442 B.R. 865
Bankr. N.D. Tex.2010Background
- Two debtors (Moores) and (Wilson) filed exemptions objections in a Northern District of Texas bankruptcy case, with Tim Truman and Alice Whitten serving as standing chapter 13 trustees.
- Moores claimed exemptions under 11 U.S.C. § 522(d); Wilson claimed exemptions under Texas exemption statutes; both designated exemptions as 100% of FMV for each asset.
- Trustees timely objected under Rule 4003(b)(1), arguing the 100% FMV designation seeks to exempt more than statutorily allowed.
- Schwab v. Reilly held that a debtor may indicate exemption of the entire asset by stating 100% of FMV, otherwise the asset remains in the estate unless the exemption covers the entire asset.
- The Wilson Objection relies on Texas exemptions; Schwab does not apply to pure Texas exemptions because they attach to the asset itself, not to an interest, so Gebhart analysis applies for timeliness.
- The court permitted evidentiary hearings on value; debtors bear the burden to prove 100% FMV exemptions fall within statutory limits, trustees bear the burden to prove excess.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Schwab permit 100% FMV exemptions for assets under § 522(d)? | Moores: 100% of FMV valid under Schwab. | Trustees: Schwab applies; exemptions must respect statutory limits. | Yes, 100% FMV designation permitted under Schwab as indicia of full exemption. |
| Does Schwab apply to the Wilson Texas exemptions analysis? | Wilson: Schwab not controlling; Texas statute governs. | Trustees: Texas exemptions reference the property; Schwab's logic limited by statute. | Schwab does not control applicability to Texas exemptions; proper review under Texas law and Gebhart timing. |
| Are the objections timely under Rule 4003(b)(1)? | Moores/Wilson designated 100% FMV; objections raise issue of extent, not timeliness. | Trustees: timely because Schwab framework requires challenge when full asset exempted is contested. | Timeliness upheld where appropriate under Rule 4003(b)(1). |
| What is the burden of proof at value hearings after objections? | Debtors: show plausible basis that 100% FMV falls within statutory limits. | Trustees: burden shifts to prove exemption exceeds statutory limit if value contested. | Debtors bear initial burden; Trustees bear burden to prove excess if value disputed. |
Key Cases Cited
- Schwab v. Reilly, 130 S. Ct. 2652 (2010) (debtors may elect entire-asset exemption by 100% FMV)
- Gebhart v. Gaughan, 621 F.3d 1206 (9th Cir.2010) (timeliness and scope of trustee's calculation under state exemptions)
- In re Stembridge, 394 F.3d 383 (5th Cir.2004) (valuation timing and exemption of interests vs assets)
- Taylor v. Freeland & Kronz, 503 U.S. 638 (1992) (timeliness of objections and debtor exemptions)