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Bankruptcy by Keyword:

"Exemptions"

Related Keywords: Tenancy by Entirety .

Resources

  • New York Exemption Laws: When you fill out your bankruptcy forms, you are asked what property you claim as exempt -- and the citation for it. This page gives you those citations and exemptions in summary fashion. [Go ->]

Definitions from the USDOJ

  • equity: The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)
  • exemptions, exempt property: Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.
  • no-asset case: A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.
  • objection to exemptions: A trustee's or creditor's objection to the debtor's attempt to claim certain property as exempt from liquidation by the trustee to creditors.
  • prebankruptcy planning: The arrangement (or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions. (Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.)

Case Law Topics

  • Exemptions: Constitutionality of State Bankruptcy-Only Exemption Laws

    This topic collects a few bizarre rulings that go against established precedent to state that state "bankruptcy-only" exemption laws are unconstitutional. These cases fly in the face of many many years of established federal law and will probably eventually be overturned.

  • 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).

  • Exemptions: Miscellaneous Cases

    A collection of various cases on a variety of exemption issues in various states, and federal limits on exemptions.

  • Tenancy by Entirety: Assorted issues

    Can be a confusing topic. Here are some cases that are good at explaining it.

  • Exemptions: Inherited IRAs exempt under either 522(b)(3)(C) or 522(d)(12)?

    The Supreme court in Clark v. Rameker, 134 S. Ct. 2242, U.S. S.Ct, 6/12/2014, held that inherited IRAs are NOT EXEMPT, at least under federal law. The court did not address state law exemptions.
    Before the Supremes weighed in on the issue, this topic was litigated heavily.
    While IRAs are clearly exempt, there was a split in caselaw on the issue of whether inherited IRAs are also exempt. Cases seem to be trending to say that inherited IRAs they ARE exempt. One case saying otherwise was reversed by the Fifth Circuit in March 2012. (In re Chilton) Meanwhile, a recent 2013 decision from the 7th Circuit (In re Clark) has held that they are not exempt.

    "Most of the courts that have analyzed this issue have concluded that inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12).[1] Nessa, 426 B.R. at 314; In re Kuchta, 434 B.R. 837, 843-44 (Bankr. N.D. Ohio 2010); In re Tabor, 433 B.R. 469, 476 (Bankr. M.D. Pa. 2010); In re Thiem, 443 B.R. 832, 843-44 (Bankr. D. Ariz. 2011); In re Weilhammer, No. 09-15148-LT7, 2010 WL 3431465, at *4-*6 (Bankr. S.D. Cal. Aug. 30, 2010); In re Stephenson, U.S. Dist. LEXIS 142360, at *7-*8. These courts have noted that the statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor. See, e.g., Nessa, 426 B.R. at 314. Accordingly, they have reasoned that "retirement funds" can include the funds that others had originally set aside for their retirement, as with inherited IRAs. Id." In re Chilton

    See also: http://www.ncbrc.org/tag/inherited-iras/

    "The line of cases that deny exemptions in inherited IRAs commonly conclude that inherited IRAs are (1) fundamentally different from a traditional IRA under the IRC and (2) lack a retirement purpose. These courts determined that an inherited IRA is (1) subject to an entirely different set of rules upon the use, distribution and taxation of the funds, and (2) no longer for used for retirement purposes but is "a liquid asset which may be accessed by [the debtor] at his discretion withhout penalty, and which he must take as income within a relatively short period of time without regard for his retirement needs." In re Sims, 241 B.R. 467, 470 (Bankr.N.D.Okla. 1999) (Oklahoma law); see also In re Chilton, 426 B.R. 612 (Bankr.E.D.Tex.2010) ( 522(d)(12)); In re Ard, 435 B.R. 719 (Bankr.M.D.Fla.2010) (Florida law and citing case law for 522(d)(12), and citing Robertson v. Deeb, 16 So.3d 936 (Ct.App.2 Dist.2009)) (non-spousal inherited IRA not exempt from garnishment); In re Klipsch, 435 B.R. 586 (Bankr.S.D.Ind.2010) (Indiana law); In re Jarboe, 365 B.R. 717 (Bankr.S.D.Tex.2007) (Texas law); In re Taylor, 2006 WL 1275400, at *2 (Bankr. C.D.Ill.2006) (Illinois law); In re Navarre, 332 B.R. 24 (Bankr.M.D.Ala.2004) (Alabama law).
    " In re Thiem 433 BR 823 (disagreeing with cited cases).

  • Exemptions: Does Wage Garnishment Law Create an Exemption In Bankruptcy?

    A collection of various cases on whether wage garnishment laws create an exemption in bankruptcy.

    Some courts have held that state wage garnishment laws do not create an exemption in bankruptcy. Many courts have also found that the federal non-bankruptcy prohibition on for wage garnishment also does not create an exemption in bankruptcy. See, e.g. IN RE BLOOMSTEIN, Case No. 09-11241-JNF., Bankr. Court, D. Massachusetts 2010("15 U.S.C. 1673 restrains the seizure of wages but does not establish an exemption applicable to bankruptcy cases"); Smith v. Frazier, 421 B.R. 513 (S.D. Ill. 2009); In re Riendeau, 293 B.R. 832 (D. Vt. 2002), aff'd, 336 F.3d 78 (2d Cir. 2003).


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