Keywords: 100% FMV . Schwab v Reilly . exemptions . valuation .
Exemptions > Homestead Exemptions: Adding "100% of FMV" to claimed dollar-amount bankruptcy exemptions - Schwab v Reilly8 Cases , IssueID 72 |
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Topic Description:The Supreme Court in Schwab v Reillly stated that, if you are claiming exempt property at specific dollar amounts, you should indicate to the trustee if you believe that dollar amount renders the asset fully exempt, by adding the phrase "100% of FMV" to the dollar amount exempted. Lines of Cases:
Topic Background / Overview:The U.S. Supreme Court in Schwab v Reilly as made it clear that: |
"Where, as here, it is important to the debtor to exempt the full market value of the asset or the asset itself, our decision will encourage the debtor to declare the value of her claimed exemption in a manner that makes the scope of the exemption clear, for example, by listing the exempt value as 'full fair market value (FMV)' or '100% of FMV.' Such a declaration will encourage the trustee to object promptly to the exemption if he wishes to challenge it and preserve for the estate any value in the asset beyond relevant statutory limits ... If the trustee fails to object, or if the trustee objects and the objection is overruled, the debtor will be entitled to exclude the full value of the asset. If the trustee objects and the objection is sustained, the debtor will be required either to forfeit the portion of the exemption that exceeds the statutory allowance, or to revise other exemptions or arrangements with her creditors to permit the exemption,"
what is frozen as of the date of filing the petition is the value of the debtor's exemption, not the fair market value of the property claimed as exempt. See Hyman v. Plotkin (In re Hyman), 967 F. 2d 1316, 1320 n.9 (9th Cir. 1992). A number of our cases have held that, under the California exemption scheme, the estate is entitled to postpetition appreciation in the value of property a portion of which is otherwise exempt. See Alsberg v. Robertson (In re Alsberg), 68 F.3d 312, 314-15 (9th Cir. 1995); Hyman, 967 F.2d at 1321; Schwaber v. Reed (In re Reed), 940 F.2d 1317, 1323 (9th Cir. 1991); see also Viet Vu v. Kendall (In re Viet Vu), 245 B.R. 644, 647-48 (9th Cir. BAP 2000).
.....
The debtors argue that the result we reach today will lead to uncertainty about the status of exempt property and abuses by trustees. The facts of the Gebhart bankruptcy suggest that some of these concerns are legitimate. Gebhart remained in his home for five years after filing for bankruptcy, paying his mortgage and believing that his bankruptcy was finished when he received his discharge. Gebhart may have been mistaken in this belief, but his misapprehension was shared by his mortgage lender, which refinanced his home, apparently unaware of any claims on the property by the Trustee. A Chapter 7 debtor will not be certain about the status of a homestead property until the case is closed (something that may not happen for several years after bankruptcy filing) or the trustee abandons the property.
The Schwab case does not support using "100% of FMV" as claimed exemption amount where the relevant Virginia exemption statute lists a maximum dollar value. Such exemptions require debtor to state explicit value, under state law. Unlimited exemptions do not require it.
ISSUE: How to claim property as completely exempt: Debtor put as value of exemption = to "100% of FMV" to indicate his assertion that the item was fully exempt. Trustee objected, but court upheld the practice, which triggers an evidentiary hearing to determine value.
Debtor cannot compel trustee to abandon debtpr's partially exempt car. Good explanation of procedure when you have a partial exemption and how you lose your car.
The Schwab case does not support using "100% of FMV" as claimed exemption amount where the relevant Virginia exemption statute lists a maximum dollar value. Such exemptions require debtor to state explicit value, under state law. Unlimited exemptions do not require it.
ISSUE: How to claim property as completely exempt: Debtor put as value of exemption = to "100% of FMV" to indicate his assertion that the item was fully exempt. Trustee objected, but court upheld the practice, which triggers an evidentiary hearing to determine value.
Debtor cannot compel trustee to abandon debtpr's partially exempt car. Good explanation of procedure when you have a partial exemption and how you lose your car.
what is frozen as of the date of filing the petition is the value of the debtor's exemption, not the fair market value of the property claimed as exempt. See Hyman v. Plotkin (In re Hyman), 967 F. 2d 1316, 1320 n.9 (9th Cir. 1992). A number of our cases have held that, under the California exemption scheme, the estate is entitled to postpetition appreciation in the value of property a portion of which is otherwise exempt. See Alsberg v. Robertson (In re Alsberg), 68 F.3d 312, 314-15 (9th Cir. 1995); Hyman, 967 F.2d at 1321; Schwaber v. Reed (In re Reed), 940 F.2d 1317, 1323 (9th Cir. 1991); see also Viet Vu v. Kendall (In re Viet Vu), 245 B.R. 644, 647-48 (9th Cir. BAP 2000).
.....
The debtors argue that the result we reach today will lead to uncertainty about the status of exempt property and abuses by trustees. The facts of the Gebhart bankruptcy suggest that some of these concerns are legitimate. Gebhart remained in his home for five years after filing for bankruptcy, paying his mortgage and believing that his bankruptcy was finished when he received his discharge. Gebhart may have been mistaken in this belief, but his misapprehension was shared by his mortgage lender, which refinanced his home, apparently unaware of any claims on the property by the Trustee. A Chapter 7 debtor will not be certain about the status of a homestead property until the case is closed (something that may not happen for several years after bankruptcy filing) or the trustee abandons the property.
"Where, as here, it is important to the debtor to exempt the full market value of the asset or the asset itself, our decision will encourage the debtor to declare the value of her claimed exemption in a manner that makes the scope of the exemption clear, for example, by listing the exempt value as 'full fair market value (FMV)' or '100% of FMV.' Such a declaration will encourage the trustee to object promptly to the exemption if he wishes to challenge it and preserve for the estate any value in the asset beyond relevant statutory limits ... If the trustee fails to object, or if the trustee objects and the objection is overruled, the debtor will be entitled to exclude the full value of the asset. If the trustee objects and the objection is sustained, the debtor will be required either to forfeit the portion of the exemption that exceeds the statutory allowance, or to revise other exemptions or arrangements with her creditors to permit the exemption,"
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