re Garrett (1998, BC WD NY) 225
BR 301.
Chapter 7 trustee's objection to claimed exemption was sustained because debtor's state and fed-
eral tax refunds under IRS Earned Income Credit and Minnesota Department of Revenue Working
Family Credit public assistance programs did not constitute local public assistance benefits for pur-
poses of 11 USCS § 522(d)(10)(a). In re Espey (2006, BC DC Minn) 347 BR 357.
193. Inheritances
Chapter 7 debtor may exempt property which he inherited postpetition from his mother; under
11 USCS § 522(b), debtor may select exempt property from "property of the estate" and under 11
USCS § 541, "property of the estate" includes property inherited within 180 days after petition is
filed. In re Magness (1993, BC ND Tex) 160 BR 294.
Property to which debtor became entitled as heir on death of his mother became property of es-
tate pursuant to 11 USCS 541(a)(5)(A), and debtor can claim exemption for such "after-acquired"
property if criteria for exemption is met. In re Meachen (1998, BC DC Colo) 217 BR 877, 15 Colo
Bankr Ct Rep 231, 39 CBC2d 757.
194. Insurance proceeds from loss of exempt property
Pennsylvania statute permitting exemption of net amount payable under any accident or disabil-
ity insurance does not apply to debtor's prospective tort judgment despite fact that such judgment
might be paid by tort defendant's insurance carrier; thus, Chapter 7 debtors' potential recovery for
slip and fall in retail store, valued by debtors at $ 500,000 to $ 750,000, could not be exempted
since (1) exemption at issue is insurance exemption, not personal injury or tort exemption, and pol-
icy proceeds will be paid to retailer rather than debtors, (2) debtors have no "property or other
rights" as required for proceeds to be exempt under Pennsylvania statute, and (3) it is illogical as
well as potentially disruptive of bankruptcy process for right to exemption under state law to turn on
possibility that tort judgment will be paid by defendant's insurer which approach would enable tort
defendant to defeat exemption by deciding to pay any judgment out of its own pocket. Kollar v
Miller (In re Kollar) (1999, CA3 Pa) 176 F3d 175.
Every item of clothing, furniture, appliances, and other personal property to which debtors were
entitled to have exemption is protected by debtors' insurable interest in insurance proceeds received
in payment for fire, smoke, and water damage to those items; debtors' insurable interest is limited
only by maximum dollar amount found in state exemption statute. In re Taylor (1982, BC SD Ohio)
23 BR 539.
Debtors are entitled to proceeds from their fire insurance policy in compensation for loss of their
exempt property; since debtors had property available for exemptions at time they filed bankruptcy
petition, fire insurance proceeds of that destroyed property are also exempt. Lewis v Thompson
(1983, BC MD Pa) 28 BR 351.
Although Chapter 7 debtor exempted promissory note and second deed trust which gave debtor
insurable interest in real estate damaged by fire, $ 6,400 payable to Chapter 7 debtor as loss payee
under fire insurance policy is not also exempted under state opt-out legislation pursuant to 11 USCS
§ 522 since it was not specifically listed and allowance as "proceeds" of promissory note and second
deed of trust would produce inequitable windfall for debtor; neither could payment be exempted
Page 349
11 USCS § 522
under state "wild-card" exemption where such exemption had already been exhausted. In re
Crownover (1984, BC ED Mo) 43 BR 22, 3 BAMSL 1266.
Proceeds of casualty insurance paid for loss of Chapter 7 debtor's household furnishing de-
stroyed in postpetition fire are exempt to extent of opt-out state law exemption, and debtors are not
bound by statement of value of such property made in their petition at time of filing, but may re-
cover all proceeds subsequently recovered within limits of state exemption. In re Rutherford (1986,
BC WD Mo) 73 BR 665.
Proceeds of fire insurance due for destruction of property occupied and used as homestead qual-
ify for exemption from levy and sale under Florida opt-out exemption law as long as property quali-
fies for homestead status at time of filing of bankruptcy case; Chapter 11 debtor may not claim
homestead exemption in fire insurance proceeds for mobile home that was located in Tennessee un-
der Florida exemption statute that requires that homestead property be located in Florida. In re
Sanders (1987, BC MD Fla) 72 BR 124.
Chapter 7 debtor may not exempt fire insurance proceeds under 11 USCS § 522, even though
assets covered by insurance were exempted by debtor without objection from trustee or other par-
ties, because (1) debtor did not claim contingent property right in fire insurance as exempt on
schedules and (2) debtor's concealment of policy and other assets prevented trustee from making
any inquiry into value of debtor's assets. In re Fox (1987, BC WD Pa) 80 BR 753.
Court will not make Chapter 13 debtor's insurance proceeds obtained as result of destruction of
debtor's car payable to secured creditor pursuant to 11 USCS § 522(b), but rather, based on equities
of case, proceeds will be made payable to debtor where debtor desires to purchase new car with
such proceeds to replace destroyed one, because vehicle is essential for debtor's plan to succeed, and
creditor's lien can readily attach to new vehicle. In re Woods (1989, BC WD Va) 97 BR 850.
Debtor's interest in unliquidated tort claim is distinct from interest in insurance proceeds so that
where debtors had not filed suit by date of their bankruptcy filing or by date of conversion of their
case from Chapter 13 to Chapter 7, they had no right to payment under insurance policy and thus
could not exempt insurance proceeds. In re Kollar (1998, BC ED Pa) 218 BR 349, 39 CBC2d 956,
affd (1998, ED Pa) 223 BR 288, CCH Bankr L Rptr P 77774, affd (1999, CA3 Pa) 176 F3d 175.
Bankruptcy court gave full faith and credit to state court's grant of summary judgment in favor
of secured lender awarding it insurance proceeds from debtor's wrecked car; court denied debtor's
attorney's claim for lien against part of proceeds. In re Watkins (2003, BC ND Ill) 298 BR 342.
195. Licenses
License of debtor as contract motor carrier was not exempt where state act in specifying types of
exempt property failed to mention licenses. Barutha v Prentice (1951, CA7) 189 F2d 29, cert den
(1951) 342 US 841, 96 L Ed 635, 72 S Ct 69.
In Pennsylvania bankrupt is not entitled to exemption out of proceeds of liquor license. In re
Myers (1900, DC Pa) 102 F 869.
Corporation commission permits, indispensable to operation of bankrupt's trucking business, are
exempt under Kansas law as tangible means necessary in carrying on bankrupt's business; and bank-
rupt's transferring permits from proprietorship to corporation does not affect exempt status where
bankrupt intends to remain in same business. In re Gardner (1977, BC DC Kan) 3 BCD 706.
Page 350
11 USCS § 522
Liquor license is not subject to exemption under 11 USCS § 522(d)(6) on ground that license
confers right or privilege to transact type of business and is not professional book or tool or imple-
ment by means of which acts involved in conduct of trade or business are performed; but such right
or privilege is property under 11 USCS § 522(d)(5) subject, however, to power of state to regulate,
to approve or disapprove transfer of, and to revoke. In re Stubenhofer (1983, BC WD Pa) 31 BR
820.
Rights of debtors in liquor license are subject to their claim for exemption under 11 USCS §
522(d)(5) free and clear of any security interest. In re Stubenhofer (1983, BC WD Pa) 31 BR 820.
Liquor license is not subject to exemption under 11 USCS § 522(d)(6); but rights of debtors in
liquor license are subject to their claim for exemption under 11 USCS § 522(d)(5) free and clear of
any security interest. In re Caylor (1983, BC WD Pa) 31 BR 821.
Debtor's motion for avoidance of judicial lien under 11 USCS § 522(f)(1) was granted because
creditor did not dispute that its lien was obtained by levy under Minn. Stat. § 551.06, subd.9 and its
existence impaired exemption that debtor otherwise could have taken as to funds. In re McGovern
(2003, BC DC Minn) 295 BR 897.
196. Money or accounts
Cash exemption to which bankrupt is entitled under law of state of domicile may not be applied
to payment of claims for taxes filed by state and city even though exemption can be reached by
bankrupt's tax creditors through other proceedings. Stein v Bostian (1943, CA8 Mo) 133 F2d 586.
Debtor's holdings of cash (i.e., actual U.S. currency) was "intangible" asset for purposes of state
exemption statute, Ind. Code § 34-55-10-2. In re Oakley (2003, CA7 Ind) 344 F3d 709, 41 BCD
Exemption for federal income tax refund and savings account is allowable under federal exemp-
tions, but not under Idaho exemption law. In re Mertsching (1980, BC DC Idaho) 4 BR 519, 6 BCD
445, 2 CBC2d 301.
Cash may be exempted under 11 USCS § 522(d)(5) which provides that debtor may take his ex-
emption in "any property"; had Congress intended to exclude cash from property which debtor may
claim as exempt it would have done so by express verbiage and absent that express language com-
mon sense dictates that phrase "any property" includes cash. In re Taylor (1981, BC ED Pa) 8 BR
578.
Where debtors transferred funds into escrow account prior to filing petition which were to be
held by counsel to satisfy counsel's prepetition legal fees, debtors, by virtue of transfer, no longer
had interest in that part of fund allocated to payment of prepetition debts and therefore had no al-
lowable claim of exemption under 11 USCS § 522(d)(5). In re Darke (1982, BC ED Mich) 18 BR
510, 8 BCD 1059.
If state court in forfeiture actions finds money found in course of arrest of debtor to have been
fruit or instrumentality of crime, debtor will not be allowed to exempt money used or intended to be
Page 351
11 USCS § 522
used in illegal drug trade. In re Ryan (1983, BC DC Md) 32 BR 794, 10 BCD 1377, CCH Bankr L
Rptr P 69391.
Joint debtors who had filed Chapter 13 petition and had subsequently converted their case to
Chapter 7 will be permitted to exempt $ 1,000 they had paid to Chapter 13 trustee prior to conver-
sion under 11 USCS § 522(d)(5). In re Wanderlich (1984, BC WD NY) 36 BR 710, 11 BCD 467.
Under Colorado exemption legislation made applicable pursuant to 11 USCS § 522, proceeds
from sale of exempt household goods are not likewise exempt; only exception is that proceeds from
sale of homestead are exempt for one year. In re Gillespie (1984, BC DC Colo) 41 BR 810 (criti-
cized in In re Capps (2000, BC DC Neb) 251 BR 73, 36 BCD 128).
Bond fund is not "cash" as defined by New York law and therefore cannot be claimed as exempt
property. In re Doyle (1984, BC WD NY) 42 BR 615.
Debtors may not claim exemptions pursuant to 11 USCS § 522 in funds they paid to trustee un-
der provisions of Chapter 13 plan before conversion to Chapter 7; therefore sums paid to trustee
prior to conversion pursuant to Chapter 13 plan in satisfaction of bank's lien must be paid to bank.
In re Williams (1985, BC WD Pa) 52 BR 15.
Bonus money, designated by Chapter 7 debtor's employer to be distributed at future date certain
to debtor, does not come within definition of cash in New York's exemption statute; therefore
debtor may not amend his schedules to include exemption when designation by employer took place
prior to filing of debtor's petition, but distribution and actual receipt of money by debtor was subse-
quent to filing. In re Joiner (1985, BC WD NY) 52 BR 41.
Future installments due debtor on mortgage do not constitute cash for purposes of New York
debtor and creditor law and may not be claimed as exempt property under 11 USCS § 522. In re
Abdo (1986, BC ND NY) 65 BR 56.
California's exemption of credit union share accounts is not independent exemption that shields
unlimited amount of money from bankruptcy trustee, but rather credit union share accounts are ex-
empt only to extent that they can be traced to otherwise available exemption under Exemption
Chapter of California Code of Civil Procedure. In re Petruzzelli (1992, BC ED Cal) 139 BR 241, 92
Daily Journal DAR 10252.
Chapter 7 debtors, having claimed checking and dairy accounts as exempt in their petition,
should have opportunity to create interest in accounts and avoid judgment creditor's lien thereon
pursuant to either 11 USCS § 522(f) or § 522(h) and, therefore, creditor's objection to debtors' claim
of exemption in accounts pursuant to Bankruptcy Rule 4003(b), based on assertion that debtors have
no interest in accounts, is denied; in event that debtors fail to create interest in accounts by avoiding
creditor's judgment lien, creditor is granted relief from automatic stay pursuant to 11 USCS § 362(d)
and also to have trustee abandon accounts pursuant to 11 USCS § 554(b). In re Shurtleff (1994, BC
ND NY) 170 BR 54, 25 BCD 1477.
Debtor's scheduled property was not held as tenants by entireties and thus exempt from process
under applicable Florida law since third party's authorization to execute checks of brokerage firm
account was inconsistent with essential unity of possession or control, and bank account was titled
not just in names of debtor and his spouse but four different names. In re Planas (1996, BC SD Fla)
199 BR 211, CCH Bankr L Rptr P 77057, 10 FLW Fed B 39 (criticized in In re Campbell (1997, BC
Page 352
11 USCS § 522
MD Fla) 214 BR 411, 11 FLW Fed B 120) and (criticized in In re Monzon (1997, BC SD Fla) 214
BR 38, 38 CBC2d 1469, 11 FLW Fed B 113).
Prejudgment garnishment order obtained by creditor against debtor in state court civil action is
debt secured by lien under 11 USCS § 522(c)(2) since creditor obtained lien under Ohio law at time
order was served upon bank, and creditor's interest in debtor's bank account is superior to debtor's
claim of exemption. In re Flynn (1999, BC ND Ohio) 238 BR 742.
Credit union's lien upon deposit accounts could not be avoided under 11 USCS § 522(f), regard-
less of whether credit union was federal credit union or state credit union; if credit union was fed-
eral credit union, then its lien upon deposit accounts could not be avoided under § 522(f) because
possessory security interests could not be avoided under § 522(f)(1)(B) and nonpossessory security
interest in money or deposit account with financial institution could not be avoided under §
522(f)(1)(B) and, if credit union were state credit union, then Pennsylvania law clearly granted to
credit union statutory lien on deposit accounts and statutory liens, in contrast to certain judicial liens
and particular security interests, are not avoidable under § 522(f)(1). Muhammad v Pittsburgh
Teachers Credit Union (In re Muhammad) (2004, BC WD Pa) 314 BR 546.
Nonpossessory, nonpurchase-money security interest in money or deposit account with financial
institution may not be avoided under 11 USCS § 522(f)(1)(B) because neither money nor deposit
accounts are among types of property listed in § 522(f)(1)(B)(i)-(iii). Muhammad v Pittsburgh
Teachers Credit Union (In re Muhammad) (2004, BC WD Pa) 314 BR 546.
197. Motor vehicles
Under opt-out provision of 11 USCS § 522(b)(1), effect of Illinois personal property exemption
allowing Chapter 7 debtor to exempt $ 1,200 in his automobile, and $ 2,000 in "any other property,"
is to allow debtor to stack exemptions so that debtor can exempt any of his equity in automobile ex-
ceeding $ 1,200. In re Barker (1985, CA7 Ill) 768 F2d 191, CCH Bankr L Rptr P 70653.
In Massachusetts statute which provides for exemption for "an automobile necessary for per-
sonal transportation or to secure or maintain employment, not exceeding $ 700 in value," statutory
phrase "not exceeding $ 700 in value" is ambiguous with respect to whether automobile exceeding $
700 in fair market value, but in which bankrupt has equity of less than $ 700, is exempt; District
Court will construe state statute as requiring that debtor be required to turn automobile over to trus-
tee for liquidation, but as permitting debtor benefit of $ 700 exemption with which to purchase an-
other vehicle. Levin v Mauro (1977, DC Mass) 425 F Supp 205.
Chapter 7 joint debtors who have each claimed $ 1,200 exemption for motor vehicle in his or
her name are not also entitled to apply separate $ 2,000 exemption provided under Illinois law for
"any other property" to same vehicles since reference to any other property in Illinois statute means
any property not specifically exempted in any other section. In re Pastorek (1983, CD Ill) 33 BR
406.
Under California law providing that debtor is entitled to automobile exemption of $ 500 if
automobile is worth $ 1,000 or less, only when automobile is worth $ 1,000 or less is debtor entitled
to keep up to first $ 500 over and above liens. In re Stivers (1975, BC SD Cal) 1 BCD 524.
Where law of state of bankrupt's domicile permits bankrupt to exempt from seizure $ 1,000 of
his personal property plus clothing but where bankrupt claims car subject to security interest, in
which he has no equity, car belongs to secured party. In re Walker (1976, BC DC NJ) 2 BCD 1177.
Page 353
11 USCS § 522
State statute providing exemption for one automobile not exceeding $ 1,000 in value is intended
to provide means of transportation for debtor and debtor may select motorcycle as his means of
transportation. In re McGray (1977, BC ED Wis) 3 BCD 988, CCH Bankr L Rptr P 66645.
Under Iowa statute granting debtor who is farmer right to exempt team and harness, and wagon
or other vehicle, Bankruptcy Court will permit debtor to exempt one vehicle which is source of mo-
tive power, rather than team and harness, together with one wagon or other vehicle suitable for car-
rying goods, and will permit debtor to choose between tractor and wagon, or truck and trailer, but
will not permit exemption of both. In re Hahn (1980, BC SD Iowa) 5 BR 242, 2 CBC2d 761.
Provisions of 11 USCS § 522 permitting debtor to claim as exempt up to $ 400 interest in any
property, plus any portion of unused homestead exemption, may be applied by debtor to totally ex-
empt automobile with value in excess of otherwise allowable exemptions, where such spillover ex-
emption exceeds remaining value of automobile. In re Dubrock (1980, BC WD Ky) 5 BR 353, 6
BCD 771, 2 CBC2d 776.
Debtor cannot place mobile home within state homestead exemption statute and automobile
within state motor vehicle exemption statute for purposes of claiming large exemptions and addi-
tionally, for purposes of avoiding nonpossessory, nonpurchase money lien, try to fit these items
within purview of 11 USCS § 522 by claiming they are held primarily for personal or family use;
neither debtor's mobile home nor automobile are types of exempt property subject to avoidance un-
der § 522 and creditor's liens on debtor's mobile home and automobile are good and valid liens to
extent that they do not impair debtor's interest in property as provided by § 522. In re Moore (1980,
BC SD Ohio) 5 BR 669.
Minnesota statute allowing debtor to exempt motor vehicle to extent of value not exceeding $
2,000 applies to equity debtor has in automobile and not to automobile's fair market value. In re
Setley (1981, BC DC Minn) 11 BR 106.
Automobile repossessed prior to filing of bankruptcy petition is not property of the estate as de-
fined by 11 USCS § 541(a)(1) from which the debtor may claim an exemption pursuant to 11 USCS
§ 522(b)(1) and, as such is not subject to turnover pursuant to 11 USCS § 542(a). In re Campbell
(1982, BC DC SC) 20 BR 42.
Fact that trustee's lien on and title to vehicle is superior to any claimed lien of creditor does not
make vehicle available to debtors as exempt from claims of creditors where debtors prevented per-
fection of creditor's prebankruptcy lien by obtaining title without notation of lien and by failing to
return title to creditor after having vehicle released from lien in one state in order to have it titled in
another state. Lincoln Nat'l Bank v Conti (1982, BC SD Ohio) 27 BR 175.
Under Illinois law, husband and wife debtors may exempt up to value of $ 2,400 in any one ve-
hicle they both own or each debtor may exempt up to value of $ 1,200 in vehicle owned by debtor
claiming exemption, but debtors may not claim $ 2,400 exemption in truck which they own and $
1,500 exemption in automobile which they own. In re Johns (1984, BC CD Ill) 39 BR 488.
Subdivision of Illinois exemption law permitting debtors to claim exemption in "any other prop-
erty" refers to property not specifically exempted in any other subsection of exemption statute, and
since motor vehicles are specifically exempted under one subsection of statute, debtors may not
claim exemption for automobile under "any other property" subdivision of statute. In re Johns
(1984, BC CD Ill) 39 BR 488.
Page 354
11 USCS § 522
Debtor is required to use Ohio exemption statute, extension of which is not violative of Ohio
constitution's one issue rule, and automobile exemption is therefore $ 1400 rather than fair market
value under 11 USCS § 522(d). In re Brown (1984, BC SD Ohio) 48 BR 19.
Only transfer by debtor which, under 11 USCS § 522(g)(1)(A), bars exemption rights is volun-
tary transfer of debtor's property itself; thus creditor bank cannot defeat debtors' exemption rights
under 11 USCS § 522(d)(2) of $ 1200 in motor vehicle by fact that debtors gave bank security inter-
est in vehicle. In re Hawley (1985, BC WD Pa) 54 BR 49.
Where Chapter 7 debtor executes document waiving vehicle exemption and releasing motor
home to sheriff's office for levy to satisfy judgment on writ of execution, and sheriff levies on prop-
erty on same date, debtor's withdrawal of waiver on following day is ineffective to render waiver
inoperative; even if withdrawal were effective, debtor waives vehicle exemption in motor home by
applying motor vehicle exemption to another vehicle when filing bankruptcy. In re Hoffner (1986,
BC DC NM) 69 BR 70, CCH Bankr L Rptr P 71600.
Debtors may not exempt nonmotorized trailer as passenger car or light truck or under alternative
provision of Texas exemption. In re Gibson (1987, BC ND Tex) 69 BR 534.
Montana statute limiting exemption for vehicle to $ 1,000 in value cannot be exceeded nor split
between more than one vehicle, despite fact debtor's exempt vehicle is worth only $ 356. In re
Stanhope (1987, BC DC Mont) 76 BR 165.
Where undisputed value of Chapter 7 debtor's vehicle is less than $ 2,400 and there are no valid
or existing liens or encumbrances on vehicle asserted by other creditors, vehicle is exempt property
under 11 USCS § 522 and New York law. In re Bagnato (1987, BC SD NY) 80 BR 655, CCH Bankr
L Rptr P 72137.
Chapter 7 debtors are not entitled to $ 1,000 exemption in automobile as provided for by Ohio
law whether trustee is successful or unsuccessful in preference action against one debtor's father; in
event trustee is successful in anticipated adversary proceeding against one debtor's father to avoid
father's security interest in automobile as preferential transfer under 11 USCS § 547, it is clear that
debtors will not be eligible to claim exemption in automobile, since pursuant to 11 USCS § 522(g)
debtors may not claim exemption in property "if the transfer avoided was a voluntary transfer of the
debtor;" if trustee's efforts to avoid lien as preferential transfer are unsuccessful, debtors still are not
entitled to exemption, where amount of father's lien exceeds value of motor vehicle, and debtors'
exemptions under Ohio law are limited to property interests not subject to pre-existing liens. In re
Baumgarten (1993, BC SD Ohio) 154 BR 66, 28 CBC2d 1650, CCH Bankr L Rptr P 75300.
Chapter 7 debtor husband is not entitled to claim $ 2,400 exemption in motor vehicle, where ve-
hicle is titled solely in name of wife, since exclusive title in debtor wife precludes debtor husband
from claiming motor vehicle exemption; to allow non-owner to claim exemption in property would
create anomalous situation whereby husband could place property in name of wife to keep it beyond
reach of his creditors and then reclaim it for bankruptcy purposes, again putting it beyond reach of
his creditors. In re Miller (1994, BC SD NY) 167 BR 782, 31 CBC2d 339.
Chapter 7 debtor is entitled to exempt $ 1,000 equity in automobile, where debtor is not barred
from claiming benefit of Florida statute merely because he incurred portion of his unsecured debts
before effective date of statute, since phrase "occurring on or after October 1, 1993" modifies terms
Page 355
11 USCS § 522
"attachment, garnishment, or other legal process." In re Adkins (1995, BC MD Fla) 176 BR 58, 8
FLW Fed B 301 (criticized in In re Puff 'n Stuff (1995, BC MD Fla) 183 BR 959, 9 FLW Fed B 9).
Debtor's automobile cannot be exempted under state law as professionally prescribed health aid
unless it is uniquely suited and principally used for diagnosis, cure, mitigation, treatment or preven-
tion of disease, or for purpose of affecting any structure or function of body. In re Driscoll (1995,
BC DC Or) 179 BR 664.
Where Chapter 7 debtors claimed $ 3,000 exemption in motor vehicle, which was statutory
maximum for joint exemption under Arizona statute, but trustee concluded vehicle was worth
minimum of $ 6,700, trustee will be ordered to sell vehicle and give debtors $ 3,000 from proceeds,
notwithstanding that trustee's objection to exemption was untimely; since debtors did not use term
"100 percent exempt," or other language, to provide warning or red flag to trustee, their recovery
will be limited to precise statutory amount they claimed as exempt and remaining proceeds will re-
main part of bankruptcy estate for distribution to creditors. In re Jackson (1995, BC DC Ariz) 194
BR 867.
All-terrain vehicle owned by Chapter 7 debtors qualified as "motor vehicle" for purposes of
Missouri exemption even though it was not lawful for vehicle to be operated on public highway ex-
cepted certain specified instances and even though this type of vehicle is, as general rule, used for
recreational purposes. In re Moore (2000, BC WD Mo) 251 BR 380.
Where debtors in Chapter 7 bankruptcy claimed boat as exempt asset under Rhode Island law,
R.I. Gen. Laws § 9-26-4(13), which provided exemption for "motor vehicle," bankruptcy court held
that "motor vehicle" as used in R.I. Gen. Laws § 9-26-4(13) referred to vehicles that traveled on
land; if Rhode Island General Assembly intended to include things marine in exemption statute, it
would have said so, rather than being silent on subject. In re Barbera (2002, BC DC RI) 285 BR
355.
Granting of lien to bank by debtors was transfer which was avoided by Chapter 7 trustee; trustee
"recovered" equity that had been encumbered by bank's lien for benefit of estate, so debtors could
not claim exemptions in that equity, but according to schedules, car was worth $ 20,575, and bank's
debt was $ 18,840; accordingly, since there was no contrary evidence as to debt due bank, trustee
recovered only $ 18,840 for benefit of estate and remainder represented equity that existed regard-
less of trustee's powers and was exemptible. In re Hicks (2006, BC WD Mo) 342 BR 596.
Trustee's objection to debtor's claim of state automobile exemptions was sustained because ex-
emptions were not available when debtor was not domiciled in state on date she filed bankruptcy
petition; however, debtor was entitled to federal automobile exemption of $ 2,950 under 11 USCS §
522(d)(2). In re Crandall (2006, BC MD Fla) 346 BR 220, 19 FLW Fed B 352.
Where debtors' attempted sale of their vehicle was voluntary, once Chapter 7 Trustee recovered
vehicle, debtors were not entitled to exemption in vehicle. In re Woods (2008, BC DC Idaho) 386
BR 758.
Defendant's claim that his automobile is exempt and is therefore not subject to seizure on behalf
of plaintiff's replevin action is without merit where defendant's exemption claim shows that he has
no interest in automobile; 11 USCS § 522(b)(2) indicates that it does not grant exemption to auto-
mobile, but rather to debtor's interest in automobile, provided that it does not exceed $ 1200. Ma-
rine Midland Bank, N. A. v Venton (1980) 104 Misc 2d 599, 428 NYS2d 615.
Page 356
11 USCS § 522
198. Spousal support

Chapter 7 debtor wife may, under Virginia opt-out provisions, exempt 50 percent of tax refund
as homestead exemption despite fact that wife did not earn 50 percent of income reported on return.
Bass v Hall (1987, WD Va) 79 BR 653.
Congress intended for 11 USCS § 522(d)(10)(D) to exempt only those monies, and potentially
other equivalent awards, that concern general spousal sustenance. Harbaugh v Sweet (In re Har-
baugh) (2001, ED Mich) 257 BR 485, 45 CBC2d 1447, judgment entered (2001, ED Mich) 2001 US
Dist LEXIS 4169.
11 USCS § 522(d)(10)(D) exempts any payments from bankruptcy estate that are intended by
parties or state court to support spouse, and that are, in judgment of bankruptcy court, reasonably
necessary for such purpose. Harbaugh v Sweet (In re Harbaugh) (2001, ED Mich) 257 BR 485, 45
CBC2d 1447, judgment entered (2001, ED Mich) 2001 US Dist LEXIS 4169.
Under Pennsylvania conflict of laws rules, New Jersey law applies to determine whether Chap-
ter 7 debtor and his wife may exempt mortgage and note on real estate located in New Jersey that is
held as tenants by entirety, where documents were negotiated and executed in New Jersey, mort-
gage is recorded there, payments are made from New Jersey, and creditor is New Jersey corpora-
tion; debtor may not exempt mortgage because New Jersey condones process upon entireties prop-
erty by individual spouse's creditors and because property is presently paid for in monthly mortgage
payments and is easily susceptible to partition, and thus creditor cannot cause injury to nondebtor
spouse by proceeding against debtor's interest thereon. In re Goldstein (1986, BC WD Pa) 66 BR
909.
Obligation of Chapter 7 debtor's former spouse to pay debtor $ 150,000 lump-sum is alimony,
rather than property settlement, for purposes of determining whether debtor may be exempt sum
under 11 USCS § 522(d)(10)(D) where state-court judge clearly allowed debtor's spouse to retain
property that, for most part, was in his name prior to marriage, and lump-sum alimony provision
was to supplement periodic alimony in assisting debtor with her continuing mental illness and need
to maintain separate home for herself; furthermore, lump-sum amount is reasonably necessary for
debtor's support, taking into account debtor's mental illness, her history of hospitalization and like-
lihood of rehospitalization, her need for daily medication, her present deficit income position, and
her lack of assets. In re Joseph (1993, BC DC Conn) 157 BR 514, 29 CBC2d 691, CCH Bankr L
Rptr P 75401.
Chapter 7 debtors may not exempt real property transferred to debtor wife by her former hus-
band in satisfaction of past due child support under Idaho statute exempting money or personal
property received for alimony, maintenance, or support where transfer of real property was in satis-
faction of past due child support, not present or future child support, and is nothing more than reim-
bursement of funds already expended. In re Russell (1994, BC DC Idaho) 163 BR 584.
Equitable distribution of $ 10,550, payable at $ 350 per month, is clearly in nature of property
settlement and does not constitute "alimony," and thus may not be exempted pursuant to Florida
statute specifically adopting federal exemptions provided by 11 USCS § 522(d)(10)(D) where (1)
debtor's right to receive each monthly payment is contingent only upon payment of equitable distri-
bution in full, not upon death or remarriage, (2) award is not subject to modification upon changing
circumstances of either party, (3) express purpose for award is to equitably divide marital property,
providing monetary payments in exchange for full ownership and possession of several parcels of
Page 357
11 USCS § 522
real property, (4) child support is addressed separately under marital settlement agreement which
indicates that equitable distribution payments did not exist to provide support for dependent child,
and (5) agreement failed to mention physical health, levels of education, or need for support of ei-
ther party, but specifically included waivers by both parties to any claim of alimony of any kind. In
re Ellertson (2000, BC SD Fla) 252 BR 831, CCH Bankr L Rptr P 78267, 13 FLW Fed B 332.
Chapter 7 debtor was not entitled to Ohio exemption for right to receive arrearages in spousal
support where she failed to establish that arrearage owed was necessary for her support, given suffi-
ciency of her $ 38,600 salary to pay her current expenses, fact that her two children were now
emancipated and had been assisting her, and fact that she still retained right to receive current
spousal support. In re Thurston (2000, BC SD Ohio) 255 BR 725.
Ohio exemption for right to receive arrearages in spousal support is limited to amount reasona-
bly necessary for support of debtor and dependants, and instant debtor is directed to submit affidavit
detailing extent to which arrearages are necessary for support. In re Edwards (2000, BC SD Ohio)
255 BR 726.
Even though Chapter 7 debtor claimed divorce agreement's characterization of monthly $ 200
payments to her as "direct financial support" rather than as "division of assets" led to conclusion
that award was alimony, labels used in contract are not dispositive of nature of obligation and pay-
ments to her from ex-husband would be held to constitute nonexempt property settlement where,
even though fact that payments were tied to her life indicated they were intended as alimony, bal-
ance of factors considered strongly suggested that money was intended for debt repayment so the
payments were property settlement in view of (1) disparate income of parties, (2) statement in
agreement that payments were "in lieu of one lump sum settlement at present time," (3) absence of
any minor children, (4) absence of evidence that debtor needed additional funds for medical or edu-
cational expenses, and (5) fact that divorce agreement and debtor's testimony, when read together,
indicated payments were intended to repay loans belonging to debtor rather than to provide her re-
habilitative support. In re Brackett (2001, BC MD Fla) 259 BR 768, 45 CBC2d 1415, 14 FLW Fed
B 217.
Proceeds from sale of marital residence was property settlement that could not be exempted un-
der 11 USCS § 522(d)(10)(D) as "alimony, support, or separate maintenance."; the debtor's marital
settlement agreement had meaningful separate alimony provision, fund at issue was described as
being part of property division, label was matched by its actual characteristics and there was no evi-
dence to suggest that true nature of obligation was disguised. Mason & Mason v Korwin (In re
Korwin) (2007, BC WD Pa) 379 BR 80.
199. Tax credits
In case of first impression, court holds that Hope Scholarship Credit, federal education tax
credit, is not exempt under Idaho law. In re Crampton (2000, BC DC Idaho) 249 BR 215, CCH
Debtor's portion of exempt tax refund attributable to state supplemental income and credits leg-
islation was required to be included in calculation of debtor's disposable income for purposes of
formulating debtor's Chapter 13 plan; fact that tax credits were designed to provide relief to low-
income families and were enacted as incentive to work rather than receiving public assistance was
irrelevant. In re Sohn (2003, BC DC Minn) 300 BR 332, 51 CBC2d 785.
Page 358
11 USCS § 522
200. Wages
Consumer Credit Protection Act, 15 USCS §§ 1671-77, does not itself create exemption within
meaning of Bankruptcy Act of 1898 [former 11 USCS §§ 1 et seq.], but by reason of its incorpora-
tion by state exemption statute, which, in turn, is adopted by Bankruptcy Act of 1898, it becomes
exemption measure, with result that 75 percent of bankrupt's wages are exempt from creditors. In
re Brissette (1977, CA9 Cal) 561 F2d 779, reh den (1977, CA9) 568 F2d 473.
District Court order directing judgment debtor to pay to creditor 25 percent of his future income
is not limited by Illinois Wage Garnishment Act, which permits creditor to obtain order requiring
debtor's employer to pay directly to creditor up to 15 percent of debtor's income, where District
Court's order is directed at judgment debtor himself and to no one else. Wienco, Inc. v Scene Three
(1994, CA7 Ill) 29 F3d 329, magistrate's recommendation, (1994, ND Ill) 1994 US Dist LEXIS
13333.
Sum due bankrupt as result of monies withheld from his wages constituted exemptible portion
of bankrupt's estate. In re Johnson (1964, SD Ohio) 232 F Supp 681, 27 Ohio Ops 2d 448.
Lien of execution and garnishment does not constitute preference voidable under 11 USCS §
547 because lien, created when execution is delivered to sheriff, was delivered prior to 90 days be-
fore filing of petition; thus, fact that funds were not actually paid over did not affect lien; where
sums sufficient to pay judgment and garnishment were removed from debtor's control more than 90
days before filing, debtors have not right to claim any part of funds as exempt under opt-out legisla-
tion. In re Lamm (1984, ED Va) 47 BR 364.
Where former Chapter 7 debtor was estopped from bringing employment discrimination claim
against her former employer because she was cognizant of her claim prior to filing for bankruptcy,
yet she did not disclose claim in bankruptcy before she received discharge, employee's claim for
front pay, sought by operation of 11 USCS § 522(d)(11)(E), did not survive either because debtor
never asserted in bankruptcy exemption for future earnings, and claim for front pay was contingent
upon debtor establishing her claim for constructive discharge, which she failed to do. Bexley v Dil-
lon Cos. (2006, DC Colo) 17 AD Cas 1745.
Even if money garnished from debtor's wages by debtor's former wife is property of estate, re-
coverable by trustee, debtor may still claim it as exempt under 11 USCS § 522(b); it would be futile
to permit recovery by trustee only to have him remit fund recovered to debtor as part of his exemp-
tions. In re Stenborg (1981, BC ED Mo) 1 BAMSL 579.
Stipulation and agreement entered into by debtor and former wife establish that money was not
owed by debtor to former wife at time that she garnished money from debtor's wages; former wife
has no claim to fund under 11 USCS § 522(c)(1); debtor may claim fund as exempt pursuant to 11
USCS § 522(g)(1). In re Stenborg (1981, BC ED Mo) 1 BAMSL 579.
Pursuant to 11 USCS §§ 522(h) and 547(b), debtor may avoid withholding of wages and entry of
garnishment judgment against employer which occurred within 90 days before Chapter 7 petition
was filed and may exempt wages under 11 USCS § 522(b) where, under Illinois law, garnishment
summons did not terminate debtor's interest in non-exempt wages which were then due or became
subsequently due, even though service of garnishment summons outside 90-day preference period
did create continuing lien; pursuant to 11 USCS § 542 creditors obtaining garnishment judgment
Page 359
11 USCS § 522
must turn over wages held by debtor's employer. In re Nealis (1985, BC ND Ill) 52 BR 329, 13
CBC2d 663.
Under Illinois wild card exemption, debtor can claim garnished wages as exempt property under
11 USCS § 522(f)(1). In re Johnson (1985, BC ND Ill) 53 BR 919.
Where Chapter 7 debtor's wages have been attached pursuant to state statute later declared to be
unconstitutional, debtor retains interest in attached funds, judgment creditor's lien is invalid, and
money being held pursuant to said lien is property of estate which debtor is entitled to claim as ex-
empt under 11 USCS §§ 522(d)(1) and (5); consent order which merely establishes procedure
whereby debtor is given opportunity to object in state court to release of garnished funds being held
in escrow does not infringe upon debtor's right to claim exemption. In re Rianna (1986, BC DC RI)
61 BR 924.
Federal garnishment statute does not apply in Missouri to allow Chapter 7 debtor to exempt pre-
bankruptcy earnings; Missouri garnishment statute does allow debtor, however, to exempt prebank-
ruptcy earnings from attachment and execution. In re Sanders (1987, BC ED Mo) 69 BR 569, 4
BAMSL 3458.
Monies withheld from Chapter 13 debtors' salary checks pursuant to statutory compulsory wage
deduction program for governmental employees and interest accrued thereon are property of debt-
ors' estates, but are subject to statutory lien; postpetition deductions constitute assignment of wages
as security for prepetition debt and therefore are not subject to statutory lien; thus, such monies
could be recovered by estate pursuant to 11 USCS § 522(h) if any avoiding powers listed therein are
invoked and established. In re Ortiz Vega (1987, BC DC Puerto Rico) 75 BR 858.
Debtor head of household may exempt paycheck due him under Florida opt-out provisions pro-
viding that such debtor may exempt money due him for personal services. In re Montoya (1987, BC
MD Fla) 77 BR 926, 110 CCH LC P 56000.
Neurological surgeon is entitled to exempt $ 3,600 paid to him by professional association
shortly before filing petition where Florida statute exempts wages earned by employee head of
household from execution, where evidence establishes that sum paid was actual wages rather than
payment of passive income and that debtor was "employee" within meaning of statute and not inde-
pendent contractor. In re Montoya (1987, BC MD Fla) 77 BR 926, 110 CCH LC P 56000.
Feed and Grain Program payments which are part of debtor's estate are not exempt as wages un-
der Iowa law because payments are not equivalent to wages since there is no relationship between
program payments and farmer's labor. In re Mattice (1987, BC SD Iowa) 81 BR 504, 6 UCCRS2d
214.
Neither Ohio future earnings exemption nor 11 USCS § 522(d)(11)(E) restrict scope of exemp-
tion to lost future earnings resulting from bodily injury, and therefore Ohio statute exempts that por-
tion of settlement of Chapter 7 debtor's employment discrimination action which is attributable to
compensation for debtor's lost future wages; debtor will be allowed to amend his schedule to claim
exemption and trustee will then be afforded opportunity to object. In re Carson (1987, BC SD
Ohio) 82 BR 847, 50 BNA FEP Cas 347.
Even if head of household's wages are commingled with nonhead of household's wages, portion
of wages traceable to head of household are exempt under Florida law. In re Welch (1990, BC MD
Fla) 115 BR 374.
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11 USCS § 522
Chapter 7 debtor may exempt 90 percent of his earnings under New York law and such exemp-
tion is not limited to $ 2,500; under New York law, 90 percent of debtor's salary earned 60 days
prior to bankruptcy, or at any time thereafter, is not subject to seizure by creditors, except such part
as court should determine to be unnecessary for reasonable requirements of debtor and his depend-
ents, because 90 percent earning exemption statute applies to bankruptcy debtors as well as judg-
ment debtors. In re Maidman (1992, BC SD NY) 141 BR 571.
Florida statute exempting money or other thing due for personal labor or services of head of
family applies only to actual wages earned by one in employer/employee relationship, and it cannot
be construed to cover those instances in which independent contractor seeks exemption of moneys
due to him even if due for rendering personal labor or services; in instant case, debtor may not ex-
empt commissions he received as real estate broker on sales procured prepetition because debtor's
occupation as real estate agent is that of independent contractor and moneys due him are not wages
within meaning of statute. In re Hanick (1994, BC MD Fla) 164 BR 165, CCH Bankr L Rptr P
75787, 7 FLW Fed B 397.
Iowa Code § 627.6(9)(c) was intended to protect bankruptcy debtor's wages from reach of credi-
tors to same extent they would be protected in state court garnishment proceedings. In re Irish
(2003, BC ND Iowa) 303 BR 380, affd (2004, BAP8) 311 BR 63.
State's wage exemptions set forth in Iowa Code §§ 537.5105 and 642.21 apply in bankruptcy
proceeding even if debtor's wages were not actually garnished in pre-petition state court proceed-
ings. In re Irish (2003, BC ND Iowa) 303 BR 380, affd (2004, BAP8) 311 BR 63.
Under Iowa Code § 642.21, maximum amount of Chapter 7 debtor's disposable earnings that
could be garnished per year was within exemption amount for wages contained in Iowa Code §
627.6(9)(c); therefore, debtor's net wages were fully exempt. In re Irish (2003, BC ND Iowa) 303
BR 380, affd (2004, BAP8) 311 BR 63.
Chapter 7 debtor was not entitled to exempt 85 percent of prepetition bonus under 735 Ill.
Comp. Stat. 5/12-803 or 740 Ill. Comp. Stat. 170/4 because statutes did not give rise to general ex-
emption for wages earned but not yet paid to employee and had no relevance to exemptions that
debtor could claim in bankruptcy case. In re Thum (2005, BC CD Ill) 329 BR 848.
Debtor was only entitled to exempt $ 16,550 of net settlement proceeds for future earnings of $
83,203 pursuant to 11 USCS § 522(d)(11)(E), as pro-rated amount reasonably necessary for support
of debtor's family postpetition; remainder was subject to Chapter 7 trustee's objection to exemption.
In re Jackson (2007, BC DC Conn) 376 BR 75.
Bankruptcy court erred by ordering turnover to debtor, tax protestor, of $ 697 in wages received
by IRS after petition pursuant to prepetition levy, where impact of 11 USCS § 522(c) on debtor's
claim of exemption had not been presented to or resolved by bankruptcy court, nor had nondis-
chargeability of claim under 11 USCS § 523(a)(1), Chapter 7 trustee had not recovered any property
for purposes of 11 USCS § 522(g), and debtor had not alleged or commenced avoidance action de-
scribed in 11 USCS § 522(h). United States, IRS v Mathews (In re Mathews) (1997, BAP6 Ohio)
209 BR 218, CCH Bankr L Rptr P 77425, 97-2 USTC P 80851, 79 AFTR 2d 3084.
Page 361
11 USCS § 522
Unpublished: Record supported bankruptcy trustee's objections to debtor's exemption because

juror statements debtor presented in his motion to amend employment case judgment showed that
jury did not intent to award damages for future wages; therefore, trustee carried his burden of proof
under Fed. R. Bank. P. 4003 and debtor was not entitled to exemption under 11 USCS §
522(d)(11)(E). Pequeno v Schmidt (In re Pequeno) (2005, CA5 Tex) 126 Fed Appx 158 (criticized in
In re Epley (2005, BC ED Va) 2005 Bankr LEXIS 2817).
201.--What constitutes exemptable wages
Debtors were not entitled to exemption under 11 USCS § 522(d)(11)(E) for entire net proceeds
of their wrongful termination action because clear and unambiguous language of statute allowed
them to claim only post-petition loss of earnings as exemption. In re Jackson (2008, DC Conn) 394
BR 8.
Clear and unambiguous language of 11 USCS § 522(d)(11)(E) creates estate on petition date and
allows exemption for loss of any future earnings after creation of that estate; to allow exemption for
earnings prior to petition date would make statute retroactive instead of future looking and would
render term "future" obsolete, defeating statute's purpose. In re Jackson (2008, DC Conn) 394 BR 8.
Bankruptcy court properly calculated amount reasonably necessary for support under 11 USCS
§ § 522(d)(11)(E) based on income and expenditure numbers provided by debtors; debtors' calcula-
tion failed to account for their certified statements in their uncontested petition that certain inde-
pendent contractor fees were earned over six month rather than twelve month period and that set-
tlement of wrongful termination action was meant to return debtor's income to his pretermination
income level. In re Jackson (2008, DC Conn) 394 BR 8.
In bankruptcy, wages are distinguishable from payments under disability insurance contract
where payments are fixed, matured, due, and payable as executed contract since wage earner con-
tinues to work and create new earnings by his labor and wages constitute property not in existence
at date of garnishment or execution. In re Dent (1976, BC ND Ala) 2 BCD 462.
Account receivable due proprietor is not "personal earnings" or "earnings for personal service"
within contemplation of state statute which allows exemption only to extent necessary to compen-
sate debtor for his personal labor if personal labor element can be distinguished from other elements
of gain such as employment of capital to produce income; bankrupt, who occupies position of inde-
pendent contractor for work performed and not that of wage earner, is not protected under 15 USCS
§§ 1671-1677, Consumer Protection Act, which provides exemption of 75 percent of personal earn-
ings. In re Erickson (1976, BC SD Cal) 2 BCD 876.
Chapter 13 debtor's retirement fund payments are not "wages" or "pay" exemptible under Flor-
ida statute. In re Harrington (1987, BC SD Fla) 70 BR 301, 15 BCD 809.
Debtors may not exempt prepetition tax refund as wages. Tavormina v United States (In re
Seslowsky) (1991, BC SD Fla) 135 BR 692.
Chapter 7 debtor may not exempt his interest in deferred compensation investment pool estab-
lished by his employer for limited number of employees as wages under Florida exemption statute
since income derived from investment pool is in nature of passive income and agreement does not
predicate distribution on performance of personal services by employee; nor may debtors exempt
funds in bank account into which only deposits were debtor husband's payroll checks and expense
reimbursements from his employer, and from which various withdrawals were made, where debtor
Page 362
11 USCS § 522
husband commingled his exempt wages in account with nonexempt expense reimbursement funds,
and having commingled funds, he cannot trace his earnings In re Parker (1992, BC MD Fla) 147
BR 810, 6 FLW Fed B 303.
Oregon statutory scheme provided exemption for funds on deposit traceable to earnings up to
total of $ 7,500, subject to statutory limitations. In re Platt (2001, BC DC Or) 270 BR 773, 38 BCD
210.
Pre-bankruptcy petition earnings deposited in debtors' bank account prior to bankruptcy filing
were not exempt wages under state law. In re Resler (2002, BC DC Kan) 282 BR 246.
Where Chapter 7 debtors sought amount in unpaid bonuses in state court action against debtor
wife's former employer, debtors were entitled to exempt from estate 75 percent of any award repre-
senting actual, unpaid wages pursuant to Ariz. Rev. Stat. § 33-1131(B) and 15 USCS § 1673; debt-
ors, however, were not entitled to exempt any amounts that were awarded in punitive damages,
treble damages, interest, attorneys' fees, costs or like. In re Mulvihill (2005, BC DC Ariz) 326 BR
459.
Unpublished: Funds that debtor received for unused sick and vacation benefits after he was ter-
minated from his employment were exempt under Mo. Rev. Stat. § 525.030.2, up to 75 percent, be-
cause these benefits were proportional to hours he had worked; he had right to be paid for unused
vacation and sick pay when he was terminated; benefits were subject to federal and state tax with-
holdings when they were paid to him; and they were part of remuneration agreed upon by debtor
and employer. In re Hidy (2007, BC WD Mo) 2007 Bankr LEXIS 973.
202.--Independent contractor earnings
Tennessee statute exempting disposable earnings from garnishment applies to independent con-
tractors as well as to employees to extent that compensation sought to be garnished is for personal
services; in instant case, debtor's renewal commissions from policies he sold while insurance agent
are compensation for personal services, even though he is no longer agent of insurance company,
because renewal commissions are intended to compensate debtor for making initial sales. In re
Duncan (1992, BC ED Tenn) 140 BR 210 (criticized in In re Galvez (1999) 115 Nev 417, 990 P2d
187).
Chapter 7 debtor independent contractor may exempt moneys owed him under prepetition ship-
ping contract under Iowa wage exemption statute where Iowa law does not distinguish for earnings,
income, or wage exemption purposes between independent contractors and employees, but rather
focus is on distinguishing types of income, i.e., whether funds represent compensation from per-
sonal services, which are exempt, or nonexempt account receivables independent contractor derives
from labor of his or her employees or investment income, and funds owed debtor under shipping
contract represent compensation for personal services of debtor himself and not his employees. In
re Sexton (1992, BC SD Iowa) 140 BR 742.
Chapter 7 debtor was more like independent contractor than employee of contracting corpora-
tion owned solely by his wife, and, therefore, is not permitted to exempt $ 4,200 balance of bank
account under wage exemption, despite fact that debtor was paid weekly salary, and not on job-by-
job basis, and that corporation provided him with office space and support personnel, where amount
Page 363
11 USCS § 522
and timing of compensation was determined by debtor and essentially constituted discretionary dis-
tribution from family-owned business; debtor (1) determined his own salary, and whether he would
receive commissions or bonuses, (2) had no employment contract, (3) used his own tools, and (4)
other than gasoline, paid his own expenses. In re Manning (1994, BC SD Fla) 163 BR 380, 7 FLW
Fed B 349.
203. Wearing apparel and jewelry
Watch is wearing apparel within state exemption law. Sellers v Bell (1899, CA5 Ala) 94 F 801.
Diamond ring purchased with insurance proceeds paid out after theft of debtor's original en-
gagement ring which had belonged to her husband's grandmother is thing of sentimental value
rather than expensive ornament and is exempt under California law and under 11 USCS § 522(b).
In re Westhem (1981, CA9 Cal) 642 F2d 1139, 7 BCD 1246.
Under state law exempting wearing apparel of debtor, personal jewelry of bankrupt is exempt.
In re H. L. Evans & Co. (1907, DC Del) 158 F 153.
Eleven pieces of jewelry of approximate value of $ 4,000 are exempt as wearing apparel which
is "reasonably necessary for the family" considering station in life of person claiming exemption
and circumstances under which claimed exemption was acquired. In re Tyler (1976, BC ND Tex) 2
BCD 1537, 11 CBC 768.
Under state law allowing personal property exemption without regard to nature or character of
items involved and placing only value limitation on personal properties claimed, diamond ring val-
ued at $ 662 is exempt. In re Wilson (1977, BC MD Fla) 3 BCD 816, CCH Bankr L Rptr P 66588.
Where debtor received insurance payment for ring which she discovered under piece of furni-
ture in her home after filing for bankruptcy, debtor holds ring in constructive trust subject to equita-
ble rights of insurance company which has beneficial interest in trust; creditor insurance company is
therefore entitled to ring and debtor who has no homestead cannot use equivalent amount under 11
USCS § 522(d)(5) to claim ring exempt; although insurance company would have had right to file
contingent claim to cover possibility of debtor's finding ring it would place extremely unreasonable
burden on debtors, insurance companies and bankruptcy court if debtors upon filing had to list all
insurance companies that had paid any claim to them and insurers had to keep such records of
closed files to be able to identify insured upon receipt of bankruptcy notice and file contingent
claim without any real hope of recovery. In re Angus (1981, BC DC Or) 9 BR 769, 7 BCD 468, 4
Debtor will be allowed to amend his schedule so that he may exempt jewelry pursuant to 11
USCS § 522(d)(4) where debtor did not conceal it. In re Alesia (1982, BC ND Ill) 28 BR 46.
Diamond engagement ring, which Chapter 7 debtor wore on daily basis and did not hold as in-
vestment, is "wearing apparel" within meaning of North Carolina exemption statutes and thus
debtor could exempt $ 1,000 in value under "wearing apparel" exemption and $ 2,500 under "wild
card" exemption to exempt entire $ 3,500 value of ring pursuant to 11 USCS § 522(b)(1). In re
Mims (1985, BC ED NC) 49 BR 283.
Debtor's watch constitutes wearing apparel for purposes of Oklahoma exemption statute; gold
chain and gold 10-dollar coin pendant, however, represent more than just ornamentation and wear-
ing apparel and they represent investment and are not exemptable. In re Goldberg (1986, BC ND
Page 364
11 USCS § 522
Okla) 59 BR 201, CCH Bankr L Rptr P 71068 (superseded by statute as stated in In re Walker
(1990, ND Okla) 139 BR 31).
Diamond wedding band and jewelry did not constitute necessary and proper wearing apparel
under "wearing apparel" exemption, Tenn. Code Ann. § 26-2-104, because they were not appropri-
ate to debtor's work of taking care of her children at home and were luxury items, considering their
$ 15,000 value; 11 USCS § 523(a)(2)(C)(i), (ii), which excepted from discharge debts aggregating
more than $ 500 for luxury goods; $ 1,225 limitation in federal bankruptcy exemption for jewelry;
and fact that state does not provide specific exemption for jewelry. In re Lebovitz (2006, BC WD
Tenn) 344 BR 556.
204. Miscellaneous
Stock exchange seat is property where property is defined as liability to be levied upon and sold
since bankruptcy statute supplies process for reaching stock exchange seat for benefit of creditors
after board creditors have been paid notwithstanding that purchaser is subject to election by ex-
change and other conditions as these are contingencies which will be reflected in its price; under
state statute entitling insolvent to retain articles exempt from levy and sale, stock exchange seat may
not be retained; hence, stock exchange seat was not within former 11 USCS § 24 which made al-
lowable to bankrupts exemptions prescribed by law of state of their domicile. Page v Edmunds
(1903) 187 US 596, 47 L Ed 318, 23 S Ct 200.
Attorney's fees refunded to debtor by Bankruptcy Court order become general property of estate
and are not governed by specific restrictions, hence are available to debtor to fund exemptions to
which he is otherwise entitled. In re Wilson (1982, CA11 Fla) 694 F2d 236, 9 BCD 1352, 7 CBC2d
Alabama Code § 6-10-126(b), which provides that no waiver of exemption in any written in-
strument shall be held to include or authorize levy of execution or attachment on any of five listed
types of property, does not provide debtors with additional exemption rights above and beyond
those provided in § 6-10-6, which provides $ 3,000 exemption in personalty. First Alabama Bank v
Mims (1986, MD Ala) 66 BR 20.
Repossessed goods in hands of creditor are not in present possession of debtor and therefore
these goods are not property that debtor may exempt under Kansas law pursuant to 11 USCS § 522.
In re Ferguson (1986, DC Kan) 67 BR 246.
Under North Carolina exemption for personal injury recoveries, Chapter 7 trustee is not entitled
to recover medical and legal fees paid by debtor to professionals directly involved in care for injury
and subsequent suit, because language creating exception for these expenses does not except them
from entire exemption, but means only that such professionals have right to reach injury compensa-
tion fund otherwise exempt from all other claims in bankruptcy. In re Brank (1986, WD NC) 67 BR
1005, 16 CBC2d 842, affd without op (1987, CA4 NC) 826 F2d 1059 and affd without op (1987,
CA4 NC) 826 F2d 1060.
Bankruptcy court properly affirmed contract substituting Chapter 7 trustee as payee of royalty
payments under license agreement; where debtor had already claimed exemptions in amount of $
2,000 or more, royalties debtor received pursuant to license agreement were not exempt under 735
Ill. Comp. Stat. 5/12 -1001(b), and 11 USCS 522(b)(2). Keen, Inc. v Gecker (2003, ND Ill) 264 F
Supp 2d 659.
Page 365
11 USCS § 522
Direct payments to debtor farmers under federal agricultural subsidy for corn and soybeans
qualified as "any public assistance benefit" for purposes of state bankruptcy exemption statute, Iowa
Code § 627.6(8)(a), as opposed to "a local public assistance benefit" under 11 USCS §
522(d)(10)(A). Wilson v Sergeant (In re Wilson) (2004, ND Iowa) 305 BR 4.
Phrase "any property" in 11 USCS § 522(d)(5) means just that; property need not be of kind oth-
erwise exempt under various provisions of 11 USCS § 522(d), and debtor properly includes under
exemption business inventory in amount necessary to make up such exemption. In re Upright
(1979, BC ND NY) 1 BR 694, 5 BCD 1124, 1 CBC2d 229.
Debtors may not claim exemption in partnership property. In re Schumacher (1982, BC ED
Mo) 1 BAMSL 699.
Debtor's right to obtain title to real estate upon performance of recorded contract for deed--
equivalent of mortgage relationship--is property of estate which debtor is entitled to claim as ex-
empt pursuant to 11 USCS § 522. In re Princiotta (1985, BC DC Mass) 49 BR 447, CCH Bankr L
Rptr P 70563 (criticized in FDIC v Finn (In re Finn) (1997, BAP1) 211 BR 780, 38 CBC2d 1176,
CCH Bankr L Rptr P 77534).
Evidence establishes that debtor's interest in testamentary trust exceeds both his valuation of his
interest and permissible exemption under state law; consequently, debtor may not exempt entirety
of trust from estate but is limited to amount specified in statutory exemption. In re Hersch (1986,
BC ED Va) 57 BR 667, 13 BCD 1358, CCH Bankr L Rptr P 70999.
"Letters of advice" indicating Chapter 7 debtors' future entitlement to funds in excess of $
18,000 are not exempt under New York law as unpaid milk proceeds since they are evidence only
of interest and debtors' rights as evidenced thereby are based not on proceeds of milk they marketed,
but on issuance of letters sometime after fiscal year to which they have reference; further, neither
New York nor federal law intended to afford farmer debtors windfall not enjoyed by nonfarmers
generally by allowing them to exempt 90 percent of fund paid over to cooperative over period of
years and not available to farmer for his ongoing expenses at time paid over. In re Stinson (1986,
BC WD NY) 59 BR 914.
Texas exemption for "athletic and sporting equipment" reasonably necessary for family or single
adult does not extend to 1975 Glass Par Boat, as if boat were logical extension of fishing rod and
reel, which exemption does cover. In re Cypert (1987, BC ND Tex) 68 BR 449.
Debtors may not claim boat used by family for recreational purposes as exempt under Texas ex-
emption for athletic and sporting equipment because that exemption is limited to small items for
individual use. In re Gibson (1987, BC ND Tex) 69 BR 534.
Chapter 11 debtor cannot exempt $ 5,000 in cash under South Dakota opt-out exemption for
provisions or fuel, where language of exemption suggests that debtor must have such provisions or
fuel in hand. In re Hogg (1987, BC DC SD) 76 BR 735, 4 UCCRS2d 1254.
Under Minnesota law, Chapter 7 debtor's right to postpetition payments from prepetition con-
servation reserve program contract are not earnings for purposes of exemption statutes. In re Holte
(1988, BC DC Minn) 83 BR 647.
Under Virginia law, shares of stock and brokerage account, neither of which constituted pro-
ceeds of, or rents or profits from, tenancy by entireties real estate, can be held as tenants by entirety
Page 366
11 USCS § 522
and thereby claimed exempt under 11 USCS § 522(b)(2)(B). In re Massey (1998, BC ED Va) 225
BR 887, 10 Fourth Cir & Dist Col Bankr Ct Rep 823.
Discretionary trust for which debtor sought exemption under statute would have exceeded any
amount that debtor might have been able to claim; in addition, property of discretionary trust was
not exempt under non-bankruptcy or state law. In re Young (2003, BC ED Tex) 297 BR 492.
Because debtors stipulated that per capita distributions received from tribal casino's revenue
were never held in joint tenancy or tenancy by entirety, neither 11 USCS § 522(b) nor (b)(2)(B) ap-
plied to exempt distributions. In re McDonald (2006, BC DC Kan) 353 BR 287.
For purposes of 11 USCS § 522(d)(10), payments received on promissory note from sale of
stock in business generally would not qualify under these special Internal Revenue Code provisions,
26 USCS §§ 401(a), 403(a), (b), 408, for qualified pension, profit-sharing, stock bonus and quali-
fied employee annuity plans, and individual retirement accounts. In re Archer (2006) 2006 MT 82,
332 Mont 1, 136 P3d 563.
VII.WAIVER OF EXEMPTIONS 205. Generally
State-law exemption of certain property from bankruptcy estate, which exemption purports to be
available unless waived, will be given effect, even if exemption has been waived, for purposes of 11
USCS § 522(f). Owen v Owen (1991) 500 US 305, 114 L Ed 2d 350, 111 S Ct 1833, 91 CDOS
3710, 91 Daily Journal DAR 6043, 21 BCD 1164, 24 CBC2d 850, CCH Bankr L Rptr P 73963 (su-
perseded by statute as stated in In re Parrish (1995, BC WD Wis) 186 BR 246, CCH Bankr L Rptr P
76786).
Creditor's claimed waiver of exemptions is enforceable only to extent of statutory lien since any
waiver of exemptions properly allowed under 11 USCS § 522(b) executed by debtor in favor of un-
secured creditor is unenforceable pursuant to 11 USCS § 522(e). In re Musser (1982, WD Va) 24
BR 913.
11 USCS § 522(e) is designed to avoid selective waivers of exemptions to favored or powerful
unsecured creditors and does not apply to waivers by operation of law, thus debtors cannot claim
exemptions when they have previously waived them by default in prior state action. United States v
Scott (1984, MD NC) 45 BR 318, 12 BCD 885.
Objection to debtors' claim of homestead exemption is not necessary under Bankruptcy Rule
4003(b) where debtors have effectively waived exemption for benefit of lien creditor whose rights
survive bankruptcy under 11 USCS § 522(c). In re Harrigan (1987, ND Ill) 74 BR 224.
State statute enforcing security interests in property which would have been exempt from levy
by third party is not invalid for conflict with 11 USCS § 522(e) because federal statute prohibits
only contractual, consensual waivers of exemptions, not statutory waivers, and debtor's interest
never vests in property and therefore cannot be waived by debtor. In re McGuire (1985, BC SD
Ohio) 47 BR 182, CCH Bankr L Rptr P 70289.
Chapter 7 debtor cannot waive exemption on property as motor vehicle and later be heard to
claim homestead exemption on same property, particularly where creditor has acted in reliance on
waiver. In re Hoffner (1986, BC DC NM) 69 BR 70, CCH Bankr L Rptr P 71600.
Protections of 11 USCS § 522(e) prohibiting waiver in favor of unsecured creditor apply not just
to federal, but also to state-created exemption rights. In re Blair (1987, BC DC Ariz) 79 BR 1.
Page 367
11 USCS § 522
Any waiver of exemption is unenforceable against Chapter 7 debtor and has no impact on debt-
ors' right to invoke voiding provisions of 11 USCS § 522(f)(1). In re Hutchinson (1988, BC MD
Fla) 92 BR 950.
Waivers of exemptions under 11 USCS § 522 should be construed narrowly so as to give effect
to purposes of Bankruptcy Code and exemptions. In re Dickinson (1995, BC DC Colo) 185 BR 840,
12 Colo Bankr Ct Rep 100.
206. Validity of particular waivers
Loan agreement signed by debtors and expressly waiving homestead exemption is not voided by
operation of 11 USCS § 522(e) covering unsecured loans; however, such waiver is avoided under
lien avoidance provision of § 522(f). Dominion Bank of Cumberlands, NA v Nuckolls (1985, CA4
Va) 780 F2d 408, 14 BCD 95, 13 CBC2d 1249, CCH Bankr L Rptr P 70885, 42 UCCRS 1508.
Chapter 11 debtor is not estopped from claiming homestead exemption in entire 129.47 acres of
farm under Texas law even though she executed homestead disclaimer that purported to release all
homestead claims to 114.47 acres and even though creditor asserts it relied on such disclaimer
where creditor's predecessor should have known or suspected that homestead disclaimer was false
because at time debtor represented that she did not have homestead rights in 114.47 acres, she and
her family lived in house on farm and were using entire farm, including 114.47 acres for homestead
purposes. In re Bradley (1992, CA5 Tex) 960 F2d 502, reh, en banc, den (1992, CA5 Tex) 966 F2d
1450 and cert den (1993) 507 US 971, 122 L Ed 2d 783, 113 S Ct 1412 and (criticized in Perry v
Dearing (In re Perry) (2002, WD Tex) 289 BR 860) and (criticized in Perry v Dearing (In re Perry)
(2003, CA5 Tex) 345 F3d 303, CCH Bankr L Rptr P 78909).
Waiver of right of exemption contained in obligation creating illegal preference is unenforce-
able against bankrupt in bankruptcy proceedings. In re Bolinger (1901, DC Pa) 108 F 374.
Hospital may obtain equitable assignment of sums to be recovered by debtor from tortfeasor to
extent of value of services provided by hospital in treatment of debtor's personal injuries; assign-
ment is invalid if equity would treat unilateral mistake as mutual mistake. In re Musser (1982, WD
Va) 24 BR 913.
Debtor, who under North Carolina opt-out legislation waived his right to claim exemption in
real estate by failing to file motion claiming exemptions within 20 days, is entitled to relief from
waiver because 11 USCS § 522(1) which provides no specific time limit for filing exemptions, pre-
empts state statute; 11 USCS § 522(b) pertains only to 11 USCS § 522(d) and other sections of stat-
ute operate independently of it. In re Howell (1985, MD NC) 51 BR 1015, 13 BCD 743.
Indiana homestead exemption need not be asserted at time of attachment lien, but at time of
consequent judgment lien; thus Chapter 11 creditor has not waived exemption, especially since state
attachment procedure provides debtor with no formal notice or procedure to contest attachment. In
re Schwartz (1985, ND Ind) 53 BR 1018.
Under 11 USCS § 522, employer-creditor may not enforce waiver of wage exemption contained
in employment contract whereby debtor consented, upon termination, to credit of wages against
credit account for goods which debtor purchased from employer. In re Terry (1980, BC ED Va) 7
BR 880, 7 BCD 21, 3 CBC2d 517 (criticized in In re Bourne (2001, BC ED Tenn) 262 BR 745).
Pursuant to 11 USCS § 522(f), until such time as debtor files petition in Bankruptcy and takes
active steps to avoid lien which impairs exemption of said debtor, waiver of exemption is valid and
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11 USCS § 522
security interest in those exemptions is also valid; therefore, debtor's waiver of exemptions is not
void but voidable and therefore, creditor's disclosure statement which disclosed enforceable security
interest in debtor's homestead exemption is valid. In re Caldwell (1981, BC ND Ga) 15 BR 811.
Waiver of exemption on homestead property is expressly prohibited under 11 USCS § 522(e);
waiver of exemption contained in financial statement in fine print is unenforceable. In re Gilman
(1983, BC SD Fla) 31 BR 930.
Motor vehicle disposed of prior to meeting held pursuant to 11 USCS § 341 is property of estate
and subject to surrender to trustee, and debtor's disposition of vehicle does not waive allowable ex-
emption existing on date of commencement of Chapter 7 case as there is no evidence of bad faith,
fraudulent conduct, or attempt to withhold estate property from trustee; burden of proof lies with
debtor to establish that vehicle was not worth more than allowable amount of exemption. In re Cat-
tell (1983, BC SD Ohio) 32 BR 311.
Once debtor has validly waived his exemptions by failure to act after being given both notice
and opportunity to claim them as required by state law, exemptions cannot be revived merely by
filing bankruptcy petition and debtor will be foreclosed from asserting opt-out state's exemptions
pursuant to 11 USCS § 522; although Chapter 7 debtors were given notice and opportunity to claim
North Carolina exemptions and failed to do so, where debtors prudently sought advice on claiming
state exemptions and failure to respond was fault of debtors' attorney, client will not be charged
with inexcusable neglect of his attorney. In re Laughinghouse (1984, BC ED NC) 44 BR 789.
Debtors may claim homestead exemption under 11 USCS § 522(f)(1) despite prior judicial lien
granted in state court in reliance in part on express waiver of homestead exemption because plain
language of 11 USCS § 522(f)(1) invalidates such waiver. In re Webb (1984, BC ED Va) 49 BR
646.
Release of lis pendens in which parties agreed for allowance of debtor's homestead exemption
did not prevent debtor from claiming exemption in burial plot on ground that debtor had previously
used homestead exemption because property which was subject of lis pendens is not real property or
personal property that debtor used as a residence as required by homestead statute. In re McCoy
(1985, BC DC SC) 54 BR 189.
Attempt by debtor wife to assign her interest in profit-sharing plan to former employer bank in
payment of promissory note owed to bank did not result in assignment or waiver of exemption un-
der 11 USCS § 522 where (1) bank refused to accept assignment and (2) provisions of plan ex-
pressly prohibit assignment. In re Pettit (1985, BC SD Iowa) 55 BR 394, affd (1985, SD Iowa) 57
BR 362.
Where Chapter 7 debtor executes document waiving vehicle exemption and releasing motor
home to sheriff's office for levy to satisfy judgment on writ of execution, and sheriff levies on prop-
erty on same date, debtor's withdrawal of waiver on following day is ineffective to render waiver
inoperative; even if withdrawal were effective, debtor waives vehicle exemption in motor home by
applying motor vehicle exemption to another vehicle when filing bankruptcy. In re Hoffner (1986,
BC DC NM) 69 BR 70, CCH Bankr L Rptr P 71600.
Debtors' agreement that lien of prejudgment attachment against their homestead property would
be transferred to escrow fund in return for release of property from lien in order to permit sale of
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11 USCS § 522
property is not, under 11 USCS § 522(f), enforceable as waiver of exemption, because attachment is
judicial lien avoidable under 11 USCS § 522(b). In re Austin (1987, BC DC Vt) 73 BR 75.
Provision in construction contract between Chapter 7 debtor and builder prohibiting debtor's
right to possession of her new residence until either builder had been paid or satisfactory financial
arrangements made does not constitute waiver of homestead exemption under Arizona opt-out pro-
visions, where homesteading is not mentioned in contract and contract gives no hint that debtor ex-
pressly gives up right to exempt premises; debtor may exempt property even though she has wrong-
fully possessed it prior to paying builder where she: (1) owns land; (2) has contracted to build resi-
dence on it; and (3) is obligated by arbitration award to pay for it. In re Blair (1987, BC DC Ariz)
79 BR 1.
Homestead exemption under Arizona opt-out provisions will not be denied to Chapter 7 debtor
who signed construction contract for residence 2 years before filing bankruptcy, under which con-
tract debtor was prohibited from possession of premises until payment was arranged, where agree-
ment to possession restrictions did not induce builder to build house or extend unsecured credit to
debtor. In re Blair (1987, BC DC Ariz) 79 BR 1.
Chapter 7 debtors' failure to claim their homestead exemption during prepetition state court
foreclosure proceedings did not waive debtors' rights in bankruptcy because debtors had no right to
claim exemption under provisions of Bankruptcy Code until their petition was filed, and court will
not construe failure to claim exemption in prepetition foreclosure suit as waiver of procedural rights
that arise upon filing of bankruptcy petition; even if debtors had asserted their exemption in their
answer in state court, such assertion would not have been effective claim of exemption in bank-
ruptcy since 11 USCS § 522(l) requires debtors to file list of property that debtors claim as exempt.
In re Shells (1994, BC SD Ohio) 171 BR 816.
Mortgage and waiver of homestead executed by Chapter 13 debtors' daughter, who was found to
hold residence in resulting trust for debtors, who lived in residence, paid taxes and insurance, and
made mortgage payments to credit union as part of scheme to avoid credit union's lending limits, is
binding on debtors, because if debtors are true owners, mortgage and waiver of homestead are bind-
ing on them as well; furthermore, debtors are procedurally barred from claiming homestead exemp-
tion since claim of homestead was not raised by any pleading in, or during trial of, this adversary
proceeding, but was raised for first time in post-trial briefs; although debtors' schedule of exemp-
tions reflects that they claimed their interest in equity up to maximum allowable amount, no asser-
tion was made that their claim was superior to that of credit union's. Heritage Fed. Credit Union v
Cox (In re Cox) (1994, BC CD Ill) 175 BR 266.
Clause in promissory note waiving homestead or exemption rights under state laws and in bank-
ruptcy proceedings and authorizing trustee in bankruptcy to retain and sell sufficient of property
claimed as exempt to pay amount allowed on debt is not sufficient assignment where it did not re-
late to particular subject matter to which debtor then had title and which he could then assign and
did not show an attempt on part of debtor to at once transfer any right or title belonging to him. Sil-
ver v Ridley-Yates Co. (1928) 166 Ga 49, 142 SE 279.
VIII.AVOIDANCE OF LIENS ON EXEMPT PROPERTY
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11 USCS § 522
Under Georgia homestead exemption enacted pursuant to 11 USCS § 522(a), Chapter 13 debtors
may avoid liens that encumber property they seek to exempt pursuant to 11 USCS § 522(f). In re
Bland (1985, CA11 Ga) 760 F2d 1252, vacated, en banc (1985, CA11 Ga) 768 F2d 1212 and cor-
rected, en banc (1986, CA11 Ga) 793 F2d 1172, 14 BCD 1416, 15 CBC2d 666, CCH Bankr L Rptr
P 71219.
Provisions of 11 USCS § 522 granting debtor right to exempt certain property and provisions
permitting him to void certain liens on exempt property must be construed to permit avoidance of
judicial liens and nonpossessory, nonpurchase money liens, or security interests upon property that
would be eligible for exemption but for such judicial or nonpossessory, nonpurchase money liens.
In re Pape (1980, BC ND Fla) 7 BR 443, CCH Bankr L Rptr P 67878.
Prospective liens on future property obtained by debtor cannot be avoided by 11 USCS § 522(f)
since relief provided reaches only that property included in property of estate pursuant to 11 USCS
§ 541 and provides that debtor may avoid lien on interest in property only to extent lien impairs ex-
emption debtor would have been entitled under 11 USCS § 522(b); § 522(b) allows debtor to ex-
empt certain types of property from "property of estate" which is defined by 11 USCS § 541(a)(1)
as encompassing all legal and equitable interests of debtor in property as of commencement of case
and, since debtor's after acquired property is distinctly different from property estate acquires after
commencement of case, it is outside estate and cannot be exempted. In re Clowney (1982, BC MD
NC) 19 BR 349, 9 BCD 375.
Legislative history of 11 USCS § 522(c) indicates clearly that Congress intended valid liens to
survive discharge as long as they were not avoided during bankruptcy proceedings. In re Cassi
(1982, BC ND Ind) 24 BR 619, 9 BCD 1022, 7 CBC2d 383.
11 USCS § 522(f) permits lien avoidance only for exemptable property. In re Zaicek (1983, BC
WD Ky) 29 BR 31.
Avoidance of lien encumbering property claimed as exempt is necessary prerequisite to return-
ing property free of liens to debtors. In re Lillard (1984, BC WD Ark) 38 BR 433.
Chapter 7 debtors who chose state exemptions may avoid liens under 11 USCS § 522(f)(2) only
as to exempt property that is of same kind as that listed in 11 USCS § 522(d)(3), (4), (6), and (9). In
re Brzezinski (1985, BC WD Wis) 65 BR 336.
Chapter 7 debtors may not, under 11 USCS § 522(f), avoid liens encumbering their alleged
homestead exemption in order to facilitate voluntary sale of homestead, because California home-
stead law exempts proceeds from sale only where there is forced judicial sale; liberal construction
of California homestead exemption statute does not give license to Bankruptcy Court to rewrite
California law. In re Knudsen (1987, BC CD Cal) 80 BR 193.
Claimed exemption in real estate of $ 0.00 is equivalent of no exemption whatsoever so that ju-
dicial liens against that real estate are not avoidable pursuant to 11 USCS § 522(f). In re Berryhill
(2000, BC ND Ind) 254 BR 242.
Debtors' motion to avoid creditor's judicial lien pursuant to 11 USCS § 522(f)(1)(A) was granted
with regard to portion of lien that exceeded value of debtors' interest in their residential property but
was denied with regard to remaining amount of lien that was not avoidable and that remained at-
tached to debtors' residence. Lindsey v Spagnol (In re Lindsey) (2004, BC WD Pa) 313 BR 390.
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11 USCS § 522
Only way for debtor to claim exemption in property that has been preserved for benefit of bank-
ruptcy estate is through 11 USCS § 522(g); under § 522(g), debtor does not have exemption right to
property preserved for estate under 11 USCS § 551 when transfer was voluntary; any other conclu-
sion would defeat purpose of § 551 by allowing debtor, after trustee avoided voluntary conveyance,
to exempt property and gain equity for himself. Riley v Sullivan (In re Sullivan) (2008, BAP1) 387
BR 353.
208. Constitutionality of lien avoidance
Bankruptcy Court will not consider whether provisions of 11 USCS § 522 permitting avoidance
of liens on exempt property are constitutional where issues were not raised, briefed, or argued by
parties. In re Butler (1980, BC DC Md) 5 BR 360, 6 BCD 768, CCH Bankr L Rptr P 67659.
Test to be applied in determining constitutionality of lien avoidance powers granted by 11 USCS
§ 522 is whether such powers bear rational relationship to legitimate legislative objective; provi-
sions of 11 USCS § 522 are rationally related to legitimate legislative goal of enhancing debtor's
chances for fresh start, and are not violative of due process. In re Brown (1980, BC ND Tex) 7 BR
Congress has power under Art I, § 8, Cl. 4 to give debtor statutory lien superior to certain prior
liens as limited by due process requirement of Fifth Amendment. In re Phillips (1981, BC CD Ill)
13 BR 82, 4 CBC2d 1467.
Compliance with 28 USCS § 2403(a) by creditor in challenge to constitutionality of 11 USCS §
522(f) is not jurisdictional requirement, where creditor failed to notify United States Attorney Gen-
eral of challenge. In re Melvin (1981, BC SD Fla) 13 BR 95; In re Melvin (1981, BC SD Fla) 13 BR
96.
11 USCS § 522(f)(2) is constitutional as prospectively applied to security interests vesting after
effective date of Bankruptcy Code and is neither grossly arbitrary nor unreasonable by giving prior-
ity to compelling interest (debtor's fresh start) at expense of uncompelling interest (creditor's reten-
tion of lien). In re Huggins (1981, BC DC Kan) 13 BR 704.
11 USCS § 522(f) is constitutional as applied prospectively to its enactment. In re Velez (1981,
BC ND Ohio) 16 BR 23.
Provision incorporated in lengthy state child-support enforcement bill which would deny
debtor's right to avoid nonpossessory and nonpurchase money liens on exempt household goods
pursuant to 11 USCS § 522(f) is unconstitutional and void because (1) it violates article of state con-
stitution which limits legislature's authority to include more than one subject matter in entitled act,
and (2) under the circumstances, elimination of right of avoidance constitutes enactment of special
legislation. In re Sapp (1987, BC WD Mo) 81 BR 545.
209.--Fifth Amendment
11 USCS § 522(f)(2) does not violate just compensation clause of United States Constitution,
even though debtors avoid lien on tools of trade as defined by state, rather than federal, law, where
statute has been enacted prior to extension of credit. In re Thompson (1989, CA7 Wis) 867 F2d 416,
18 BCD 1513, 22 CBC2d 1191, CCH Bankr L Rptr P 72740, 8 UCCRS2d 202.
Avoidance of creditor's judicial lien did not completely destroy creditor's property interest as ju-
dicial lien was perfected thirteen years after 11 USCS § 522(f) became effective, and because credi-
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11 USCS § 522
tor's property rights in judicial lien are circumscribed by Chapter 7 debtor's ability under Bank-
ruptcy Code to avoid lien, prospective application of 11 USCS § 522(f) does not constitute "taking"
of creditor's property interest within meaning of Fifth Amendment Takings Clause. Patriot Portfo-
lio, LLC v Weinstein (In re Weinstein) (1999, CA1 Mass) 164 F3d 677, cert den (1999) 527 US
1036, 144 L Ed 2d 794, 119 S Ct 2394.
Creditor's Fifth Amendment rights were not violated, and no illegal governmental taking oc-
curred, when majority of amount that was owed on its judgment lien was avoided in Chapter 7
bankruptcy proceeding under 11 USCS § 522(f); although statute's impairment of creditor's business
might arguably constitute "taking" for Fifth Amendment purposes, creditor could not claim that
statute unfairly interfered with any of its financial expectations because it had registered its judg-
ment lien after § 522(f)(2)(A) was enacted; statute's enactment put creditor on notice concerning
operation of debtor protection provision and its potential application to its business activities.
Brinley v LPP Mortg., Ltd. (In re Brinley) (2005, CA6 Ky) 403 F3d 415, CCH Bankr L Rptr P
80256, 2005 FED App 141P.
Debtor avoidance of judicial lien under 11 USCS § 522(f)(1) does not constitute "taking of
property" in violation of Fifth Amendment where under state law judicial lien does not operate to
endow creditor with vested property interest or transfer any estate in debtor's real property to credi-
tor. In re Lattimore (1981, WD NY) 12 BR 111.
11 USCS § 522(f) does not violate Takings Clause in that avoidance of lien does not destroy un-
derlying debt, but merely changes creditor's status from secured to unsecured. In re Falconer
(1987, WD Mich) 79 BR 283.
11 USCS § 522 is not so sweeping as to deprive creditors of all rights in security agreements
made after enactment date of Bankruptcy Code, but permits debtors to avoid only portion of secu-
rity interest impairing debtor's exemptable equity in secured household goods, tools of trade, or
health aids, and does not apply to purchase money security agreements, but rather to nonpurchase
money agreements where debtor already owns goods made subject to security interest; even in
situations where debtor can avoid creditor lien, creditors are not left wholly without recourse, since
they still have right to file proof of claim as unsecured creditor and share in any possible distribu-
tion of assets of estate. In re Webber (1980, BC DC Or) 7 BR 580, affd (1982, CA9 Or) 674 F2d
796, 8 BCD 1416, 6 CBC2d 1149, CCH Bankr L Rptr P 68657, cert den (1982) 459 US 1086, 74 L
Ed 2d 931, 103 S Ct 567.
Lien avoidance under 11 USCS § 522(f) pursuant to congressional power to regulate subject of
bankruptcy and for purpose of preventing enforcement of security interests which stifle debtor's
fresh start does not come within traditional definitions of taking under Fifth Amendment. In re Pil-
low (1981, BC DC Utah) 8 BR 404.
Pennsylvania judgment lien is charge against property but is not interest in property and there-
fore 11 USCS § 522 may be applied to avoid judgment lien without violating Fifth Amendment. In
re Ashe (1981, BC MD Pa) 10 BR 97, affd (1983, CA3 Pa) 712 F2d 864, 10 BCD 1172, 9 CBC2d
23, CCH Bankr L Rptr P 69287, cert den (1984) 465 US 1024, 79 L Ed 2d 683, 104 S Ct 1279, reh
den (1984) 466 US 963, 80 L Ed 2d 564, 104 S Ct 2183.
Creditor's judgment lien on debtor's residential real property was avoidable pursuant to 11 USCS
§ 522(f) to extent that lien impaired debtor's exemption and provisions of 11 USCS § 522(f) were
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11 USCS § 522
not clearly repugnant to due process clause of Fifth Amendment where creditor failed to overcome
presumption of constitutionality. In re Jenkins (1981, BC ND Ga) 11 BR 958.
Congress has determined that generally non-purchase money, non-possessory liens in household
goods have little or no value and therefore such liens are avoidable under 11 USCS § 522(f)(2)(A)
and avoidance does not violate due process clause of Fifth Amendment of United States Constitu-
tion; however where it is alleged that household goods have greater than nominal value, court must
hold hearing to determine value and to decide whether avoidance of all or part of lien would consti-
tute substantial deprivation of creditor's property rights and goods without due process of law. In re
Morris (1981, BC ND Ill) 12 BR 321, 7 BCD 1336, CCH Bankr L Rptr P 68219.
Avoidance of creditor's lien is not violative of Fifth Amendment taking clause under 11 USCS §
522(f) where, although § 522(f) may be violative of Fifth Amendment in certain situations, collat-
eral here constitutes consumer goods of rapidly declining value and security interest could not rea-
sonably have been taken to guarantee repayment of underlying debt, however, in fact, instant trans-
action appears to be typical consumer loan arrangement in which security was taken to provide
creditor with leverage to enable collection of debt and it may be avoided. Lucas v Beneficial Fi-
nance Co. (1982, BC SD Ohio) 18 BR 179.
Lien avoidance provision of 11 USCS § 522(f) does not violate Fifth Amendment. In re Carr
(1982, BC ED Pa) 18 BR 794.
11 USCS § 522(f) is not unconstitutional taking of property without due process. In re Elsner
(1983, BC DC SD) 35 BR 115.
Allowing spillover exemption of 11 USCS § 522(d)(5) for lien avoidance purposes does not
render § 522(f) unconstitutional taking under Fifth Amendment; creditors have notice of Bank-
ruptcy Code provision prior to acquisition of security interests, lien avoidance is limited as to kinds
of property subject thereto and specific dollar maximums; avoidance of lien does not destroy under-
lying debt but changes status of creditor from secured to unsecured position; taking is merely rear-
rangement of private contractual right and not for public purpose. In re Walkington (1984, BC WD
Mich) 42 BR 67, 11 CBC2d 276, CCH Bankr L Rptr P 69987.
11 USCS § 522(f)(2)(B) lien avoidance does not constitute "taking" of property in violation of
protections of Fifth Amendment where creditor's security interest arose after effective date of statute
and was, pursuant to Wisconsin statute, conditioned on debtor's right to avoid such security interests
under Bankruptcy Code; § 522(f)(2)(B) is rational exercise of Congress' bankruptcy power, is pro-
spective in application, and is merely "regulation," not "taking." In re Thompson (1988, BC WD
Wis) 82 BR 985, 19 CBC2d 297.
Application of 11 USCS § 522(f) to avoid nonpossessory, nonpurchase money lien on Chapter 7
debtors' household furnishings does not effect unconstitutional taking of property where lien has
been created well after enactment date of statute. In re Caruthers (1988, BC ND Ga) 87 BR 723,
Formula of 11 USCS § 522(f)(2)(A) should be applied to exclude junior nonavoidable liens in
computation of whether particular judgment lien impairs debtor's exemption, thereby avoiding con-
stitutional issue of whether avoidance of property interests not avoidable under 1978 provisions
would violate Fifth Amendment takings clause. Dolan v D.A.N. Joint Venture (In re Dolan) (1999,
Page 374
11 USCS § 522
BC DC Conn) 230 BR 642, 41 CBC2d 594 (criticized in In re Smith (2004, BC DC Mass) 315 BR
636, 52 CBC2d 1656).
11 USCS § 522(f) was not intended to alter state law lien priorities; to allow such alteration
would violate Fifth Amendment takings clause of U.S. Constitution by eliminating existing property
rights. In re Radcliffe (2002, BC WD Ky) 278 BR 426, 48 CBC2d 241, revd, in part on other
grounds (2003, WD Ky) 2003 US Dist LEXIS 5286, affd (2005, CA6 Ky) 2005 US App LEXIS 5198
and (criticized in In re Smith (2004, BC DC Mass) 315 BR 636, 52 CBC2d 1656).
Creditor's lien on Chapter 7 debtors' homestead was born subject to debtors' right to avoid it
pursuant to 11 USCS § 522(f)(1). Bruin Portfolio, LLC v Leicht (In re Leicht) (1998, BAP1 Mass)
210.--Tenth Amendment
Considerations of federalism under Tenth Amendment of Constitution do not require barring
application of 11 USCS § 522(f) where debtor seeks to avoid state welfare lien on real property that
is exempt under Bankruptcy Code since Congress has plenary power to enact Code, and state failed
to meet burden of demonstrating that avoidance of state welfare lien on such property so disrupted
or frustrated state in performance of its welfare function that avoidance powers should be limited.
In re Holt (1981, BC WD Pa) 11 BR 797, CCH Bankr L Rptr P 68251.
Tenth Amendment does not bar application of 11 USCS § 522(f)(1) to avoid judgment lien of
state department of public welfare on real property of debtor. In re Graham (1981, BC ED Pa) 15
BR 1010.
211. Purpose
Congress enacted avoidance of lien provisions of 11 USCS § 522 to protect debtor's exemptions,
discharge, and thus debtor's fresh start, in view of practice of creditors with judicial liens and non-
purchase-money security interests under former Bankruptcy Act in taking unfair advantage over
debtor by threatening foreclosure on property with little actual resale value, but considerable re-
placement cost. In re Hill (1980, BC ND Ohio) 4 BR 310, 6 BCD 307, 2 CBC2d 123, CCH Bankr L
Rptr P 67666.
Lien avoidance provisions of 11 USCS § 522 were adopted by Congress specifically in recogni-
tion of fact that some creditors lending money to consumer debtor will take security interest in all
debtor's household goods, and then have debtor waive exemption rights, so that creditor then may
use threat of repossession as means of leverage in obtaining payment, although household goods
themselves may be of little resale value, because replacement cost is so high; by permitting debtor
to avoid nonpurchase money security interests, 11 USCS § 522 eliminates any unfair advantage
creditors may have; however, application of 11 USCS § 522 should not be extended beyond evil it
attempts to reach, and results should differ where property in question is truly valuable and was
given as security due to its value. In re Steinart (1980, BC WD La) 4 BR 354, 6 BCD 623, 2 CBC2d
Legislative history of Bankruptcy Code intimates that purpose of 11 USCS § 522(f) is to give
consumer debtors fresh start and to cure inadequacies in prior bankruptcy legislation under which
they were accorded inadequate exemption rights. In re Lee (1982, BC ED Tenn) 21 BR 774.
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11 USCS § 522
Purpose of 11 USCS § 522(f) is to relieve debtors from creditor pressure to reaffirm debts on es-
sential personal items where creditors have security interests in property that is necessary to debtor
but of little resale value. In re Wetzel (1984, BC WD Va) 46 BR 254.
Congress intended, in 11 USCS § 522(f), to permit avoidance of creditors' liens obtained in rush
before bankruptcy when liens attach after debtor had already acquired property and not in same
transaction as judicial proceeding which transferred interest to debtor. In re Hart (1985, BC DC
Nev) 50 BR 956, 13 CBC2d 190 (criticized in Huskey v Huskey (In re Huskey) (1995, BC SD Cal)
183 BR 218).
212. Relationship with other laws
Under 11 USCS § 522, which provides for avoidance of judgment liens on interest of debtor in
property to extent that such lien impairs exemption, interest of debtor is limited to value of security
which exceeds value due on secured indebtedness, so that where balance due on secured debt is
greater than value of security, there is no interest which can be exempted, and, accordingly, lien
avoidance is not ordinarily available remedy; however, where trustee, under 11 USCS § 547, would
be able to avoid creditor's interest as preference, debtors may claim against him their exemption un-
der 11 USCS § 522 once lien of creditor is avoided. In re Donaldson (1980, BC WD Mo) 7 BR 559.
Compliance with 28 USCS § 2403(a) by creditor in challenge to constitutionality of 11 USCS §
522(f) is not jurisdictional requirement, where creditor failed to notify United States Attorney Gen-
eral of challenge. In re Melvin (1981, BC SD Fla) 13 BR 95; In re Melvin (1981, BC SD Fla) 13 BR
96.
Chapter 12 debtors may avoid, under 11 USCS § 522(f), bank's nonpurchase money security in-
terest in exempt tools of trade, despite apparent conflict between § 522(f) and confirmation re-
quirements of 11 USCS § 1225(a)(5)(B)(i). In re Dykstra (1987, BC ND Iowa) 80 BR 128, 16 BCD
Correct way to establish effect, extent, and value of judicial lien not avoided by 11 USCS §
522(f), if any, is by use of 11 USCS §§ 502 and 506. In re Hermansen (1988, BC DC Colo) 84 BR
729, 18 CBC2d 952.
New Jersey statute providing that party may apply for order directing judgment to be canceled
and discharged of record after one year has elapsed since that party was discharged from his or her
debts in bankruptcy is merely alternative means to discharge judgment of record and it in no way
prevents Bankruptcy Court from properly discharging judgment before expiration of one-year pe-
riod; debtors may move to avoid fixing of lien under 11 USCS § 522(f) even after debtors have re-
ceived discharge. In re Arevalo (1992, BC DC NJ) 142 BR 111, CCH Bankr L Rptr P 74712.
Where debtor voluntarily parted with value that trustee has recovered (for example, by consen-
sual grant of security interest), debtor cannot meet requirement of 11 USCS § 522(g)(1)(A), and
cannot use § 522(g)(1) as basis for his claim of exemption, but § 522(g)(2) opens debtor's right back
out again for classes of assets that are subject to debtor's lien avoidance powers under § 522(f); thus,
§ 522(g)(2) trumps trustee's avoidance and recovery powers (11 USCS §§ 544, 550 and 551), to ex-
tent of debtor's lien avoidance remedy under § 522(f). In re Flitter (1995, BC DC Minn) 181 BR
938.
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11 USCS § 522
11 USCS § 522 lien avoidance constitutes sufficient cause for reopening case under 11 USCS §
350(b), since lien avoidance affords relief to debtor. In re Levy (2000, BC DC NJ) 256 BR 563, 45
CBC2d 810.
Whether lien "impairs" exemption may be determined in every case by applying 11 USCS §
522(f)(2) formula, regardless of state-law limitations on exemption; thus, judgment lien could im-
pair debtors' homestead even though New Mexico law did not allow it to attach to homestead. In re
Cisneros (2000, BC DC NM) 257 BR 332.
Debtor who fails good faith test by not scheduling claim he had knowledge of loses federal rem-
edy of lien avoidance as result of bad faith omission of debt, remedy which exists only pursuant to
11 USCS § 522, not as matter of state law; therefore, if case is not reopened, loss of federal jurisdic-
tion will, unlike dischargeability question, preclude debtor's lien avoidance. In re Garrett (2001, BC
SD Ga) 266 BR 910.
Under 11 USCS § 522(f), lien secured by motor vehicles was possessory and nonavoidable at
commencement of debtor's Chapter 7 case, where parties had agreed that possessory status of lien
would be preserved for later litigation as condition for debtor's having possession during prior
Chapter 13 case, since, upon its dismissal, 11 USCS § 349(b) revested creditor with right to posses-
sion. In re Beeman (2001, BC DC Kan) 268 BR 268.
Debtor's intent in failure to schedule claim was not relevant to bankruptcy court's decision to
deny debtor's motion to reopen bankruptcy case, pursuant to 11 USCS § 350(b), in order to file mo-
tion to avoid lien under 11 USCS § 522(f), where there were no assets and no bar date; case would
not be reopened based upon doctrine of laches where debtor's delay in scheduling creditors and
dealing with their liens resulted in prejudice to creditors. In re Frasier (2003, BC DC Colo) 294 BR
362, 50 CBC2d 1037.
Unlike other provisions in Bankruptcy Code and Federal Rules of Bankruptcy Procedure, 11
USCS § 522(f) and Fed. R. Bankr. P. 4003(d) did not set forth deadline for filing of lien avoidance
motion, while 11 USCS § 350(b) and Fed. R. Bankr. P. 5010 did not contain any limitation on time
for filing motion to reopen case; Fed. R. Bankr. P. 9024(1) also specifically excluded motions to
reopen from one year time limitation prescribed by Fed. R. Bankr. P. 60(b). In re Frasier (2003, BC
DC Colo) 294 BR 362, 50 CBC2d 1037.
In light of explicit language of 11 USCS § 522(f)(2)(A) defining "impairment," court was pro-
hibited from looking to state law for definition; thus, bankruptcy court rejected creditor's contention
that its lien had priority over later mortgage lien and, thus, should not be avoided as it did not impair
debtors' homestead exemption because 11 USCS § 522(f)(2) required bankruptcy court to include
mortgage in impairment analysis. In re Northern (2003, BC ED Tenn) 294 BR 821.
Unpublished: Creditor had not established that stay pending appeal of bankruptcy court's inter-
locutory order granting debtor's motion to reopen was warranted, in part, because creditor had not
shown likelihood of success on merits when debtor's reasons for reopening, to determine status of
lien on exempt property, were valid, pursuant to 11 USCS § 350, particularly when debtor sought to
avoid lien pursuant to 11 USCS § 522(f). In re DuCharme (2008, BC DC Vt) 2008 Bankr LEXIS
764.
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11 USCS § 522
213. Application to Chapter 12

Lien avoidance provisions of 11 USCS § 522(f) are applicable in Chapter 12. In re Ptacek
(1987, BC DC ND) 78 BR 986.
11 USCS § 522(f) applies in Chapter 12 cases. In re Dykstra (1987, BC ND Iowa) 80 BR 128,
Lien avoidance under 11 USCS § 522(f) is available in Chapter 12 case but actual avoidance of
lien may not occur until discharge becomes effective pursuant to 11 USCS § 1228. In re Huner-
dosse (1988, BC SD Iowa) 85 BR 999.
Ohio homestead exemption may be used to avoid lien on debtor's property even if property is
not presently subject of involuntary execution since 1994 amendment to 11 USCS § 522(f) had ef-
fect of overruling contrary Sixth Circuit precedent; thus, judicial lien against Chapter 7 debtor's
homestead may be avoided in full where amount of impairment is greater than amount of lien
sought to be avoided. In re Jakubowski (1996, BC ND Ohio) 198 BR 262 (criticized in In re Colston
(1997, BC SD Ohio) 213 BR 704, 38 CBC2d 1585).
NOTES:
214. Application to Chapter 13
Lien avoidance power contained in 11 USCS § 522(f) applies in Chapter 13 proceedings. In re
Hall (1985, CA11 Ga) 752 F2d 582, 12 BCD 949, 11 CBC2d 1367, CCH Bankr L Rptr P 70249
(criticized in In re Bland (1986, CA11 Ga) 793 F2d 1172, 14 BCD 1416, 15 CBC2d 666, CCH
Bankr L Rptr P 71219) and (ovrld in part as stated in Gamble v Brown (In re Gamble) (1999, CA11
Ga) 168 F3d 442, CCH Bankr L Rptr P 77893, 12 FLW Fed C 550); Transouth Financial Corp. v
Paris (1982, WD Tenn) 26 BR 184; In re Ohnstad (1980, BC DC SD) 6 BCD 6, 1 CBC2d 494; In re
Thurman (1982, BC WD Tenn) 20 BR 978, affd (1982, WD Tenn) 26 BR 184; In re Coma (1982,
BC WD Pa) 25 BR 103; In re Leecan (1983, BC ED Pa) 27 BR 907; In re Rasmus (1983, BC MD
Fla) 34 BR 9, CCH Bankr L Rptr P 69514; In re Schneider (1984, BC ND Ga) 37 BR 747, 38
UCCRS 1013 (criticized in In re Gentry (2003, BC CD Ill) 297 BR 553); In re Quidley (1984, BC
ED Va) 39 BR 362.
Debtor must cross best-interests-of-creditor threshold to have confirmable plan under Chapter
13, and under 11 USCS § 1325 plan generally must provide that unsecured creditors receive at least
as much value as they would have received in Chapter 7 liquidation, and that secured creditors must
receive present value of collateral; thus, under relatively limited circumstances, avoiding lien under
§ 522(f) would allow debtor to file Chapter 13 bankruptcy that he would not otherwise have been
able to file; he may do so because § 522(f) converts creditor's status from secured to unsecured,
thereby changing amount due that creditor. Tower Loan v Maddox (In re Maddox) (1994, CA5
Miss) 15 F3d 1347, 30 CBC2d 1510, CCH Bankr L Rptr P 75764.
In typical Chapter 13 case, lien avoidance under 11 USCS § 522(f) only adjusts distribution of
payments under creditors; putative secured creditor drops into unsecured creditor class, thereby de-
creasing his share of payments, while share of payments received by original class of unsecured
creditors increases concomitantly; consequently, in great majority of Chapter 13 cases trustee is as-
serting lien avoidance under § 522(f) to protect interests of this original class of unsecured creditors.
Tower Loan v Maddox (In re Maddox) (1994, CA5 Miss) 15 F3d 1347, 30 CBC2d 1510, CCH
Page 378
11 USCS § 522
11 USCS § 522(f) applies in Chapter 13 bankruptcies. Tower Loan v Maddox (In re Maddox)
(1994, CA5 Miss) 15 F3d 1347, 30 CBC2d 1510, CCH Bankr L Rptr P 75764.
Lien avoidance, pursuant to 11 USCS § 522, is not improper under provisions of 11 USCS §
1327 where lien avoidance is sought after confirmation of plan pursuant to § 1327. In re Ward
(1981, SD Ga) 14 BR 549, 32 UCCRS 1215.
Application of 11 USCS § 522 to Chapter 13 case does not conflict with 11 USCS §
1325(a)(5)(B); after lien is awarded under 11 USCS § 522(f), it is not an allowed secured claim pro-
vided for by plan. Transouth Financial Corp. v Paris (1982, WD Tenn) 26 BR 184.
Chapter 13 debtor has strong arm powers of trustee under 11 USCS § 544 so long as require-
ments of 11 USCS § 522, and §§ 544-547 are fulfilled; Chapter 13 debtor, as property owner against
whom creditor did perfect statutory lien under applicable state law, may avoid such lien to amount
such lien impairs exempt property under 11 USCS § 522, if under such section, transfer is avoidable
by trustee and trustee does not choose to act; thus debtor may avoid such transaction if transfer was
involuntary, debtor did not conceal property, and debtor could have exempted such property but for
transfer, and lien, although valid against debtor, would not have been valid against bona fide pur-
chaser of property under state law, and thus would not be valid against trustee. In re Saberman
(1980, BC ND Ill) 3 BR 316, 6 BCD 146, 1 CBC2d 671, CCH Bankr L Rptr P 67416.
Bankruptcy Court will specify, as condition to approval of Chapter 13 plan, that plan be modi-
fied so as to void judgment liens against debtor's property, which are voidable under 11 USCS § 522
because they impair debtor's homestead exemption, in order to provide adequate protection to mort-
gagee, as required by 11 USCS § 1325 as condition for confirmation. In re Polvino (1980, BC WD
NY) 4 BR 677.
Lien avoidance provisions of 11 USCS § 522 are applicable in Chapter 13 proceeding, and are
not inconsistent with provisions of 11 USCS § 1325 that secured creditor who does not accept plan
may be crammed down only if said creditor is permitted to retain lien on subject collateral; under 11
USCS § 1322, debtor is permitted to classify unsecured claims, and creditor with avoided lien in
Chapter 13 case becomes part of separate class of unsecured creditors who are compensated for loss
of security by obtaining indubitable equivalent of secured claim as compared to other unsecured
creditors. In re Snow (1980, BC SD Ohio) 8 BR 113, CCH Bankr L Rptr P 68078.
Chapter 13 debtor may not use 11 USCS § 522(f) to avoid nonpossessory, nonpurchase-money
security interests in household and personal goods where debtor's interests in goods does not exceed
value of exemptions available to him under § 522(b) and (d). In re Sands (1981, BC MD NC) 15
Debtor in Chapter 13 case is not entitled to exempt property from property of estate under 11
USCS § 522(b), therefore, there can be no impairment of exemption and 11 USCS § 522(f) is not
applicable in Chapter 13 case. In re Aycock (1981, BC ED NC) 15 BR 728, 8 BCD 507, 5 CBC2d
856.
11 USCS § 522(f) lien avoidance is designed to protect debtor's exemption rights, but since there
are no exemptions granted in Chapter 13, no such protection is required for Chapter 13 proceedings;
exemption issues in Chapter 13 are limited to advising Bankruptcy Court of existence of such ex-
emptions in required Chapter 13 statement so that court may determine whether confirmation stan-
dard of 11 USCS § 1325(a)(4) is met by debtor; therefore, in Chapter 13 case, debtor will not be
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11 USCS § 522
permitted to utilize 11 USCS § 522(f) to avoid either judicial lien or non-possessory or nonpurchase
money security interest but security interest, if otherwise valid, will be recognized and paid through
plan according to confirmation order. In re Corden (1982, BC MD Fla) 19 BR 552, 6 CBC2d 594.
Chapter 13 debtor can use 11 USCS § 522(f) to avoid nonpurchase money nonpossessory secu-
rity interest in household goods, however, where creditor and debtor consolidated several purchase
money agreements, secured agreement provided clear and fair way to apportion payments made by
debtors among purchase prices of various collateral, and, therefore, creditor retains its purchase
money liens upon household items and gun and must be treated as having secured claim to extent of
$ 2,100 under debtor's Chapter 13 plan, and unsecured claim for remainder of debt. In re Mattson
(1982, BC WD Wis) 20 BR 382.
Inasmuch as neither Bankruptcy Code nor Interim Bankruptcy Rules fix bar date for filing ac-
tion under 11 USCS § 522(f) for lien avoidance of non-purchase money and non-possessory liens,
there is no valid reason why Chapter 13 debtor should not be able to seek lien avoidance so long as
Chapter 13 case is pending or at least prior to expiration of time allowed for debtor to file Chapter
13 plan. In re Babineau (1982, BC MD Fla) 22 BR 936, 9 BCD 855.
Provisions of 11 USCS § 522(f) are applicable in Chapter 13 proceeding and where creditor's
loan to debtor is not purchase-money loan since, although portion of loan enabled debtor to pur-
chase household goods, portion of loan was also consolidation of pre-existing debt, consequently,
creditor does not have purchase-money security interest and security interest in property may be
avoided. In re Cameron (1982, BC ND Ga) 25 BR 410.
Chapter 13 debtors may avoid nonpossessory, nonpurchase-money security interest in house-
hold goods and other exempt personal property under 11 USCS § 522(f); 11 USCS § 522(f) relief is
available to Chapter 13 debtors. In re Lincoln (1982, BC WD Mich) 26 BR 14.
11 USCS § 522(f) is available to Chapter 13 debtor; Chapter 13 debtor is entitled to claim same
exemptions that Chapter 7 debtor is allowed and may avoid nonpossessory, nonpurchase money se-
curity interest in property which is subject to exemption under 11 USCS § 522(b) and is of type des-
ignated in § 522(f)(2); § 522(f) is not in conflict with 11 USCS § 1325(a)(5)(b). In re Slykerman
(1983, BC ED Mich) 29 BR 82, 10 BCD 1033.
Chapter 13 debtor cannot avoid prepetition execution lien on personal property and cause prop-
erty to be turned over to him. In re Berry (1983, BC ED Mich) 30 BR 36, 10 BCD 1425, 8 CBC2d
Construing 11 USCS § 522(f) and 11 USCS § 1325(a)(5) together, lien avoidance provisions of
§ 522(f) apply to bankruptcy proceedings under Chapter 13; since New York debtor filing under
Chapter 13 is entitled to homestead exemption not exceeding $ 10,000 in his principal residence
under New York Debtor and Creditor Law § 282 and New York Civil Practice Law § 5206(a), and
debtor's residence is valued at $ 7,000, debtor is entitled to homestead exemption for latter amount,
and debtor may avoid judicial lien to that extent. In re Blake (1984, BC ED NY) 38 BR 604, CCH
Where clear trend of authority is contrary to Bankruptcy Court's earlier holding in Re Corden
(1982, BC MD Fla) 19 BR 552, court will recede from its earlier position and allow Chapter 13
debtor to avoid judicial liens and nonpossessory purchase-money security interests under 11 USCS
§ 522(f); pursuant to general provisions of 11 USCS § 103 based upon reasoning that (1) value of
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11 USCS § 522
exemptions may be material in determining whether plan meets best interests test of 11 USCS §
1325(a)(4) or impact upon waiver of discharge under 11 USCS § 1328(a) or hardship discharge un-
der 11 USCS § 1328(b), (2) threat of repossession of household goods may encourage coerced reaf-
firmation agreements, and (3) chances of success of plan may be enhanced by ability to treat debt as
unsecured under plan and by loss of ability of creditor to bring motion for relief from automatic
stay. In re Cowart (1984, BC MD Fla) 43 BR 110, 12 BCD 512, 11 CBC2d 530, CCH Bankr L
Rptr P 70070.
Lien avoidance procedures of 11 USCS § 522(f) clearly apply to Chapter 13 proceedings pursu-
ant to 11 USCS 103(a). In re Berrong (1985, BC DC Colo) 53 BR 640, 13 CBC2d 669, CCH Bankr
L Rptr P 70760.
11 USCS § 522(f) remedy may be applied to avoid nonpossessory, nonpurchase money liens
against large farming equipment and implements in Chapter 13 case. In re Schyma (1985, BC DC
Minn) 68 BR 52.
Chapter 13 debtor may utilize 11 USCS § 522(f) to avoid nonpossessory nonpurchase money
lien on household goods; lien avoidance under § 522(f) applies to available state exemptions not-
withstanding any limitations state may put on available exemptions--once state lists particular type
of property as available exempt property, any further state action defining lien-encumbered property
as not exempt is subject to provisions of 11 USCS § 522(f). In re Thompson (1986, BC WD Tex) 59
BR 690.
Chapter 13 debtors may avoid liens under 11 USCS § 522(f). In re Bowers (1987, BC DC
Conn) 69 BR 822, revd on other grounds (1987, DC Conn) 78 BR 388, app dismd (1988, CA2
Conn) 847 F2d 1019.
Secured creditor is not obligated to object to debtor's claim of exemption or to file proof of
claim in order to preserve its lien, especially in Chapter 13 case; failure by judicial lien creditor to
object to exemption claims within time frame set out in Bankruptcy Rule 4003(b) will not prevent
that creditor from asserting invalidity of lien under § 522(b) as defense to debtor's lien avoidance
action. In re Mitchell (1987, BC WD Tex) 80 BR 372, 17 CBC2d 1379.
Because Chapter 13 debtor's objection to secured status of creditor's claim is predicated entirely
upon her attempt to avoid lien under 11 USCS § 522(f)(1), this objection is subsumed by her motion
to avoid judicial lien. In re Windfelder (1988, BC ED Pa) 82 BR 367.
Chapter 13 debtor's adversary proceeding under 11 USCS § 506(a) seeking to determine secured
status of creditor's claim is subsumed by her motion to avoid creditor's lien under 11 USCS §
522(f)(1); Bankruptcy Rule 4003(d) requires that cases under § 522(f) be heard, on motion, as con-
tested matters. In re Windfelder (1988, BC ED Pa) 82 BR 367.
For purposes of 11 USCS § 522(f)(1), valuation of Chapter 13 debtor's interest in property is es-
tablished as of date bankruptcy case commenced. In re Windfelder (1988, BC ED Pa) 82 BR 367.
Adversary complaint filed by Chapter 13 debtors against vendee of commercial property that
was seized by judgment creditor and sold to vendee was dismissed on ruling that debtors lacked
standing to exercise avoidance powers granted to trustee under 11 USCS § 544 or 11 USCS § 548
because only transfers that were voidable by Chapter 13 debtor pursuant to 11 USCS § 522(h) were
those affecting property that debtors could have exempted and because debtors had elected applica-
tion of exemptions in Tex. Prop. Code Ann. §§ 41.001(a) and 41.002(a), which did not provide any
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11 USCS § 522
basis for debtor to claim exemption as to interests in commercial property. Salaymeh v Plaza Centro
LLC (In re Mohyadein) (2007, BC SD Tex) 361 BR 822.
Although wholly unsecured junior mortgage on principal residence was not protected from
modification by 11 USCS § 1322(b)(2), if lien had any value, regardless of how small, it was con-
sidered "secured claim" and creditor's rights could not be modified; because there was equity in
debtors' real property, creditor's judgment lien was considered secured and could not be stripped. In
re Edmunds (2007, BC WD Ky) 373 BR 5.
215. Applicable law
Although state law governs question of Chapter 7 debtors' exemption of their breeding cattle,
federal law determines availability of lien avoidance under 11 USCS § 522(f); liens on property ex-
empt under Kansas law are avoidable only if enumerated in 11 USCS § 522(f)(2). In re Heape
(1989, CA10 Kan) 886 F2d 280, 19 BCD 1397, CCH Bankr L Rptr P 73160.
Chapter 13 debtor may avoid nonpossessory, non-purchase-money lien under 11 USCS § 522(f)
on property exempt from seizure under state law, even though that lien falls within state law excep-
tion to such exemption; although states remain free to define property eligible for exemptions under
§ 522(b), particular liens that may be avoided on that property are determined by reference to fed-
eral law, specifically § 522(f). Tower Loan v Maddox (In re Maddox) (1994, CA5 Miss) 15 F3d
Although Bankruptcy Courts defer to state law when determining amount of allowable state
homestead exemption, 11 USCS § 522(f) still controls availability of lien avoidance. David Dorsey
Distrib. v Sanders (In re Sanders) (1994, CA10 Utah) 39 F3d 258, 32 CBC2d 582, CCH Bankr L
Rptr P 76187 (superseded by statute as stated in Pepper v Public Serv. Emples. Credit Union (In re
Pepper) (1997, BC DC Colo) 210 BR 480, 14 Colo Bankr Ct Rep 205, 38 CBC2d 596) and (super-
seded by statute as stated in In re Richardson (1998, BC ND Okla) 224 BR 804, 40 CBC2d 980,
CCH Bankr L Rptr P 77815) and (superseded by statute as stated in Parsons v Investment Co. (In re
Parsons) (1999, BAP10 NM) 16 Colo Bankr Ct Rep 55).
Federal District Court looks to state law to determine validity, nature, and effect of liens in
bankruptcy proceedings, with substantive law of state with jurisdiction over property governing dis-
position of issue; thus, Pennsylvania law governed determination of validity, nature, and effect of
attorney's lien against Chapter 7 debtor's interest in spendthrift trust where trust was created under
Pennsylvania law and trust corpus was located in Pennsylvania. Schreiber v Kellogg (1996, ED Pa)
194 BR 559, affd, in part, revd, in part on other grounds (1997, CA3 Pa) 124 F3d 188.
Language of 11 USCS § 522(f)(1), which permits debtor to avoid fixing of judicial lien, must be
read in conjunction with state law; court must determine that debtors are entitled under state law to
exemptions claimed, in amount claimed, and court must determine whether lien impairs debtor's
exemption by applying state law governing priorities of real property interest. In re Register (1983,
BC ND Ga) 37 BR 708.
If unencumbered property of specified type may be exempted under state exemption statute,
then nonpurchase money lien on that type of property can be avoided under 11 USCS § 522(f), be-
cause although state may elect to control what property is exempt under state law, federal law de-
termines availability of lien avoidance; in present case, although Texas law specifically excludes
encumbered property from qualifying as exempt, debtors may avoid nonpurchase money lien on
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11 USCS § 522
furniture and piano which secures amount greater than value of property because debtors would be
entitled to interest in property to which § 522(b) exemption could attach in absence of lien. In re
Kelly (1991, BC ND Tex) 133 BR 811, 22 BCD 479.
Homestead exemption under Connecticut statute was available to Chapter 7 debtors so as to
permit avoidance of judgment lien as impairing that exemption where credit card debt on which
judgment was obtained had been incurred after reduction of account balance to zero, which oc-
curred after effective date of homestead exemption statute, even though credit card had been issued
prior to statute's effective date. Caraglior v World Savings & Loan (In re Caraglior) (2000, BC DC
Conn) 251 BR 778.
216. Discretion of court
Bankruptcy Court should be initial judge of whether any lien is avoidable under 11 USCS § 522
or other provisions of Bankruptcy Code. In re Donahue (1988, CA10 Kan) 862 F2d 259, 18 BCD
980.
Where literal interpretation of 11 USCS § 522(f)(2)(A) would produce result at odds with con-
gressional intent, court will not follow literal language of statute, but rather, will utilize equity
analysis. In re Ware (2001, BC DC SC) 274 BR 206, 47 CBC2d 1489.
Bankruptcy court's order regarding lien motion had to be vacated because § 522(f) required that
court could not use its discretion in applying section because statute provided simple arithmetic test
to determine whether exemption was impaired; bankruptcy court only looked to prejudice of credi-
tor as opposed to applying strict mathematical test to lien motion. Snyder v Rockland Trust Co. (In
re Snyder) (2002, BAP1) 279 BR 1, 39 BCD 190, 48 CBC2d 538.
217. Sovereign immunity
Sovereign immunity is not available to Farmers Home Administration in connection with 11
USCS § 522(f) claims. In re Yoder (1984, WD Pa) 48 BR 744.
11 USCS § 522(f) could be used to avoid certain liens possessed by FmHA in crops, equipment,
and livestock since government, like any secured party, is subject to avoidance of lien; pursuant to
11 USCS § 106, sovereign immunity does not apply. Flick v United States (1985, WD Pa) 47 BR
Sovereign immunity does not bar application of 11 USCS § 522(f) to United States to defeat ex-
emption. In re Yoder (1983, BC WD Pa) 32 BR 777, affd in part and revd in part on other grounds
(1984, WD Pa) 48 BR 744 and (criticized in In re Larson (2001, BC DC Colo) 260 BR 174, 2001
Colo J C A R 2723).
Doctrine of sovereign immunity does not act as bar to debtor's action to avoid nonpossessory,
nonpurchase-money security interest in certain tools of debtor's trade which have been claimed as
exempt by debtor; although 11 USCS § 522(f)(2)(B) does not contain words "creditor," "entity," or
"governmental unit," which are specified in 11 USCS § 106(c) being applicable to governmental
units, lien avoidance statute applies to United State in light of legislative history to 11 USCS § 522,
which suggests lack of distinction between governmental and non-governmental units. In re Dim-
mig (1984, BC ED Pa) 41 BR 396, CCH Bankr L Rptr P 70007.
Terminology of 11 USCS §§ 106 and 522 is sufficiently explicit to waive right of Farmers
Home Administration to assert defense of sovereign immunity as against right of debtor farmers to
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11 USCS § 522
avoid nonpossessory, non-purchase money security interest in items of farm equipment claimed as
exempt. In re Kight (1985, BC WD Pa) 49 BR 437.
Bankruptcy court granted debtors' motion to avoid lien where (1) lien attached when creditor
served bank in which debtors maintained account with writ of execution, (2) lien was never extin-
guished because funds remained in bank's control, (3) lien was subject to 11 USCS § 522(f) because
it was in existence when debtors filed for bankruptcy, and (4) lien impaired exemption to which
debtor wife would have been entitled, in that she had enough unapplied value under "pour-over"
exemption of 11 USCS § 522(d)(5) to cover funds. In re Howard (2004, BC DC Minn) 307 BR 659.
Tribal sovereign immunity was matter of common law, not Eleventh Amendment; however,
case law defining parameters of states' sovereign immunity and interpreting term "suit" under Elev-
enth Amendment was persuasive and bankruptcy court's order dismissing debtor's motion to avoid
judicial lien under 11 USCS § 523(f)(1)(A) was upheld on sovereign immunity grounds, as motion
would divest creditor Indian tribe of property interest which otherwise could be be enforced against
exempt property under 11 USCS § 522(c)(2), and was suit for sovereign immunity purposes. Mayes
v Cherokee Nation (In re Mayes) (2003, BAP10) 294 BR 145.
218. Effect of lien avoidance
Debtor may avoid judicial lien against property exempted under North Carolina's homestead ex-
emption; however, lien is not cancelled because under North Carolina law, debtor would not be en-
titled to homestead exemption if she discontinues using property as residence or conveys ownership
to another party. In re Love (1985, ED NC) 54 BR 947.
11 USCS § 522(f) gives debtor statutory lien superior to judicial lien or nonpossessory, nonpur-
chase-money security interest in categories of personalty enumerated in § 522(f)(2)(A), (B) and (C).
In re Phillips (1981, BC CD Ill) 13 BR 82, 4 CBC2d 1467.
Right of debtor to avoid lien under 11 USCS § 522(f) has effect of making perfected judicial and
certain other liens avoidable, but not void. In re Serafini (1983, BC WD Pa) 30 BR 606, 8 CBC2d
1334, CCH Bankr L Rptr P 69259, affd (1984, WD Pa) 41 BR 880.
Any lien or portion of lien in excess of value of property and consequently avoided pursuant to
11 USCS § 522(f) will be unsecured claim under 11 USCS § 506. In re Duncan (1984, BC DC
Alaska) 43 BR 833, 12 BCD 685, 11 CBC2d 677, CCH Bankr L Rptr P 70119.
Judicial liens on debtor's residential property which had been avoided pursuant to 11 USCS §
522(f) are void and not merely subordinated to debtor's exemption although obligation underlying
lien is not negated and creditor has unsecured claim where property is not to be abandoned from
estate and is not to be subjected to foreclosure; allowing liens to remain intact until debtor develops
equity in property would frustrate "fresh start" objective and debtor's right to finality of proceed-
ings. In re Morelock (1985, BC ND Ohio) 47 BR 533, 12 BCD 1154, 12 CBC2d 570.
Under 11 USCS § 522(f), when Chapter 7 debtors have avoided judgment lien on homestead
property, holder of lien cannot claim any of debtors' postpetition, additional interest in property to
satisfy lien; rather, lien is avoided to extent of exemption, and when amount of exemption is greater
than amount of prepetition equity, there is nothing to which lien may attach. In re Blevins (1985,
BC WD Va) 53 BR 74.
Once debtors' claim of exemption to property has been allowed by running of period for objec-
tion to claim of objections under Bankruptcy Rule 4003(b), property revests in debtors and is no
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11 USCS § 522
longer property of estate; however, substantive transfer of exempt property from estate to debtors
occurring when exemptions are allowed does not affect debtors' right to use remaining exemption
rights not so exhausted to defeat rights of judicial lien creditors under 11 USCS § 522(f). In re
Hahn (1985, BC DC Minn) 60 BR 69.
Homestead deed does not extinguish judgment liens against exempt property but merely pre-
vents seizure and sale of encumbered property in order to satisfy debt underlying lien and absent
lien avoidance proceeding under 11 USCS § 522(f), lien survives discharge in bankruptcy and con-
tinues in force even on exempt homestead property; subsequent purchaser of encumbered home-
stead property then takes property subject to creditor's liens. In re Trammel (1986, BC ED Va) 63
BR 878, 15 CBC2d 998.
11 USCS § 522(f)(1) does not authorize avoidance of any portion of judicial lien to extent it ex-
ceeds amount by which Chapter 7 debtor's exemption is impaired--lien is valid and enforceable to
extent it secures indebtedness in excess of amount by which exemption is impaired. In re Sanglier
(1991, BC ED Mich) 124 BR 511.
Judgment creditor's lien, to extent it remains on bankruptcy debtor's property, rides through
debtor's bankruptcy unaffected; bankruptcy court has no authority to stop accruing of postpetition
interest or modify creditor's unaffected judgment lien by virtue of debtor's avoidance action. In re
Kanakaris (2006, BC SD Cal) 341 BR 33.
Where one of creditor's judgment liens was partially avoided to protect bankruptcy debtor's
homestead exemption under 11 USCS § 522(f), liens were otherwise unaffected by debtor's bank-
ruptcy and thus creditor was entitled to post-petition accrual of interest on liens. In re Kanakaris
(2006, BC SD Cal) 341 BR 33.
In Kansas, as in most if not all other states, while discharge in bankruptcy will prevent debtor
from being personally liable on dischargeable debt, debt itself is not extinguished and creditor hold-
ing security interests in exempt property may look to that property for satisfaction of debt. Garnett
State Sav. Bank v Tush (1983) 232 Kan 447, 657 P2d 508, 35 UCCRS 608.
In bankruptcy, only personal liability is discharged; unavoided liens may be enforced notwith-
standing discharge. Reichert v Koch (1983) 202 Mont 167, 655 P2d 993.
Debtor-attorney's homestead exemption in house, of which he owned 25 percent and his wife
owned 75 percent, was not impaired by judgment lien because, after deducting all prior liens and
homestead exemption, there was no surplus to which lien could attach, since surplus equity must be
calculated after deducting all joint encumbrances from total value of residence, not from debtor's
fractional interest. Wiget v Nielsen (In re Nielsen) (1996, BAP9 Cal) 197 BR 665, 96 CDOS 5516,
96 Daily Journal DAR 8807, CCH Bankr L Rptr P 77052 (criticized in In re Piersol (2000, BC ED
Pa) 244 BR 309, 43 CBC2d 1268, CCH Bankr L Rptr P 78112).
Unpublished: Although creditor's lien was avoided under 11 USCS § 522(f), creditor was
granted relief from stay to renew judgment because, if debtor failed to complete his plan, and case
was dismissed, then judgment would have once again become valid and enforceable lien upon
debtor's property. In re Austin (2007, BC DC Vt) 2007 Bankr LEXIS 3196.
B.Determination of Impairment of Exemptions
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11 USCS § 522

Creditor's judicial lien on debtor's property did not impair his homestead exemption, under state
law, because he could not stack exemption he claimed under Mass. Gen. Laws ch. 188, § 1A, for
being disabled person, with exemption his spouse claimed under Mass. Gen. Laws ch. 188, § 1, as
homeowner, and, using formula in 11 USCS § 522(f)(2), sum of creditor's lien and another lien on
property, plus one homestead exemption debtor could claim, did not exceed property's value as of
date bankruptcy petition was filed. Garran v SMS Fin. V, LLC (In re Garran) (2003, CA1 Mass)
Avoidance power of debtor under 11 USCS § 522(f) may be applied to security interest held by
United States only to extent that lien impairs exemption allowable under § 522(b). Augustine v
United States (1981, WD Pa) 5 CBC2d 542.
Liens are to be avoided under 11 USCS § 522 in descending order of their priorities as estab-
lished by 11 USCS § 724. In re Hoffman (1983, BC DC Md) 28 BR 503, CCH Bankr L Rptr P
69126.
Under 11 USCS § 522(f), debtors may avoid judicial lien on homestead even though lien would
be unimpaired under state homestead law, and even if debtors failed to perfect their homestead dec-
laration until after fixing of lien. In re Stacher (1985, BC ED Cal) 50 BR 18.
Pursuant to state law, nonpossessory, nonpurchase-money security interest may be avoided un-
der 11 USCS § 522(f)(1)(B) only when property affected by exemption is subject to execution, gar-
nishment, attachment or sale to satisfy judgment or order. In re Morgan (1995, BC SD Ohio) 179
BR 868.
Calculation of impairment under section 522(f) is relatively straightforward, consisting of ag-
gregating amounts represented by subsections (i)-(iii) and then comparing that sum to value of
debtor's unencumbered fee simple interest in residence, and difference is extent to which attachment
impairs debtor's presumed exemption and extent to which attachment will be avoided by court or-
der. Corson v Fidelity & Guar. Ins. Co. (In re Corson) (1997, BC DC Conn) 206 BR 17.
Plain meaning of 11 USCS § 522(f)(2)(A) dictates that in applying formula for determining im-
pairment of exemption, partially undersecured judicial liens that encumber equity over and above
total sum of unavoidable liens and allowable exemption need not be avoided in their entirety. In re
Ryan (1997, BC DC Mass) 210 BR 7.
Where Chapter 7 debtor claimed as exempt residence owned with non-debtor spouse, Bank-
ruptcy Court would not determine extent of impairment by deducting all encumbrances on property
from debtor's interest since, notwithstanding plain language of 11 USCS 522(f)(2)(A) dictates this
result, this would lead to absurd windfall for debtor; court would determine impairment by (1) de-
ducting amount of mortgage from value of entire property, (2) calculating debtor's interest in prop-
erty to be one half that sum, (3) deducting debtor's exemption from amount of his interest to arrive
at sum which would be compared to creditor's lien to determine whether that lien impaired debtor's
exemption. Lehman v VisionSpan, Inc. (In re Lehman) (1998, BC ND Ga) 223 BR 32 (criticized in
In re Piersol (2000, BC ED Pa) 244 BR 309, 43 CBC2d 1268, CCH Bankr L Rptr P 78112) and affd
(2000, CA11 Ga) 205 F3d 1255, 43 CBC2d 1369, CCH Bankr L Rptr P 78125, 13 FLW Fed C 437
(criticized in Milgard Tempering, Inc. v DaRosa (In re DaRosa) (2004, BAP9) 318 BR 871, CCH
Bankr L Rptr P 80249).
Page 386
11 USCS § 522
Petition date is operative date to make all 11 USCS § 522(f) determinations. In re Salanoa
(2001, BC SD Cal) 263 BR 120.
Pursuant to 11 USCS § 522(f)(2)(A), lien impairs exemption under Chapter 7 of Bankruptcy
Code to extent that sum of following exceeds value that debtor's interest in property would have in
absence of any liens: (1) lien at issue, (2) all other liens on property, and (3) amount of exemption
that debtor could claim if there were no liens on property; this provision was intended to provide
simple arithmetic test to determine whether judicial lien impairs exemption. Thigpen v Cadle Co.
(In re Thigpen) (2007, BC SD Ga) 374 BR 374.
220. Formal requirements
Three-step process is utilized to determine whether 11 USCS § 522(f) applies: (1) court deter-
mines whether debtor is entitled to exemption; (2) court determines extent to which lien can be
avoided; and (3) court determines whether lien does, in fact, impair exemption. David Dorsey Dis-
trib. v Sanders (In re Sanders) (1994, CA10 Utah) 39 F3d 258, 32 CBC2d 582, CCH Bankr L Rptr
P 76187 (superseded by statute as stated in Pepper v Public Serv. Emples. Credit Union (In re Pep-
per) (1997, BC DC Colo) 210 BR 480, 14 Colo Bankr Ct Rep 205, 38 CBC2d 596) and (superseded
by statute as stated in In re Richardson (1998, BC ND Okla) 224 BR 804, 40 CBC2d 980, CCH
Bankr L Rptr P 77815) and (superseded by statute as stated in Parsons v Investment Co. (In re Par-
sons) (1999, BAP10 NM) 16 Colo Bankr Ct Rep 55).
To avoid lien under 11 USCS § 522(f), debtor must demonstrate, in order, that there is (a) prop-
erty of estate, (b) in which debtor can claim valid exemption, to extent of which (c) lien against that
property may be avoided under § 522(f). In re Gibbs (1984, BC WD Ky) 39 BR 214.
Where literal interpretation of 11 USCS § 522(f)(2)(A) would produce result at odds with con-
gressional intent, court will not follow literal language of statute, but rather, will utilize equity
analysis. In re Ware (2001, BC DC SC) 274 BR 206, 47 CBC2d 1489.
Judgment creditor failed to show that liens which allegedly constituted fraudulent transfers were
excludable in determining whether bankruptcy debtor's exemption in real property was impaired for
purposes of avoiding creditor's lien under 11 USCS § 522(f), since bankruptcy trustee did not pursue
avoidance actions with regard to transfers, statutory period for bringing such actions expired, and
creditor was precluded from asserting untimely and defensive avoidance of liens. In re Bowshier
(2008, BC SD Ohio) 389 BR 542.
Where judgment creditor asserted that lien against bankruptcy debtor's real property was also
secured by other assets and argued that assets should be marshaled in determining whether debtor's
exemption in real property was impaired for purposes of avoiding creditor's lien under 11 USCS §
522(f), there was no basis for marshalling assets to determine that portion of lien which was ade-
quately secured by other assets, since § 522(f) expressly required that amounts of all liens be to-
talled unless lien was actually avoided. In re Bowshier (2008, BC SD Ohio) 389 BR 542.
221. Ownership requirement
Debtor need not have interest in property at time debtor moves to avoid lien because operation
of 11 USCS § 522(f) is not to avoid "lien," per se, although that is its practical effect in most cases,
but rather, it provides for avoidance of "fixing" of certain liens; § 522(f) operates retrospectively to
annul event of fastening subject lien upon property interest and fundamental question of ownership
is whether property encumbered by subject lien was "property of the debtor" at time of fixing of that
Page 387
11 USCS § 522
lien upon such property. Culver, LLC v Kai-Ming Chiu (In re Kai-Ming Chiu) (2002, CA9) 304 F3d
905, 2002 CDOS 9617, 40 BCD 63, CCH Bankr L Rptr P 78719.
Pennsylvania debtor who elects exemption under 11 USCS § 522(b)(2) may claim as exempt
only undivided interest in ownership equity rather than entire value of property; 11 USCS § 522(f) is
inapplicable since judicial lien sought to be enforced by creditors does not impair debtor's allowable
exemption under state law. In re Cipa (1981, BC WD Pa) 11 BR 968, 7 BCD 1026.
Debtor will not be allowed to avoid perfected security agreement against vehicle pursuant to 11
USCS § 522(b)(2)(B) where there is no evidence introduced by debtor to establish ownership of ve-
hicle as estate by entirety, transfer of vehicle was to spouse and not to him and debtor as tenants by
entirety, and there was no evidence of intent on part of spouse to make gift to debtor of an interest
in vehicle. In re Lefevre (1983, BC DC Vt) 27 BR 40, 35 UCCRS 614, affd (1983, DC Vt) 38 BR
980, 38 UCCRS 602.
Where Chapter 7 debtors transferred realty to trustee for benefit of their children over one year
prior to filing of bankruptcy petition, debtors had no legal or equitable interest in property at time of
filing and therefore property is not within estate as defined in 11 USCS § 541; therefore, debtors
may not invoke 11 USCS § 522(f) to avoid attempted revival of lien against realty. In re Mills
(1984, BC WD Pa) 41 BR 849.
Under 11 USCS § 522(f) debtor may avoid only those liens fixed on debtor's own property and
once debtor transfers title to encumbered property, he loses ability to avoid liens. In re Trammel
(1986, BC ED Va) 63 BR 878, 15 CBC2d 998.
Chapter 7 debtor wife who acquired interest in real property as a joint tenant only 12 days prior
to bankruptcy filing may not avoid liens on exempt real property under 11 USCS § 522(f)(1), where
wife acquired her interest in property subject to judicial liens sought to be avoided. In re Saturley
(1993, BC DC Me) 149 BR 245 (superseded by statute as stated in Bruin Portfolio, LLC v Leicht (In
re Leicht) (1998, BAP1 Mass) 222 BR 670, CCH Bankr L Rptr P 77806).
Judicial lien against bankruptcy debtors' real property held in trust created by debtors as both
settlors and beneficiaries was not avoidable under 11 USCS § 522(f)(1)(A), since trust was revoca-
ble, debtors' interest in property was limited to their homestead exemption, and non-exempt portion
of property was property of trust rather than debtors. In re Bogetti (2006, BC ED Cal) 349 BR 14.

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LEXSTAT 11 USC 522

UNITED STATES CODE SERVICE

*** CURRENT THROUGH PL 111-43, APPROVED 07/31/2009 ***

TITLE 11. BANKRUPTCY

Go to the United States Code Service Archive Directory

(a) In this section--

(3) Property listed in this paragraph is--

HISTORY; ANCILLARY LAWS AND DIRECTIVES

Prior law and revision:

Effective date of section:

"(B) not voided under section 506(d) of this title; or

Related Statutes & Rules:

Am Jur Proof of Facts:

Law Review Articles:

Emerging Issues Analysis

Interpretive Notes and Decisions:

223. Equity as prerequisite

298. Nonpossessory, nonpurchase money security interests

332. Water or sewer liens

I.IN GENERAL 1. Generally

Determination of whether exemption is available to Chapter 13 debtor under 11 USCS § 522 is

value of exemption from $ 10,000 to $ 25,000, if applied retroactively, is violation of Constitution;

Upon objection by trustee in bankruptcy, allowance of amended exemption depends on whether

73. Homestead exemption

A.In General 83. Generally

86.--Use for specific property

105. Property inherited postpetition

Under Texas law governing homestead exemption, there is no requirement of occupancy of

Although federal homestead exemption should be liberally construed in favor of Chapter 7

ordation of mortgage by assignee. In re Ochmanek (2000, BC ND Ohio) 266 BR 114 (criticized in

Bankruptcy court rejected creditor's argument, that nonpossessory, nonpurchase-money security

146. Animals and livestock

that husband's primary occupation is construction. In re Samuel (1984, BC ED Va) 36 BR 312, 11

153. Cash surrender value

Retirement contributions must be included in calculation of disposable income in Chapter 13

Where bankruptcy debtor claimed exemption under 11 USCS § 522(d)(10)(C), 522(d)(11)(E) in

198. Spousal support

Unpublished: Record supported bankruptcy trustee's objections to debtor's exemption because

213. Application to Chapter 12

1.In General 219. Generally

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* CURRENT THROUGH PL 111-43, APPROVED 07/31/2009 *