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"Schwab V Reilly"

Related Keywords: 100% FMV . exemptions . procedure .

Case Law Topics

  • Exemptions: Adding "100% of FMV" to claimed dollar-amount bankruptcy exemptions - Schwab v Reilly

    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.
    This puts the trustee on notice of your position and if he/she does not agree, they must object then, rather than wait to see if the asset appreciates. This prevents the trustee from sitting on property (e.g. a house) to see if the value will go up. For example, an underwater house could be listed as having a exempt equity of "$1 100%FMV"

    If the trustee does not object to the debtor's assertion as to the asset's value within the time allotted by Fed. R. Bankr. P. 4003(b)(1), the the exemption is deemed correct whether or not there is a colorable statutory basis for the exemptions. Taylor v. Freeland & Kronz, 503 U.S. 638, 644, 112 S.Ct. 1644, 1648 (1992).
    See In re Massey, Case No. 11-41059-MSH, (Bankr.D.Mass 2011).

    If the debtor does not put "100% of FMV" after the stated exempt amount, the issue of whether the asset is fully exempt remains an open issue, which the trustee can challenge later, on the ground that the debtor's asserted value of the exempt amount was not an assertion as it was 100% exempt. See, Schwab v Reilly, 130 S.Ct. 2652 (Supreme Court 2010).

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