In Re Long
470 B.R. 186
Bankr. D. Kan.2012Background
- Ms. Long filed Chapter 13 in February 2011 as a Kansas resident but had not resided in Kansas for 730 days.
- From February 2007 to December 2009, Long resided in Nebraska, where Nebraska exemptions are limited to Nebraska residents.
- Long claimed federal exemptions under § 522(d) because Nebraska exemptions would be unavailable to nonresidents; § 522(b)(3)(A) and the 730-day rule govern eligibility.
- The Trustee objected, arguing Nebraska's territorial limitation on exemptions is preempted by federal law.
- The court concluded Long may claim the federal exemptions, applying the hanging paragraph and state-law exemptions where appropriate.
- Venue and opt-out considerations under Nebraska and Kansas law were reconciled to allow Long to reach § 522(d) exemptions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May debtor claim federal exemptions under § 522(d)? | Long may rely on the hanging paragraph when domiciliary-time rules render state exemptions unavailable. | Trustee argues Nebraska restrictions preclude federal exemptions where applicable. | Yes; Long may claim § 522(d) exemptions. |
| Is Nebraska's territorial limitation preempted by § 522? | Nebraska territorial limits should be displaced by the federal scheme when applicable. | § 522 does not preempt Nebraska's territorial exemptions; state law governs eligibility. | No preemption; state territorial limits may align with § 522 mechanics. |
| Does Nebraska's opt-out apply to a petition filed in Kansas? | Nebraska opt-out applies to Nebraskan filings; not to petitions filed in Kansas by nonresidents. | Nebraska opt-out restricts federal exemptions regardless of petition venue. | Nebraska opt-out does not bar federal exemptions in this Kansas filing. |
| How does the hanging paragraph interact with domiciliary time limits? | Hanging paragraph serves as a fail-safe to permit § 522(d) exemptions when domiciliary limits block state exemptions. | Hanging paragraph is limited and does not broadly override state territorial restrictions. | Hanging paragraph properly allows federal exemptions while honoring domiciliary rules. |
Key Cases Cited
- In re Rody, 468 B.R. 384 (Bankr.D.Ariz. 2012) (hanging paragraph permits federal exemptions when state exemptions are unavailable)
- In re Camp, 396 B.R. 194 (Bankr.W.D.Tex. 2008) (state opt-out considerations; later history cited in 5th Cir. 2011)
- In re Garrett, 435 B.R. 434 (Bankr.S.D.Tex. 2010) (statutory interpretation of § 522 and state territorial limits)
- In re Stephens, 402 B.R. 1 (10th Cir. BAP 2009) (residency-based exemptions and § 522(b)(3)(A) effects)
- In re Fernandez, 445 B.R. 790 (Bankr.W.D.Tex. 2011) (interpretation of preemption and hanging paragraph interplay)