460 B.R. 466
Bankr. E.D. Mich.2011Background
- Reinhart filed chapter 7 in the Eastern District of Michigan and elected state exemptions under 11 U.S.C. § 522(b)(3), claiming exemptions under Michigan’s MCL § 600.5451.
- The trustee objected, arguing Michigan’s MCL § 600.5451 is unconstitutional.
- Michigan allows two exemptions for debtors in bankruptcy: MCL § 600.6023 (exempt from levy and sale) and MCL § 600.5451 (exempt from property of the estate).
- Reinhart elected § 600.5451 exemptions, and the trustee contends the statute is unconstitutional under Schafer (6th Cir. BAP).
- The court concludes that § 522(b)(3)(A) was not intended to allow exemptions under state bankruptcy-specific exemption laws like § 600.5451, and thus Reinhart cannot rely on § 600.5451; the trustee’s objection is sustained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 11 U.S.C. § 522(b)(3)(A) allows exemptions under state bankruptcy-specific exemption laws | Reinhart relies on § 522(b)(3)(A) to use Michigan’s § 600.5451 | Lim contends § 600.5451 is unconstitutional under Schafer | No; § 600.5451 cannot be used to claim exemptions under § 522(b)(3)(A) |
| Whether § 600.5451 is unconstitutional under the uniformity constraint | N/A | Schafer supports unconstitutionality under uniformity | Unconstitutional as applied to bankruptcy exemptions under § 522(b)(3)(A) |
| Whether Congress intended to constrain § 522(b)(3)(A) to exemptions available to judgments | N/A | N/A | Yes; Congress intended to limit exemptions to those exempt from collection on judgments (state law execution exemptions) |
Key Cases Cited
- Hanover Nat'l Bank v. Moyses, 186 U.S. 181 (1902) (uniformity constrained by execution-based exemptions in bankruptcy)
- Dewsnup v. Timm, 502 U.S. 410 (1992) (statutory change not assumed without history; reluctant to interpret as major change)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (avoid serious doubt of constitutionality by construing federal statutes)
- In re Schafer, 455 B.R. 590 (6th Cir. B.A.P. 2011) (holding § 600.5451 does not meet uniformity under the Bankruptcy Clause)
