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460 B.R. 466
Bankr. E.D. Mich.
2011
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Background

  • 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)
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Case Details

Case Name: In Re Reinhart
Court Name: United States Bankruptcy Court, E.D. Michigan
Date Published: Nov 16, 2011
Citations: 460 B.R. 466; 2011 WL 5599413; 2011 Bankr. LEXIS 4309; 19-40645
Docket Number: 19-40645
Court Abbreviation: Bankr. E.D. Mich.
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    In Re Reinhart, 460 B.R. 466