SCHWAB v. REILLY
No. 08-538
Supreme Court of the United States
Argued November 3, 2009—Decided June 17, 2010
560 U.S. 770
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
THOMAS, J., delivered the opinion of the Court, in which STEVENS, SCALIA, KENNEDY, ALITO, and SOTOMAYOR, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which ROBERTS, C. J., and BREYER, J., joined, post, p. 795.
Craig Goldblatt argued the cause for petitioner. With him on the briefs were William G. Schwab, pro se, Seth P. Waxman, Danielle Spinelli, and Daniel S. Volchok.
Jeffrey B. Wall argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Kagan, Assistant Attorney General West, Deputy Solicitor General Stewart, Ramona D. Elliott, P. Matthew Sutko, and Eric K. Bradford.
G. Eric Brunstad, Jr., argued the cause for respondent. With him on the brief were Collin O‘Connor Udell, Joshua Richards, and Gino L. Andreuzzi.*
*Martin P. Sheehan filed a brief for the National Association of Bankruptcy Trustees as amicus curiae urging reversal.
William C. Heuer filed a brief for the National Association of Consumer Bankruptcy Attorneys et al. as amici curiae urging affirmance.
JUSTICE THOMAS delivered the opinion of the Court.
When a debtor files a Chapter 7 bankruptcy petition, all of the debtor‘s assets become property of the bankruptcy estate, see
This case presents an opportunity for us to resolve a disagreement among the Courts of Appeals about what constitutes a claim of exemption to which an interested party must object under
I
Respondent Nadejda Reilly filed for Chapter 7 bankruptcy when her catering business failed. She supported her petition with various schedules and statements, two of which are relevant here: Schedule B, on which the Bankruptcy Rules require debtors to list their assets (most of which become property of the estate), and Schedule C, on which the Rules require debtors to list the property they wish to reclaim as exempt. The assets Reilly listed on Schedule B included an itemized list of cooking and other kitchen equipment that she described as “business equipment,” and to which she assigned an estimated market value of $10,718. App. 40a, 49a-55a.
On Schedule C, Reilly claimed two exempt interests in this equipment pursuant to different sections of the Code. Reilly claimed a “tool[s] of the trade” exemption of $1,850 in the equipment under
Subject to exceptions not relevant here, the Federal Rules of Bankruptcy Procedure require interested parties to object to a debtor‘s claimed exemptions within 30 days after the conclusion of the creditors’ meeting held pursuant to Rule 2003(a). See
Petitioner William G. Schwab, the trustee of Reilly‘s bankruptcy estate, did not object to Reilly‘s claimed exemptions in her business equipment because the dollar value Reilly assigned each exemption fell within the limits that
Reilly opposed Schwab‘s motion. She argued that by equating on Schedule C the total value of the exemptions she claimed in the equipment with the equipment‘s estimated market value, she had put Schwab and her creditors on notice that she intended to exempt the equipment‘s full value, even if that amount turned out to be more than the dollar amount she declared, and more than the Code allowed. Id., at 165a. Citing
The Bankruptcy Court denied both Schwab‘s motion to auction the equipment and Reilly‘s conditional motion to dismiss her case. See In re Reilly, 403 B. R. 336 (Bkrtcy. Ct. MD Pa. 2006). Schwab sought relief from the District Court, arguing that neither the Code nor Rule 4003(b) requires a trustee to object to a claimed exemption where the amount the debtor declares as the “value of [the debtor‘s] claimed exemption” in certain property is an amount within the limits the Code prescribes. The District Court rejected Schwab‘s argument, and the Court of Appeals affirmed. See In re Reilly, 534 F. 3d 173 (CA3 2008).
The Court of Appeals agreed with the Bankruptcy Court that by equating on Schedule C the total value of her exemptions in her business equipment with the equipment‘s market value, Reilly “indicate[d] the intent” to exempt the equipment‘s full value. Id., at 174. In reaching this conclusion, the Court of Appeals relied on our decision in Taylor:
“[W]e believe this case to be controlled by Taylor. Just as we perceive it was important to the Taylor Court that the debtor meant to exempt the full amount of the property by listing ‘unknown’ as both the value of the property and the value of the exemption, it is important to us that Reilly valued the business equipment at $10,718 and claimed an exemption in the same amount. Such an identical listing put Schwab on notice that Reilly intended to exempt the property fully.
“‘[A]n unstated premise’ of Taylor was ‘that a debtor who exempts the entire reported value of an asset is claiming the “full amount,” whatever it turns out to be.‘” 534 F. 3d, at 178-179.
Relying on this “unstated premise,” the Court of Appeals held that Schwab‘s failure to object to Reilly‘s claimed exemptions entitled Reilly to the equivalent of an in-kind interest in her business equipment, even though the value of that exemption exceeded the amount that Reilly declared on Schedule C and the amount that the Code allowed her to withdraw from the bankruptcy estate. Ibid.
As noted, the Court of Appeals’ decision adds to disagreement among the Circuits about what constitutes a claim of exemption to which an interested party must object under
II
The starting point for our analysis is the proper interpretation of Reilly‘s Schedule C. If we read the Schedule Reilly‘s way, she claimed exemptions in her
The parties agree that this case is governed by
Schedule C-Property Claimed as Exempt
| Description of Property | Specify Law Providing Each Exemption | Value of Claimed Exemption | Current Market Value of Property Without Deducting Exemptions |
|---|---|---|---|
| Schedule B Personal Property | |||
| .... | .... | ..... | ...... |
| See attached list of business equipment. | 1,850 | 10,718 | |
| 8,868 |
According to Reilly,
Schwab does not dispute that columns 3 and 4 apprised him that Reilly equated the total value of her claimed exemptions in the equipment ($1,850 plus $8,868) with the equipment‘s market value ($10,718). He simply disagrees with Reilly that this “identical listing put [him] on notice that Reilly intended to exempt the property fully,” regardless of whether its value exceeded the exemption limits the Code prescribes. 534 F. 3d, at 178. Schwab and amicus United States instead contend that the Code defines the “property” Reilly claimed as exempt under
We agree. The portion of
Reilly‘s contrary view of Schwab‘s obligations under
For all of these reasons, we conclude that Schwab was entitled to evaluate the propriety of the claimed exemptions based on three, and only three, entries on Reilly‘s Schedule C: the description of the business equipment in which Reilly claimed the exempt interests; the Code provisions governing the claimed exemptions; and the amounts Reilly listed in the column titled “value of claimed exemption.” In reaching this conclusion, we do not render the market value estimate on Reilly‘s Schedule C superfluous. We simply confine the estimate to its proper role: aiding the trustee in administering the estate by helping him identify assets that may have value beyond the dollar amount the debtor claims as exempt, or whose full value may not be available for exemption because a portion of the interest is, for example, encumbered by an unavoidable lien. See, e. g., 3 W. Norton & W. Norton, Bankruptcy Law and Practice § 56:7 (3d ed. 2009); Brief for United States as Amicus Curiae 16; Dept. of Justice, Executive Office for U. S. Trustees, Handbook for Chapter 7 Trustees, p. 8-1 (2005), http://www.justice.gov/ust/eo/private_trustee/library/chapter07/docs/7handbook1008/Ch7_Handbook.pdf (as visited June 14, 2010, and available in Clerk of Court‘s case file). As noted,
Our interpretation of Schwab‘s statutory obligations is not only consistent with the governing Code provisions; it is also consistent with the historical treatment of bankruptcy exemptions. Congress has permitted debtors to exempt certain property from their bankruptcy estates for more than two centuries. See Act of Apr. 4, 1800, ch. 19, §5, 2 Stat. 23.12 Throughout these periods, debtors have validly exempted property based on forms that required the debtor to list the value of a claimed exemption without also estimating the market value of the asset in which the debtor claimed the exempt interest. See Brief for Respondent 46, n. 7 (citing
III
The Court of Appeals erred in holding that our decision in Taylor dictates a contrary conclusion. See 534 F. 3d, at 178. Taylor does not rest on what the debtor “meant” to exempt. 534 F. 3d, at 178. Rather, Taylor applies to the face of a debtor‘s claimed exemption the Code provisions that compel reversal here.
The debtor in Taylor, like the debtor here, filed a schedule of exemptions with the Bankruptcy Court on which the debtor described the property subject to the claimed exemption, identified the Code provision supporting the exemption, and listed the dollar value of the exemption. Critically, however, the debtor in Taylor did not, like the debtor here, state the value of the claimed exemption as a specific dollar amount at or below the limits the Code allows. Instead, the debtor in Taylor listed the value of the exemption itself as “$ unknown“:
Schedule B-4. -Property Claimed Exempt
| Type of Property | Location, Description, and, So Far as Relevant to the Claim of Exemption, Present Use of Property | Specify the Statute Creating the Exemption | Value Claimed Exempt |
|---|---|---|---|
| Proceeds from lawsuit | Winn v. TWA Claim for lost wages | $ unknown |
The interested parties in Taylor agreed that this entry rendered the debtor‘s claimed exemption objectionable on its face because the exemption concerned an asset (lawsuit proceeds) that the Code did not permit the debtor to exempt beyond a specific dollar amount. See 503 U. S., at 642. Accordingly, although this case and Taylor both concern the consequences of a trustee‘s failure to object to a claimed exemption within the time specified by Rule 4003, the question arose in Taylor on starkly different facts. In Taylor, the question concerned a trustee‘s obligation to object to the debtor‘s entry of a “value claimed exempt” that was not plainly within the limits the Code allows. In this case, the opposite is true. The amounts Reilly listed in the Schedule C column titled “Value of Claimed Exemption” are facially within the limits the Code prescribes
Taylor supports this conclusion. In holding otherwise, the Court of Appeals focused on what it described as Taylor‘s “unstated premise” that ““a debtor who exempts the entire reported value of an asset is claiming the “full amount,” whatever it turns out to be.“” 534 F. 3d, at 179. But Taylor does not rest on this premise. It establishes and applies the straightforward proposition that an interested party must object to a claimed exemption if the amount the debtor lists as the “value claimed exempt” is not within statutory limits, a test the value ($ unknown) in Taylor failed, and the values ($8,868 and $1,850) in this case pass.
We adhere to this test. Doing otherwise would not only depart from Taylor and ignore the presumption that parties act lawfully and with knowledge of the law, cf. United States v. Budd, 144 U. S. 154, 163 (1892); it would also require us to expand the statutory definition of “property claimed as exempt” and the universe of information an interested party must consider in evaluating the validity of a claimed exemption. Even if the Code allowed such expansions, they would be ill advised. As evidenced by the differences between Reilly‘s Schedule C and the schedule in Taylor, preprinted bankruptcy schedules change over time. Basing the definition of the “property claimed as exempt,” and thus an interested party‘s obligation to object under
at face value and find them unobjectionable under the Code, so the objection deadline we enforced in Taylor is inapplicable here.
IV
In a final effort to defend the Court of Appeals’ judgment, Reilly asserts that her approach to
As we emphasized in Rousey, “[t]o help the debtor obtain a fresh start, the Bankruptcy Code permits him to withdraw from the estate certain interests in property, such as his car or home, up to certain values.” 544 U. S., at 325 (emphasis added). The Code limits exemptions in this fashion because every asset the Code permits a debtor to withdraw from the estate is an asset that is not available to his creditors. See
Reilly nonetheless contends that our approach creates perverse incentives for trustees and creditors to sleep on their rights. See Brief for Respondent 64, n. 10, 67-69. Again, we disagree. Where a debtor intends to exempt nothing more than an interest worth a specified dollar amount in an asset that is not subject to an unlimited or in-kind exemption under the Code, our approach will ensure clear and efficient resolution of competing claims to the asset‘s value. If an interested party does not object to the claimed interest by the time the Rule 4003 period expires, title to the asset will remain with the estate pursuant to
Where, as here, it is important to the debtor to exempt the full market value of the asset or the asset itself, our decision will encourage the debtor to declare the value of her claimed exemption in a manner that makes the scope of the exemption clear, for example, by listing the exempt value as “full fair market value (FMV)” or “100% of FMV.”19 Such a declaration will encourage the trustee to object promptly to the exemption if he wishes to challenge it and preserve for the estate any value in the asset beyond relevant statutory limits.20 If the trustee fails to object, or if the trustee objects and the objection is overruled, the debtor will be entitled to exclude the full value of the asset. If the trustee objects and the objection is sustained, the debtor will be required either to forfeit the portion of the exemption that exceeds the statutory allowance, or to revise other exemptions or arrangements with her creditors to permit the exemption. See
sult will facilitate the expeditious and final disposition of assets, and thus enable the debtor (and the debtor‘s creditors) to achieve a fresh start free of the finality and clouded-title concerns Reilly describes. See Brief for Respondent 57-59 (arguing that “[u]nder [Schwab‘s] interpretation of
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*
*
We reverse the judgment of the Court of Appeals for the Third Circuit and remand this case for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and JUSTICE BREYER join, dissenting.
In Chapter 7 bankruptcies, debtors must surrender to the trustee-in-bankruptcy all their assets,
The trustee in this case, petitioner William G. Schwab, maintains that the obligation promptly to object to exemption claims extends only to the qualification of an asset as exemptible, not to the debtor‘s valuation of the asset. Respondent Nadejda Reilly, the debtor-in-bankruptcy, urges that the timely objection requirement applies not only to the debtor‘s designation of an asset as exempt; the requirement applies as well, she asserts, to her estimate of the asset‘s market value. That is so, she reasons, because the asset‘s current dollar value is critical to the determination whether she may keep the property intact and outside bankruptcy, or whether the trustee, at any time during the course of the proceedings, may sell it.
The Court‘s decision drastically reduces
I
Nadejda Reilly is a cook who operated a one-person catering business. Unable to cover her debts, she filed a Chapter 7 bankruptcy petition appending all required schedules and statements. Relevant here, her filings included a form captioned “Schedule B - Personal Property,” which called for enumeration of “all personal property of the debtor of whatever kind.” App. 40a. On that all-encompassing schedule, Reilly listed “business equipment,” i. e., her kitchen equipment, with a current market value of $10,718. Id., at 49a.
Reilly also filed the more particular form captioned “Schedule C - Property Claimed as Exempt.” Id., at 56a. Schedule C contained four columns, the first headed “Description of Property“; the second, “Specify Law Providing Each Exemption“; the third, “Value of Claimed Exemption“; and the fourth, “Current Market Value of Property Without Deducting Exemptions.” Id., at 57a. In the first column of Schedule C, Reilly wrote, as she did in Schedule B‘s description-of-property column: “See attached list of business equipment.” Id., at 58a. On the list appended to Schedules B and C, Reilly set out by hand a 31-item inventory of her restaurant-plus-catering-venture equipment. Next to each item, e. g., “Dough Mixer,” “Gas stove,” “Hood,” she specified, first, the purchase price and, next, “Today‘s Market Value,” which added up to $10,718 for the entire inventory. Id., at 51a-55a.1
As the laws securing exemption of her kitchen equipment, Reilly specified in the second Schedule C column,
Before the 30-day clock on filing objections had begun to run, an appraiser told Schwab that Reilly‘s equipment was worth at least $17,000. Brief for Petitioner 15; App. 164a. Nevertheless, Schwab did not object to the $10,718 market value Reilly attributed to her business equipment in Schedule C and the attached inventory. Instead, he allowed the limitations period to lapse and then moved, unsuccessfully,
for permission to sell the equipment at auction. Id., at 141a-143a.3
From Reilly‘s filings, the Bankruptcy Judge found it evident that Reilly had claimed the property itself, not its dollar value, as exempt. Id., at 168a-169a (“I know there‘s an argument . . . that . . . the property identified as exempt is really the [valuation] column, [i. e., $10,718,] but that‘s not what the forms say. The forms say property declared as exempt and to see attached list. So, they‘re exempting all the property. . . . If the Trustee believes that . . . all the property cannot be exempt, [he] should object to it.“).
The District Court and Court of Appeals similarly concluded that, by listing the identical amount, $10,718, as the property‘s market value and the value of the claimed exemptions, Reilly had signaled her intention to safeguard all of her kitchen equipment from inclusion in the bankruptcy estate. In re Reilly, 403 B. R. 336, 338-339 (Bkrtcy. Ct. MD Pa. 2006); In re Reilly, 534 F. 3d 173, 178 (CA3 2008). Both courts looked to
“The debtor shall file a list of property that the debtor claims as exempt . . . . Unless a party in interest objects, the property claimed as exempt on such list is exempt.”
§ 522(l) .“A party in interest may file an objection to the list of property claimed as exempt only within 30 days after the meeting of creditors held under
§ 341(a) is con-
cluded . . . . The court may, for cause, extend the time for filing objections if, before the time to object expires, a party in interest files a request for an extension.”
Rule 4003(b) .4
Schwab having filed no objection within the allowable 30 days, each of the tribunals below ruled that the entire inventory of Reilly‘s business equipment qualified as exempt in full. App. 168a; 403 B. R., at 339; 534 F. 3d, at 178. The leading treatise on bankruptcy, the Court of Appeals noted, id., at 180, n. 4, is in accord:
“Normally, if the debtor lists property as exempt, that listing is interpreted as a claim for exemption of the debtor‘s entire interest in the property, and the debtor‘s valuation of that interest is treated as the amount of the exemption claimed. Were it otherwise—that is, if the listing were construed to claim as exempt only that portion of the property having the value stated—the provisions
finalizing exemptions if no objections are filed would be rendered meaningless. The trustee or creditors could [anytime] claim that the debtor‘s interest in the property was greater than the value claimed as exempt and [then] object to the debtor exempting his or her entire interest in the property after the deadline for objections had passed.” 9 Collier ¶ 4003.02[1], pp. 4003-4 to 4003-5.
Agreeing with the courts below, I would hold that Reilly, by her precise identification of the exempt property, and her specification of $10,718 as both the current market value of her kitchen equipment and the value of the claimed exemptions, had made her position plain: She claimed as exempt the listed property itself—not the dollar amount, up to $10,718, that sale of the property by Schwab might yield.
Because neither Schwab nor any creditor lodged a timely objection, the listed property became exempt, reclaimed as property of the debtor, and therefore outside the bankruptcy estate the trustee is charged to administer.
II
A
Pursuant to
The Court holds, however, that Schwab was not obliged to file a timely objection to the exemption Reilly claimed, and indeed could auction off her cooking equipment anytime prior to the administrative closing of the bankruptcy estate. In so holding, the Court decrees that no objection need be made to a debtor‘s valuation of her property.
To support the conclusion that
the ‘property’ a debtor may ‘clai[m] as exempt’ as the debtor‘s ‘interest‘—up to a specified dollar amount—in the assets described in the category, not as the assets themselves.” Ante, at 782. So long as a debtor values her claimed exemption at a dollar amount below the statutory cap, the Court reasons, the claim is on-its-face permissible no matter the market value she ascribes
B
The Court‘s account, however, shuts from sight the vital part played by the fourth entry on Schedule C—current mar-
ket value—when a capped exemption is claimed. A debtor who estimates a market value below the cap, and lists an identical amount as the value of her claimed exemption, thereby signals that her aim is to keep the listed property in her possession, outside the estate-in-bankruptcy. In contrast, a debtor who estimates a market value above the cap, and above the value of her claimed exemption, thereby recognizes that she cannot shelter the property itself and that the trustee may seek to sell it for whatever it is worth.7 Schedule C‘s final column, in other words, alerts the trustee whether the debtor is claiming a right to retain the listed property itself as her own, a right secured to her if the trustee files no timely objection.8
Because an asset‘s market value is key to determining the character of the interest the debtor is asserting in that asset,
tions to the debtor‘s description of the property, the asserted legal basis for the exemption, and the claimed value of the exemption. See 4 Collier ¶ 522.05[1], p. 522-28 (rev. 15th ed. 2005) (“[T]o evaluate the
C
Requiring objections to market valuation notably facilitates the debtor‘s fresh start, and thus best fulfills the prime purpose of the exemption prescriptions. See, e. g., Burlingham v. Crouse, 228 U. S. 459, 473 (1913) (Bankruptcy provisions “must be construed” in light of policy “to give the bankrupt a fresh start.“). See also Rousey v. Jacoway, 544 U. S. 320, 325 (2005); United States v. Security Industrial Bank, 459 U. S. 70, 72, n. 1 (1982); ante, at 791. The 30-day deadline for objections, this Court has recognized, “prompt[s] parties to act and . . . produce[s] finality.” Taylor v. Free-
land & Kronz, 503 U. S. 638, 644 (1992). As “there can be no possibility of further objection to the exemptions” after this period elapses, the principal bankruptcy treatise observes, “if the debtor is not yet in possession of the property claimed as exempt, it should be turned over to [her] at this time to effectuate fully the fresh start purpose of the exemptions.” 9 Collier ¶ 4003.03[3], p. 4003-13.
With the benefit of closure, and the certainty it brings, the debtor may, at the end of the 30 days, plan for her future secure in the knowledge that the possessions she has exempted in their entirety are hers to keep. See 534 F. 3d, at 180. If she has reclaimed her car from the estate, for example, she may accept a job not within walking distance. See Brief for National Association of Consumer Bankruptcy Attorneys et al. as Amici Curiae 2-3 (hereinafter NACBA Brief). Or if she has exempted her kitchen equipment, she may launch a new catering venture. See App. 138a (Reilly “wishe[d] to continue in restaurant and catering as her occupation” postbankruptcy.).
By permitting trustees to challenge a debtor‘s valuation of exempted property anytime before the administrative closing of the bankruptcy estate, the Court casts a cloud of uncertainty over the debtor‘s use of assets reclaimed in full. If the trustee gains a different opinion of an item‘s value months, even years, after the debtor has filed her bankruptcy petition,10 he may
ministrative closing of the bankruptcy estate, “[h]ow can debtors reasonably be expected to restructure their affairs“? NACBA Brief 25. See In re Polis, 217 F. 3d 899, 903 (CA7 2000) (Posner, C. J.) (“If the assets sought to be exempted by the debtor were not valued at a date early in the bankruptcy proceeding, neither the debtor nor the creditors would know who had the right to them.“).
III
The Court and Schwab raise three concerns about reading
A
The Court suggests that requiring timely objections to a debtor‘s valuation of exempt property would saddle trustees with an unmanageable load. See ante, at 790 (declining to “expand . . . the universe of information an interested party must consider in evaluating the validity of a claimed exemption“). See also Brief for Petitioner 32-33; Brief for United States as Amicus Curiae 24.12 But trustees, sooner or later, must attempt to ascertain the market value of ex-
empted assets. They must do so to determine whether sale of the items would likely produce surplus proceeds for the estate above the value of the claimed exemption, see
The 30-day objection period, I note, does not impose on trustees any additional duty, but rather guides the exercise of existing responsibilities; under
If the trustee needs more than 30 days to assess market value, moreover, the time period is eminently extendable.
B
On affording trustees fair notice of the need to object, the Court emphasizes that a debtor must list her claimed exemptions “in a manner that makes the scope of the exemption clear.” Ante, at 792. If a debtor wishes to exempt property in its entirety, for example, the Court counsels her to write “full fair market value (FMV)” or “100% of FMV” in Schedule C‘s value-of-claimed-exemption column. Ante, at 793 (internal quotation marks omitted). See also Tr. of Oral Arg. 6-7, 26-29; In re Hyman, 967 F. 2d 1316, 1319-1320, n. 6 (CA9 1992) (Trustees must be able to assess the validity of an exemption from the face of a debtor‘s schedules.). Our decision in Taylor v. Freeland & Kronz, the Court notes, is instructive. In Taylor, the debtor recorded the term “$ unknown” as the value of a claimed exemption, which, the Court observes, raised a “warning fla[g]” because the value “was not plainly within the limits the Code allows.” Ante, at 788-789.
True, a debtor‘s schedules must give notice sufficient to cue the trustee that an objection may be in order. But a “warning flag” is in the eye of the beholder: If a debtor lists identical amounts as the market value of exempted property and the value of her claimed exemption, she has, on the face of her schedules, reclaimed the entire asset just as surely as if she had recorded “100% of FMV” in Schedule C‘s value-of-claimed-exemption column. See Brief for Respondent 36. See also 9 Collier ¶ 4003.03[3], p. 4003-14 (“Only when a debtor‘s schedules specifically value the debtor‘s interest in the property at an amount higher than the amount claimed as exempt can it be argued that a part of the
In this case, by specifying $10,718 as both the current market value of her kitchen equipment and the value of her claimed exemptions, Reilly gave notice that she had reclaimed the listed property in full. See supra, at 796-800. To borrow the Court‘s terminology, Reilly waved a “warning flag” that should have prompted Schwab to object if he believed the equipment could not be reclaimed in its entirety because its value exceeded the statutory cap. 534 F. 3d, at 179. See 4 Collier ¶ 522.05[2][b], p. 522-33 (“Normally, if a debtor lists an asset as having a particular value in the schedules and then exempts that value, the schedules should be read as a claim of exemption for the entire asset, to which the trustee should object if the trustee believes the asset has been undervalued.“).
Training its attention on trustees’ needs, moreover, the Court overlooks the debtor‘s plight. As just noted, the Court counsels debtors wishing to exempt an asset in full to write “100% of FMV” or “full FMV” in the value-of-claimed-exemption column. But a debtor following the instructions that accompany Schedule C would consider such a response nonsensical, for those instructions direct her to “state the dollar value of the claimed exemption in the space provided.”
C
Schwab finally urges that requiring timely objections to a debtor‘s market-value estimations “would give debtors a perverse incentive to game the system by undervaluing their assets.” Brief for Petitioner 35; see Brief for United States as Amicus Curiae 27. The Court rejected an argument along these lines in Taylor, and should follow suit here. Multiple measures, Taylor explained, discourage undervaluation of property claimed as exempt. 503 U. S., at 644. Among those measures: The debtor files her exemption claim under penalty of perjury. See
Furthermore, the objection procedure is itself a safeguard against debtor undervaluation. If a trustee suspects that the market value of property claimed as exempt may exceed a debtor‘s estimate, he should do just what
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For the reasons stated, I would affirm the Third Circuit‘s judgment.
APPENDIX
IN RE Reilly, Nadejda Case No.
Debtor(s)
SCHEDULE B - PERSONAL PROPERTY
Except as directed below, list all personal property of the debtor of whatever kind. If the debtor has no property in one or more of the categories, place an “X” in the appropriate position in the column labeled “None“. If additional space is needed in any category, attach a separate sheet properly identified with the case name, case number, and the number of the category. If the debtor is married, state whether husband, wife, or both own the property by placing an “H” for Husband, “W” for Wife, “J” for Joint, or “C” for Community in the column labeled “HWJC.” If the debtor is an individual or a joint petition is filed, state the amount of any exemptions only in Schedule C-Property Claimed as Exempt.
Do not include interests in executory contracts and unexpired leases on the schedule. List them in Schedule G-Executory Contracts and Unexpired Leases.
If the property is being held for the debtor by someone else, state that person‘s name and address under “Description and Location of Property“.
| TYPE OF PROPERTY | NONE | DESCRIPTION AND LOCATION OF PROPERTY | HWJC | CURRENT MARKET VALUE OF DEBTOR‘S INTEREST IN PROPERTY WITHOUT DEDUCTING ANY SECURED CLAIM OR EXEMPTION |
|---|---|---|---|---|
| 1. Cash on hand. | X | |||
| 2. Checking, savings or other financial accounts, certificates of deposit, or shares in banks, savings and loan, thrift, building and loan, and homestead associations, or credit unions, brokerage houses, or cooperatives. | Account no. [REDACTED], business account at PNC Bank, Hazleton, PA. Name on account, [REDACTED] Personal checking account of debtor with PNC Bank, Hazleton, PA acct. no. [REDACTED] | 21.00 5.00 | ||
| 3. Security deposits with public utilities, telephone companies, landlords, and others. | X | |||
| 4. Household goods and furnishings. Include audio, video, and computer equipment. | X | |||
| 5. Books, pictures and other art objects, antiques, stamp, coin, record, tape, compact disc, and other collections or collectibles. | Pictures, camera, other personal property for child. | 1,000.00 | ||
| 6. Wearing apparel. | Clothing. | 1,000.00 | ||
| 7. Furs and jewelry. | Jewelry | 100.00 | ||
| 8. Firearms and sports, photographic, and other hobby equipment. | X | |||
| 9. Interests in insurance policies. Name insurance company of each policy and itemize surrender or refund value of each. | X | |||
| 10. Annuities. Itemize and name each issuer. | X | |||
| 11. Interests in IRA, ERISA, Keogh, or other pension or profit sharing plans. Itemize. | Pension fund with International Union Industry. | 67.92 | ||
| 12. Stock and interests in incorporated and unincorporated businesses. Itemize. | X | |||
| 13. Interests in partnerships or joint ventures. Itemize. | X | |||
| 14. Government and corporate bonds and other negotiable and non-negotiable instruments. | X | |||
| 15. Accounts receivable. | X | |||
| 16. Alimony, maintenance, support, and property settlements in which the debtor is or may be entitled. Give particulars. | X | |||
| 17. Other liquidated debts owing debtor including tax refunds. Give particulars. | X |
SCHEDULE B - PERSONAL PROPERTY
(Continuation Sheet)
| TYPE OF PROPERTY | NONE | DESCRIPTION AND LOCATION OF PROPERTY | HWJC | CURRENT MARKET VALUE OF DEBTOR‘S INTEREST IN PROPERTY WITHOUT DEDUCTING ANY SECURED CLAIM OR EXEMPTION |
|---|---|---|---|---|
| 18. Equitable or future interest, life estates, and rights or powers exercisable for the benefit of the debtor other than those listed in Schedule of Real Property. | X | |||
| 19. Contingent and noncontingent interests in estate of a decedent, death benefit plan, life insurance policy, or trust. | X | |||
| 20. Other contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and rights to setoff claims. Give estimated value of each. | X | |||
| 21. Patents, copyrights, and other intellectual property. Give particulars. | X | |||
| 22. Licenses, franchises, and other general intangibles. Give particulars. | X | |||
| 23. Automobiles, trucks, trailers, and other vehicles and accessories. | 02 Honda CRV, V.I.N. [REDACTED] title holder, American Honda Finance Corp., 470 Granby Rd., Ste. 2, S. Hadley, MA 01075. | 13,367.00 | ||
| 24. Boats, motors, and accessories. | X | |||
| 25. Aircraft and accessories. | X | |||
| 26. Office equipment, furnishings, and supplies. | X | |||
| 27. Machinery, fixtures, equipment, and supplies used in business. | See attached list of business equipment. | 10,718.00 | ||
| 28. Inventory. | Food goods on hand at restaurant of the debtor | 3,000.00 | ||
| 29. Animals. | X | |||
| 30. Crops - growing or harvested. Give particulars. | X | |||
| 31. Farming equipment and implements. | X | |||
| 32. Farm supplies, chemicals, and feed. | X | |||
| 33. Other personal property of any kind not already listed. Itemize. | X | |||
| TOTAL | 29,278.92 | |||
TWO WORLDS BY FINE EUROPEAN CATERING AT [REDACTED] CONYNGHAM PA 18219
EQUIPMENT! Tax is not included.
| Paid | Today‘s Market Value | |
|---|---|---|
| 1 Coffee Maker 1 New Air pot Brewer | $545.00 | $250.00. |
| 2 Soup Warmers 2 New Advil ( Black & Stainless steel) | $270.00. | $100.00. |
| 3 3 Bay sink 1 used | $350.00 | $100.00. |
| 4 Hand washing sink 1 used. | Free | Free |
| 5 Microwave oven 1 used Pulsar | $120.00 | $25.00 |
| 6 Sandwich grill 1 new Star Pane Bello broad New | $1897.40 | $950.00 |
| 7 Hot Plate 1 new | $378.00 | $150.00 |
| 8 Convection Oven 1 New Single deck- US Range, | $2725.00 | $1,000.00 |
| 200.00 | 100.00 |
TWO WORLDS’ EQUIPMENT
| Paid. | Today‘s Market Value | |
|---|---|---|
| | $1,775.00 | $600.00 |
| 11 56” Refrigerator 1 New Turbo Air 2 sliding door | $1,975.00 | $800.00 |
| 12 Coffee table New | $55.00 | $30.00 |
| 12a Grill table New | $150.00 | $50.00. |
| 13 Refrigerated Pasky Case 1 used Federal used | $950.00 | $400.00. |
| 14 Round Table 3 used. | $100.00. | $50.00. |
| 15 Chairs 9 new BISTRO CHAIR-BK FRAME | $458.00. | $150.00 |
| 16 Barstools 6 new BUFF BK FRAME | $476.72 | $160.00. |
| 17 Holding Shelves 3 new | $160.00 | $80.00. |
| 18 High Chair 1 new wooden Mahogany | $38.16 | $18.00. |
| 20 Cash Register 1 new | $1148.00 | $70.00 |
| 21 Slicer 1 used | $150.00 | $75.00 |
| 22 Holding Rack strays 5 | $185.00 | $100.00 |
| 23 Dishes, Flatware & others | $300.00 | $100.00. |
FINE EUROPEAN CATERING...... AT [REDACTED]
| EQUIPMENT. | Paid | Today‘s Market Value |
|---|---|---|
| 1 3 Bay sink 1 new | $700.00. | $300.00. |
| 2 Hand washing sink 1 New | $36.00 | $10.00. |
| 3 Dough Roller-Sheeter 1 New | $2,665.00 | $800.00 |
| 4 Gas stove 1 new US Range 1 new. | $1,000.00 | $500.00 |
| 5 Hood 1 New | $2,000.00 | $1,000.00 |
| 6 Ref- Freezer 1 new | $2,200.00 | $500.00. |
| 7 Dough Mixer 1 New | $2,300 | $1,500.00. |
| 8 Fire suppressive System | $1,500.00 | $750.00 |
IN RE Reilly, Nadejda Case No.
Debtor(s)
SCHEDULE C - PROPERTY CLAIMED AS EXEMPT
Debtor elects the exemptions to which debtor is entitled under:
(Check one box)
[X]
[]
| DESCRIPTION OF PROPERTY | SPECIFY LAW PROVIDING EACH EXEMPTION | VALUE OF CLAIMED EXEMPTION | CURRENT MARKET VALUE OF PROPERTY WITHOUT DEDUCTING EXEMPTION |
|---|---|---|---|
| SCHEDULE B - PERSONAL PROPERTY | |||
| Account no. [REDACTED], business account at PNC Bank, Hazleton, PA. Name on account, [REDACTED] | 21.00 | 21.00 | |
| Personal checking account of debtor with PNC Bank, Hazleton, PA acct. no. [REDACTED] | 5.00 | 5.00 | |
| Pictures, camera, other personal property for child. | 1,000.00 | 1,000.00 | |
| Clothing. | 1,000.00 | 1,000.00 | |
| Jewelry | 100.00 | 100.00 | |
| Pension fund with International Union Industry. | 57.92 | 57.92 | |
| 02 Honda CRV, V.I.N. [REDACTED] title holder, American Honda Finance Corp., 470 Granby Rd., Ste. 2, S. Hadley, MA 01075. | 2,850.00 | 13,367.00 | |
| See attached list of business equipment. | 1,850.00 8,868.00 | 10,718.00 | |
| Food goods on hand at restaurant of the debtor | 1,331.00 975.00 | 3,000.00 |
Notes
“[Name of Trustee], the duly qualified and acting trustee of the estate of the debtor, would show the court the following:
“1. The debtor is not entitled under [the automobile exemption] to an interest of more than $3,225 in an automobile. The automobile claimed by debtor as exempt . . . has a value substantially greater than $3,225.
. . . .
“WHEREFORE Trustee prays that the court determine that debtor is not entitled to . . . the exemptio[n] claimed by him, that the [property claimed as exempt] which [is] disallowed be turned over to the trustee herein as property of the estate, and that he have such other and further relief as is just.” 13A Collier § CS17.14, p. CS17-22 (rev. 15th ed. 2009). See also
Rules 9013 -9014 .