Slip Opinion
Bankr. D. Me.2021Background
- Debtor Candace Goldstein lived in Maryland from Nov 2016–Nov 2018, later moved to Maine, and filed a Chapter 13 petition in Maine on November 3, 2021.
- In Schedule C she claimed multiple exemptions under Maryland law, including: a tools‑of‑the‑trade claim (listed as “household goods”) and a Maryland bankruptcy‑only "wildcard" exemption under Md. Code Ann., Cts. & Jud. Proc. § 11‑504(f).
- Chapter 13 Trustee Dudley objected to most of the exemptions; Trustee specifically challenged (1) the vagueness of "household goods" as a tools‑of‑the‑trade exemption and (2) the Debtor’s eligibility to claim the Md. § 11‑504(f) wildcard because she is domiciled in Maine.
- Debtor declined to supply more detail about the household goods or amend Schedule C despite multiple opportunities; the Court found no evidentiary showing that the goods were reasonably necessary to her trade as required by Maryland law.
- The Court sustained the Trustee’s objections: (1) household goods do not qualify under Md. § 11‑504(b)(1) as tools‑of‑the‑trade absent specificity and a demonstrated nexus; and (2) the Md. § 11‑504(f) wildcard (limited to Maryland domiciliaries) is not available to this nonresident debtor.
- In resolving the residency issue the Court adopted the state‑specific approach (giving effect to state residency limits), rejected anti‑extraterritoriality and declined to adopt broad preemption of state residency rules; the Court also noted (dicta) it would likely allow a debtor to invoke the federal exemptions under the § 522(d) "hanging paragraph" when a particular state exemption is rendered unavailable by residency limits.
Issues
| Issue | Trustee's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Whether "household goods" may be claimed under Md. § 11‑504(b)(1) tools‑of‑the‑trade exemption | "Household goods" is generic and lacks the required specificity and nexus to the Debtor’s trade; disclosure insufficient | Debtor listed "household goods" and declined to further particularize; conceded risk but did not amend schedules | Sustained. Generic "household goods" without particulars or a demonstrated reasonable necessity to the trade fails under Taylor and Md. § 11‑504(b)(1) |
| Whether a nonresident Maine debtor may claim Maryland’s § 11‑504(f) bankruptcy‑only wildcard (limited to Maryland domiciliaries) | Maryland’s domiciliary limitation must be respected; § 522(b)(3)(A) choice‑of‑law does not nullify state residency limits (state‑specific approach) | Debtor contends Maryland law should apply under § 522(b)(3)(A) and that hanging paragraph or preemption allows the wildcard despite nonresidency | Sustained. Court applies state‑specific approach and enforces § 11‑504(f)’s residency limit; nonresident may not claim that wildcard |
| Whether debtor can claim federal exemptions under the § 522(d) "hanging paragraph" when barred from a particular state exemption by residency limits | Trustee argued state law controls; if debtor remains eligible for some state exemptions, hanging paragraph may not trigger | Debtor argued hanging paragraph allows federal exemptions where a specific state exemption is unavailable due to residency | Court’s dicta: likely would permit federal exemption for a particular exemption rendered unavailable by residency (consistent with Withington/Kelsey); hanging paragraph interpreted to allow specific federal exemptions when state residency limits make that exemption unavailable |
Key Cases Cited
- In re Taylor, 537 A.2d 1179 (Md. 1988) (tools‑of‑the‑trade exemption requires property be reasonably necessary to the debtor’s trade)
- In re Withington, 594 B.R. 696 (Bankr. D. Colo. 2018) (permitting federal homestead exemption under hanging paragraph when a state residency limitation made the state homestead unavailable)
- Camp v. Ingalls (In re Camp), 631 F.3d 757 (5th Cir. 2011) (appellate treatment of state residency/exemption conflicts and choice‑of‑law analyses)
- In re Garrett, 435 B.R. 434 (Bankr. S.D. Tex. 2010) (advocating preemption/extraterritorial application of state exemptions under § 522(b)(3)(A))
- Stephens v. Holbrook (In re Stephens), 402 B.R. 1 (10th Cir. B.A.P. 2009) (discussing choice‑of‑law approaches to state exemption residency limits)
- Kelsey, 477 B.R. 870 (Bankr. M.D. Fla. 2012) (permitting a federal homestead exemption while allowing state exemptions for personal property)
- In re Long, 470 B.R. 186 (Bankr. D. Kan. 2012) (rejecting wholesale preemption of state residency limits and applying state‑specific approach)
- Sheehan v. Ash, 889 F.3d 171 (4th Cir. 2018) (affirming discussions of state residency/exemption interplay in bankruptcy contexts)