§ 144.1     Exemptions at Conversion
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 144.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The Bankruptcy Reform Act of 1994 changed the exemptions available to individual debtors in all Chapter 13 cases filed after October 22, 1994.1 The Bankruptcy Reform Act of 1994 also changed the content of the estate at conversion from Chapter 13 for cases filed after October 22, 1994.2 A Chapter 13 case filed before October 22, 1994, that is converted after that date is controlled by the pre-1994 exemption rules. Even if the debtor files a new exemption schedule in a case filed before but converted after October 22, 1994, the debtor is not entitled to nor is the debtor subject to the 1994 amendments with respect to exemptions.

[2]

In Chapter 13 cases filed after October 22, 1994, the 1994 Act made many specific changes in the amounts of exemptions available to individual debtors.3 In addition, the 1994 Act amended § 522(f) to clarify the power of individual debtors to avoid liens that impair exemptions.4

[3]

Section 348(f), as amended in 1994, redefined property of the estate at conversion from Chapter 13 to Chapter 7.5 Because exemptions are determined under § 522(b) with reference to property of the estate, changing definitions of property of the estate affects the items available for exemption at conversion. Put another way, because the definition of property of the estate at the filing of the Chapter 13 case is now different under § 348(f) at conversion, the pool of property from which the debtor can select exemptions may change between the petition and conversion. The impact on exemptions of the redefinition of the estate at conversion under § 348(f) is somewhat uncertain because the case law is not altogether clear whether exemptions after conversion are determined based on property of the estate at the petition or at the time of conversion. This question becomes entangled with the rule in the district on entitlement to postpetition property upon conversion.6

[4]

For example, if there is $1,000 held by the Chapter 13 trustee at conversion, and if the debtor is in a district where that $1,000 is considered property of the Chapter 7 estate, can the debtor claim a $1,000 exemption in the money? If exemptions are determined as of the date of the Chapter 13 petition, what can the debtor do about the $1,000 that did not exist at that time? If the $1,000 is not considered property of the Chapter 7 estate, does it belong outright to the debtor without use of an exemption? Can the debtor use an exemption to stop that money from being distributed to creditors in the Chapter 13 case? Can the debtor amend the exemption schedule to capture property or income that was acquired during the Chapter 13 case and before conversion?

[5]

There is a split of authority with respect to the rules to determine exemptions at conversion from Chapter 13. Several courts, including the Bankruptcy Appellate Panel for the Ninth Circuit, have held that exemptions are determined as of the date of conversion.7 These courts reason that exemptions are less important in Chapter 13 cases8 and property of the estate continues to accrue after the petition by virtue of § 1306;9 thus, it only makes sense that debtors would select exemptions from the accumulated property of the estate at conversion to Chapter 7.

[6]

Before the 1994 amendments to § 348(f), the U.S. Court of Appeals for the Eighth Circuit was the leading proponent of the view that exemptions were determined as of the date of conversion from Chapter 13 to Chapter 7. In Armstrong v. Lindberg (In re Lindberg),10 the Eighth Circuit permitted debtors to change their homestead exemption from the home they claimed in their original Chapter 13 schedules to the farm on which they resided at the time of conversion to Chapter 7.11 Citing Lindberg, the U.S. Court of Appeals for the Seventh Circuit adopted the conversion-date approach at least in part “to discourage . . . opportunistic behavior that hurts creditors.”12

[7]

After the 1994 amendments to § 348(f),13 the Bankruptcy Appellate Panel for the Eighth Circuit questioned the vitality of Lindberg, and the Eighth Circuit itself eventually overruled Lindberg. In Alexander v. Jensen-Carter (In re Alexander),14 at the Chapter 13 petition the debtor lived on Lexington Parkway but claimed an exemption in real property on Laurel Avenue. The Chapter 13 trustee successfully objected to the Laurel Avenue exemption. The case converted to Chapter 7. By the time of conversion, the debtor had moved to the Laurel Avenue address. The exemption schedule filed in the Chapter 7 case again claimed a homestead exemption in the Laurel Avenue property. The Chapter 7 trustee objected. The debtor argued that Lindberg fixed exemption rights based on the facts at the time of conversion. The Bankruptcy Appellate Panel denied the Laurel Avenue exemption, holding that Lindberg no longer controlled:

In [Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984)], the court ruled that when a case is converted from chapter 13 to chapter 7, the date of conversion controls what exemptions may be claimed in the converted chapter 7 case. . . . However, later decisions by the Eighth Circuit cast doubt on the Lindberg decision’s continued viability in light of the 1994 amendments to the Bankruptcy Code. . . . 11 U.S.C. § 348(a). The Bankruptcy Code clearly indicates that in a case converted from chapter 13, property of the estate in the converted case is determined according to the filing date of the original chapter 13 petition. Therefore, exemption eligibility should also be determined as of the original chapter 13 filing date. . . . [O]ther courts have concluded that Lindberg has been superseded by the 1994 Bankruptcy Code amendments and that exemption eligibility is determined as of the date the original chapter 13 petition was filed. . . . Lindberg is no longer good law.15
[8]

On appeal to the Eighth Circuit, the court of appeals accepted the BAP’s invitation to reconsider Lindberg in light of the 1994 bankruptcy amendments:

We have reviewed [Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984),] and agree with the Bankruptcy Court that the equitable concerns underlying Lindberg are no longer relevant in light of the Bankruptcy Reform Act of 1994. . . . Lindberg was motivated by the concern that debtors who had their cases converted would not have the opportunity to exempt from their estate new property they acquired after filing bankruptcy. . . . After we decided Lindberg, a circuit split developed as to whether the filing date or the conversion date controlled what property formed the debtor’s estate. Compare [Bobroff v. Continental Bank (In re Bobroff),] 766 F.2d 979, 803–04 (3d Cir. 1985) (original-petition filing date), with In re Lybrook, 951 F.2d 136, 137–38 (7th Cir. 1991) (conversion date). . . . This state of affairs changed, however, when Congress added section 348(f)(1) to the Bankruptcy Code in 1994. Section 348(f)(1)(A) provides that the property of a converted Chapter 7 estate is the property of the estate as of the date of the Chapter 13 filing. The legislative history to section 348(f)(1) indicates that Congress intended this language to overrule the holding of cases such as Lybrook in favor of those cases holding that the property of the estate in a converted case is the property the debtor had when he filed his original Chapter 13 petition. See 140 Cong. Rec. H10770 (Oct. 4, 1994). It is clear to us that the express language of section 348(f) and its legislative history abrogates the rationale underlying Lindberg. . . . We therefore hold that Lindberg, . . . has been, in effect, overruled by Congress.16
[9]

The U.S. Court of Appeals for the Tenth Circuit has approved the general proposition that debtors can amend exemptions at conversion from Chapter 13 but has reported decisions refusing exemption amendments at conversion for equitable reasons and holding that the exemption law in effect at the Chapter 13 petition controls notwithstanding a later conversion. In Calder v. Job (In re Calder),17 the Tenth Circuit observed that, at conversion from Chapter 13 to Chapter 7, a debtor generally is entitled to amend the exemption schedule as a matter of course under Bankruptcy Rule 1009(a);18 but amendment may be denied “if there is bad faith by the debtor or prejudice to creditors.”19 The Tenth Circuit found that the debtor’s attempt to amend the exemption schedule four years after filing the Chapter 13 petition and more than one year after conversion to Chapter 7 was bad faith and/or prejudicial to creditors.

[10]

A year after Calder, the Tenth Circuit held that the law in effect at the filing of the original Chapter 13 petition controls a debtor’s entitlement to exemptions upon conversion to Chapter 7. As explained in Marcus v. Zeman (In re Marcus),20 § 522 governs exemptions and “defines exempt property as any that is ‘exempt under . . . state or local law that is applicable on the date of the filing of the petition.’ 11 U.S.C. § 522(b)(2)(A).”21 Because under § 348(a), conversion from one chapter to another does not change the filing date of the original petition, “these two Code provisions [§§ 522(b)(2)(A) and 348(a)] require a determination that the law applicable at the date of filing controls exemptions.”22 The Tenth Circuit distinguished the Eighth Circuit’s holding in Lindberg:

This conclusion might appear to conflict with the position that the Eighth Circuit adopted in [Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984)]. In that case, however, there was not a change in the law applicable to exemptions. Rather, the debtor sought to change their exemption upon conversion based on a change in circumstances. . . . Where, as here, the law, rather than the facts, has changed, the plain language of the statute dictates the result. . . . We hold that the law in effect on the date of filing controls what exemptions would be available to a debtor converting from Chapter 13 to Chapter 7.23
[11]

The U.S. Court of Appeals for the Fifth Circuit adopted the petition-date approach to exemptions at conversion even before the Eighth Circuit changed its view. In Lowe v. Sandoval (In re Sandoval),24 at the Chapter 13 petition, the debtors owned a homestead and a separate rental property. The debtors were unable to make the payments on their homestead. In anticipation of conversion, the debtors moved to the rental property, filed a motion to convert, then amended their schedules to designate a new homestead in the rental property. The Chapter 7 trustee objected to the exemption amendment. Because § 522(b)(2)(A) provides that exemptions are determined “on the date of the filing of the petition” and § 348(a) requires that conversion does not change the date of the petition, the Fifth Circuit rejected Lindberg and concluded that exemptions at conversion are determined as of the date of the Chapter 13 petition:

Lindberg’s [Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984)] reasoning that policy reasons justify departing from the plain language of the statute is unpersuasive. . . . [T]he Sandovals’ homestead exemption must be determined as of the date of filing rather than as of the date of conversion. . . . On remand, the bankruptcy court must determine whether, as the facts existed at the date of filing, the Sandovals were entitled to a homestead exemption in the [rental] property.25
[12]

Although not completely clear from the Fifth Circuit’s opinion in Sandoval, choice of the petition date to measure exemptions at conversion probably defeated altogether the debtors’ homestead exemption because at the petition, the rental property could not qualify as a homestead under Texas law. In this respect, Sandoval and the Eighth Circuit’s subsequent decision in Alexander agree: debtors who move during a Chapter 13 case risk forfeiting any homestead exemption at conversion.26 In an opinion reported before Sandoval, a district court in Texas, on facts similar to those in Sandoval, predicted that the Fifth Circuit would agree with Lindberg and concluded that Chapter 13 debtors can claim new exemptions at conversion to change their homestead to reflect the sale of a residence between the Chapter 13 petition and conversion.27

[13]

There remains a split among (and within) the circuits with respect to the methodology to determine exemptions at conversion from Chapter 13. The reported decisions demonstrate that changes in the facts during the Chapter 13 case can dramatically change the property the debtor wants to exempt at conversion. Stated the other way around, the choice whether exemptions are determined as of the date of the original petition or at the time of conversion dramatically affects the property available for exemption at conversion.

[14]

This complication is then amplified by the 1994 amendments to § 348(f). As discussed above,28 in cases filed after October 22, 1994, the content of the bankruptcy estate changes at conversion because of § 348(f)(1)(A) and (f)(2). If the bankruptcy court determines exemptions as of the date of conversion, after the 1994 amendments, the content of the estate from which the debtor would claim those exemptions will change from the petition and be different depending on whether conversion is in good faith or bad faith.

[15]

Applying the conversion-date approach in a case filed after October 22, 1994, at conversion in good faith, the estate would consist of “property of the estate, as of the date of filing of the petition that remains in the possession of or is under the control of the debtor on the date of conversion.”29 The debtor would claim exemptions from that property based on the facts at the time of conversion. In contrast, in the Fifth Circuit, applying Sandoval, at good-faith conversion of a case filed after October 22, 1994, the estate in the converted case would be the same as stated immediately above, but exemptions would be determined as of the date of the original Chapter 13 petition. It is not immediately obvious how this would work.

[16]

For example, imagine a Chapter 13 case filed after October 22, 1994, in which the debtor claimed a $2,000 exemption in the equity in a bass boat.30 After confirmation and before conversion to Chapter 7, the debtor (lawfully) sold the bass boat and used the exempt proceeds to pay postpetition medical bills. At a “good faith” conversion to Chapter 7, property of the estate in the converted case would not include the bass boat.31 Can (must?) the debtor change exemptions to reflect that the bass boat is no longer property of the estate? If the debtor used the (exempt) proceeds to buy a different boat, does the debtor lose the exemption to the Chapter 7 trustee if the new boat is in the debtor’s possession at conversion? The new boat obviously did not exist at the petition. If exemptions at conversion are determined as of the date of the petition, does the debtor end up with a useless exemption in the boat he sold but no exemption in the replacement boat that sits in the driveway? Try explaining that outcome to the debtor.

[17]

The interaction between § 348(f) and exemptions at conversion seems to confuse bankruptcy lawyers and courts even in circuits that have declared rules for decision. For example, in In re Demars,32 the Chapter 13 case was filed in 1998 and converted to Chapter 7 in 2002. The debtor was entitled to an income tax refund for 2001 as a result of the earned income tax credit. The Chapter 7 trustee objected to the debtor’s claim of exemption in the 2001 tax refund. Citing Eighth Circuit authority, the bankruptcy court held that the 2001 tax refund was property of the Chapter 7 estate and was not exempt under Missouri law.

[18]

Demars is curious for the absence of any citation to § 348(f). The 2001 tax refund, of course, did not exist at the Chapter 13 petition in 1998. Under § 348(f), absent bad faith the tax refund would not become property of the Chapter 7 estate at conversion in 2002.33

[19]

And what happened to Alexander? In 2001 in Alexander, the Eighth Circuit clarified that at conversion from Chapter 13 to Chapter 7, Lindberg was overruled and exemptions are determined as of the original Chapter 13 petition.34 Again, the 2001 tax refund did not exist in 1998 and was not available as an exemption at conversion in 2002. But neither was it property of the Chapter 7 estate. In other words, the 2001 tax refund was the debtor’s property without regard to exemptions, and the Chapter 7 trustee had no claim to the refund at all.35

[20]

At conversion of Chapter 13 cases filed after October 22, 1994, debtors will have to take a careful look at the redefined estate to determine whether the property available for exemption is different than at the filing of the Chapter 13 petition. Counsel will have to know the rule in the circuit with respect to whether the controlling facts are fixed at the petition or at the date of conversion. If changing facts are considered to determine exemptions at conversion, the redefinition of the estate at conversion under § 348(f)(1)(A) will probably change the exemptions available to most debtors.

[21]

This is complicated enough, but then there lurks also the uncertainty how bankruptcy courts will interpret “property of the estate” in § 348(f)(1)(A) as amended in 1994. As discussed above,36 there was substantial controversy in the pre-1994 case law with respect to the meaning of property of the estate at conversion from Chapter 13. The decisions reported since the 1994 amendments are not reassuring that this controversy was entirely resolved by the 1994 amendments.37 Differing notions of property of the estate would add another level of uncertainty to determining exemptions at conversion.

[22]

In this regard, a “bad faith” conversion of a Chapter 13 case filed after October 22, 1994, triggers the alternative definition of the Chapter 7 estate in § 348(f)(2).38 Debtors converting in bad faith will face a Chapter 7 estate that consists of “the property of the estate as of the date of conversion.”39 Can a debtor converting in bad faith amend exemptions based on the facts at the time of conversion, including that the estate contains acquisitions (and appreciation) during the Chapter 13 case? Applying the Sandoval approach, acquisitions during the Chapter 13 case would become property of the Chapter 7 estate, but would not be available as exemptions because exemptions would be determined as of the date of the original Chapter 13 petition. This outcome is consistent with the notion that debtors converting in bad faith should be penalized with the loss of property acquired during the Chapter 13 case. Would the conversion-date approach to exemptions permit a debtor converting in bad faith to escape this penalty? Perhaps the bad-faith limit on the amendment of exemptions discussed by the Tenth Circuit in Calder prohibits amendment of exemptions at conversion when the bad-faith definition of property of the estate applies under § 348(f)(2).

[23]

As discussed elsewhere,40 the Supreme Court’s 1992 opinion in Taylor v. Freeland & Kronz,41 has affected exemptions and lien avoidance42 in Chapter 13 cases. These impacts are also felt at conversion from Chapter 13.

[24]

Bankruptcy Rule 4003(b) states, “The trustee or any creditor may file objections to the list of property claimed as exempt within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a) or the filing of any amendment to the list or supplemental schedules unless . . .”43 In Taylor, the Supreme Court held that the failure of any creditor or the trustee to object to exemptions in a Chapter 7 case within the 30 days described in Bankruptcy Rule 4003(b) was a bar to subsequent attack on those exemptions, notwithstanding that the original claim of exemption was without foundation.44

[25]

The issue is whether Bankruptcy Rule 4003(b) as interpreted by the Supreme Court in Taylor controls objections to exemptions at conversion from Chapter 13. For example, if the Chapter 13 debtor claimed exemptions in the original schedules and no one objected within the 30 days described in Bankruptcy Rule 4003(b), are those exemptions insulated from objection at conversion to Chapter 7? Does it matter whether the debtor files a new schedule of exemptions at the time of conversion?

[26]

Several courts, including the Courts of Appeals for the Second and Eighth Circuits, have held or suggested that at conversion, neither Taylor nor Bankruptcy Rule 4003(b) precludes a second chance for the Chapter 7 trustee to object to exemptions, even when the same exemptions were claimed without objection during the Chapter 13 case. As explained by the district court in Weissman v. Carr (In re Weissman):45

Unfortunately, Rule 4003(b) fails to distinguish which § 341 meeting triggers the time period for objections in the case of conversion where two distinct meetings are held. . . . Seldom do creditors scrutinize exemptions claimed by the debtor in a Chapter 13 action. . . . To construe Rule 4003(b) to mean that the original § 341 meeting triggers the thirty (30) day time frame in which to file objections would deprive Chapter 7 trustees of the opportunity to challenge the debtor’s claims of exempted property. . . . [T]he only reasonable construction of Rule 4003(b) is to allow the language to convey its plain meaning and permit the Chapter 7 Trustee an opportunity to object to the claimed exemptions, provided that the Trustee files the objection within thirty (30) days after the § 341 meeting following conversion.46
[27]

The logic of these cases is not compelling. In Taylor, the Supreme Court based its strict interpretation of Bankruptcy Rule 4003(b) on the imperative statement of finality of a debtor’s exempt property under § 522(l) of the Code.47 There is no Chapter 13 “exception” to the finality of exemptions in § 522 or in Bankruptcy Rule 4003(b). Absent objection (or amendment), 30 days after the meeting of creditors, a Chapter 13 debtor’s exempt property “is exempt.” No provision of the Code drags exempt property back into the estate at conversion months or years later.48 Taylor is inconsistent with the view in Weissman that Bankruptcy Rule 4003(b) indefinitely postpones finality of a Chapter 13 debtor’s claims of exemption pending the possibility of conversion. The Chapter 13 trustee and all creditors have standing to challenge the debtor’s exemptions in the Chapter 13 case.49 That creditors and (some) Chapter 13 trustees are not accustomed to carefully reviewing exemptions hardly rationalizes a judicial exception to the plain language of § 522(l). Other reported decisions recognize that Taylor and Bankruptcy Rule 4003(b) preclude the Chapter 7 trustee from objecting to exemptions at conversion if time expired in the Chapter 13 case and no new exemptions are claimed at conversion.50

[28]

If the debtor files amended exemption claims in the Chapter 7 case after conversion, Bankruptcy Rule 4003(b) clearly contemplates the running of a new 30-day period for objections. This is a substantial reason for Chapter 13 debtors to avoid amending exemptions at conversion. The debtor is best positioned to argue for the limitation on objections to exemptions recognized by the Supreme Court in Taylor when the debtor does not file a new exemption schedule after conversion.

[29]

The local rules in some judicial districts require Chapter 13 debtors to file new schedules at conversion to Chapter 7.51 Debtors should not file a new Schedule C to Official Bankruptcy Form 652 unless it is necessary to change the exemptions claimed in the original Chapter 13 schedules. Filing a new schedule of exemptions, even without changes, could be (mis)interpreted as an “amendment . . . or supplemental schedule” that would trigger a new period for objection under Bankruptcy Rule 4003(b).

[30]

Especially in cases filed after October 22, 1994, debtors will sometimes need to file a new schedule of exemptions at conversion because of changes in the estate during the Chapter 13 case.53 For example, the exemptions claimed at the petition will not include property acquired during the Chapter 13 case. Amending the exemption schedule at conversion may be the only way for a Chapter 13 debtor to avoid liquidation of appreciated property in jurisdictions that include postpetition acquisitions and appreciation in the Chapter 7 estate at conversion.54 The passage of time between the Chapter 13 petition and conversion—years in some cases—may affect the liens avoidable under § 522(f) and thus the selection of exemptions upon which lien avoidance depends.55 Changes in marital status during the Chapter 13 case may require amended exemptions to reflect changes in ownership by marriage, property settlement, divorce decree and the dissolving of tenancies by the entireties. Debtors simply may not be able to avoid filing a new exemption schedule at conversion, and the bar to objections in Taylor will give way to a new 30-day open season under Bankruptcy Rule 4003(b).


 

1  See discussion beginning at § 48.1  Available and Important in Chapter 13 Cases and § 49.1  Available in Chapter 13 Cases.

 

2  See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

3  See § 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1  Available and Important in Chapter 13 Cases.

 

4  See discussion beginning at § 49.1  Available in Chapter 13 Cases.

 

5  See § 143.1  In Cases Filed before October 22, 1994 § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

6  See § 143.1  In Cases Filed before October 22, 1994 § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

7  In re Winchester, 46 B.R. 492 (B.A.P. 9th Cir. 1984) (The date of conversion from Chapter 13 controls the exemptions available in Chapter 7 case.). Accord Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984), overruled by Alexander v. Jensen-Carter (In re Alexander), 236 F.3d 431 (8th Cir. 2001); Resendez v. Lindquist, 691 F.2d 397 (8th Cir. 1982), overruled by Alexander v. Jensen-Carter (In re Alexander), 236 F.3d 431 (8th Cir. 2001); Alderman v. Martinson (In re Alderman), 195 B.R. 106 (B.A.P. 9th Cir. 1996); In re Patterson, 190 B.R. 84 (S.D. Tex. 1995), probably overruled by Lowe v. Sandoval (In re Sandoval), 103 F.3d 20 (5th Cir. 1997); In re Bartlett, 149 B.R. 446 (Bankr. W.D. Tex. 1992), probably overruled by Lowe v. Sandoval (In re Sandoval), 103 F.3d 20 (5th Cir. 1997); In re Dyess, 65 B.R. 143 (Bankr. W.D. La. 1986), probably overruled by Lowe v. Sandoval (In re Sandoval), 103 F.3d 20 (5th Cir. 1997); In re Humphreys, 64 B.R. 215 (Bankr. D. Or. 1986); Salamone v. Bank of Commerce, 46 B.R. 19 (Bankr. E.D.N.Y. 1984).

 

8  But see § 48.1  Available and Important in Chapter 13 Cases and § 48.2  BAPCPA and Exemptions.

 

9  See § 46.1  What Is Property of the Chapter 13 Estate? and § 46.2  Property of the Chapter 13 Estate—Changes by BAPCPA.

 

10  735 F.2d 1087 (8th Cir. 1984).

 

11  Curiously, two years before Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984), in Resendez v. Lindquist, 691 F.2d 397 (8th Cir. 1982), the Eighth Circuit refused to permit a Chapter 13 debtor to amend the exemption schedule at conversion to claim undistributed funds held by the Chapter 13 trustee, finding that because the funds were voluntarily paid to the trustee consistent with the plan, it was “unfair” to exempt those funds after conversion to Chapter 7.

 

12  In re Lybrook, 951 F.2d 136, 137–38 (7th Cir. 1991).

 

13  See § 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994.

 

14  239 B.R. 911 (B.A.P. 8th Cir. 1999), aff’d, 236 F.3d 431 (8th Cir. 2001).

 

15  239 B.R. at 915. Accord In re Burley, No. 03-50279, 2003 WL 22947572, at *2–*3 (Bankr. W.D. Mo. Dec. 11, 2003) (unpublished) (Distinguishing Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir.), cert. denied, 469 U.S. 1073, 105 S. Ct. 566, 83 L. Ed. 2d 507 (1984), change in Missouri Homestead Exemption during Chapter 13 case is not available at conversion to Chapter 7 because “the rationale for the court’s holding in Lindberg was superseded by statute. . . . [Reading] 11 U.S.C. § 348(a) together with § 522(b)(2)(A) leads to the inescapable conclusion that the law applicable on the date of filing of the bankruptcy petition controls the exemptions that are available to a debtor.”); In re Beshirs, 236 B.R. 42, 47 (Bankr. D. Kan. 1999) (“[T]he [Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984),] decision appears to this Court to have been flawed under the law in effect when it was issued, and has been further undermined by subsequent changes in the law.”). But see In re Wegner, 243 B.R. 731, 734–37 (Bankr. D. Neb. 2000) (At conversion from Chapter 13 to Chapter 7, debtor can amend exemption schedule to exempt equity in real property that developed as a result of payments during the Chapter 13 case. At the Chapter 13 petition in 1995, residence was worth $42,000. Because the debtor was not married and there was no equity in the home, the debtor could not claim a homestead exemption. Plan was confirmed, and the debtor made payments to the mortgage holder. In 1999, at conversion to Chapter 7, the debt secured by the home had been reduced to $39,900 and the value of the home had appreciated to $51,500. The debtor filed an amended exemption schedule claiming the $11,600 equity. Applying § 348(f)(1)(B), the bankruptcy court concluded that the $42,000 value during the Chapter 13 case controlled. “Since the debtor’s home is valued at $42,000, there is a $9,500 increment of property value that is excluded from this Chapter 7 bankruptcy estate under § 348(f), and it constitutes property of the debtor. . . . Since the $9,500 increment of value is excluded from the estate by § 348(f), it is unnecessary and redundant to assert that the $9,500 is excluded from the estate because it is exempt.” However, the $2,100 difference between the $42,000 value of the house and the $39,900 mortgage that developed because of payments during the Chapter 13 plan became property of the Chapter 7 estate. Rejecting the conclusion of the Bankruptcy Appellate Panel for the Eighth Circuit that Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984), was no longer good law, see Alexander v. Jensen-Carter (In re Alexander), 239 B.R. 911 (B.A.P. 8th Cir. 1999), aff’d, 236 F.3d 431 (8th Cir. 2001), bankruptcy court applied Lindberg: “[A] debtor is permitted to claim a homestead exemption at the time of conversion. . . . Fed. R. Bankr. P. 1009(a) allows the debtor, as a matter of right, to amend bankruptcy schedules any time before the case is closed. Bankruptcy Code sections 348 and 522 do not prohibit the claiming of an exemption at the time of conversion. . . . Because the purposes and consequences of exemptions differ so much in Chapter 13 and Chapter 7, a debtor should be permitted to claim exemptions based on circumstances which exist at the time of conversion from Chapter 13 to Chapter 7. . . . Bankruptcy Rule 1019 provides further support that the date of conversion controls what exemptions may be claimed. . . . [F]or all practical purposes, the $2,100 equity in the debtor’s home which is attributed to debt reduction is included in the Chapter 7 bankruptcy estate as of the date of conversion. The homestead exemption should be determined as of the date the property is included in the Chapter 7 bankruptcy estate. . . . Congress intends to provide Chapter 13 debtors a fresh start as of the date they file a Chapter 13 case. These purposes would be frustrated if a debtor was not permitted to claim an exemption with respect to equity which came into existence in their home after the filing of the Chapter 13 case.”).

 

16  Alexander v. Jensen-Carter (In re Alexander), 236 F.3d at 432–33.

 

17  973 F.2d 862 (10th Cir. 1992).

 

18  Bankruptcy Rule 1009(a) states in part: “A voluntary . . . schedule . . . may be amended by the debtor as a matter of course at any time before the case is closed.”

 

19  973 F.2d at 867. Accord In re Knapp, 283 B.R. 819 (Bankr. W.D. Pa. 2002) (After conversion from Chapter 7 to Chapter 13 and back to Chapter 7, debtor cannot amend to exempt a portion of settlement proceeds when Chapter 7 trustee prejudicially relied on the absence of an exemption to expend substantial time and administrative expense recovering the settlement proceeds.); In re Zenone, 278 B.R. 792 (Bankr. E.D. Ark. 2002) (Failure to claim exemption in pension/IRA/401(k) during Chapter 13 case is fatal to amended exemption after conversion when debtor demonstrated bad faith by withdrawing a portion of the funds for personal use before seeking to amend.); In re Lundy, 216 B.R. 609 (Bankr. E.D. Mich. 1998) (After voluntary conversion from Chapter 13 to Chapter 7, debtor’s bad faith bars amending exemption schedules to add a prepetition personal injury lawsuit. Debtor was aware of lawsuit at the time of filing statements, schedules and exemption claims in prior Chapter 13 case and amended only after being warned by the Chapter 7 trustee that exemption rights could be lost if the debtor failed to properly disclose assets. Debtor’s claim that he failed to read schedules before signing was evidence of dishonesty and bad faith.).

 

20  1 F.3d 1050 (10th Cir. 1993).

 

21  1 F.3d at 1051.

 

22  1 F.3d at 1051.

 

23  1 F.3d at 1051–52. Accord In re Burley, No. 03-50279, 2003 WL 22947572, at *2–*3 (Bankr. W.D. Mo. Dec. 11, 2003) (unpublished) (Distinguishing Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir.), cert. denied, 469 U.S. 1073, 105 S. Ct. 566, 83 L. Ed. 2d 507 (1984), increase in Missouri homestead exemption from $8,000 to $15,000 during Chapter 13 case is not available at conversion to Chapter 7. “[T]he change in Missouri’s homestead exemption law was not effective when the Debtor filed her Chapter 13 petition on March 12, 2003, but was effective when she converted her case to Chapter 7 on September 16, 2003 . . . . After the Eighth Circuit’s decision in Lindberg, Congress amended § 348 in 1994 to clarify that property of the estate in a converted case only consists of property of the estate as of the date of filing of the petition that remains in the possession and control of the debtor at the time of the conversion. . . . [T]he rationale for the court’s holding in Lindberg was superceded by statute. Furthermore, the facts before the court in Lindberg involved a change in circumstances of the debtors, who had changed their homestead before conversion, and not a change in the law. . . . Reading 11 U.S.C. § 348(a) together with § 522(b)(2)(A) leads to the inescapable conclusion that the law applicable on the date of filing of the bankruptcy petition controls the exemptions that are available to a debtor.”); In re Weed, 221 B.R. 256, 258–59 (Bankr. D. Nev. 1998) (On conversion from Chapter 13 to Chapter 7, the state law in effect at the time of the filing of the original Chapter 7 petition controls the exemptions available in the Chapter 13 case. When the debtor’s Chapter 13 petition was filed on August 8, 1996, Nevada law permitted a $1,500 exemption in a car. During the pendency of the Chapter 13 case, the Nevada legislature increased the automobile exemption to $4,500. After this change in Nevada law, the debtor converted to Chapter 7 and filed an amended exemption schedule claiming the higher automobile exemption. Distinguishing Winchester v. Watson (In re Winchester), 46 B.R. 492 (B.A.P. 9th Cir. 1984), and Alderman v. Martinson (In re Alderman), 195 B.R. 106 (B.A.P. 9th Cir. 1996), “11 U.S.C. § 522(b)(2)(A) is clear. Exempt property is defined by the state law that is applicable on the date of the filing of the petition.” Conversion from one chapter to another does not alter the date of filing of the petition. Accordingly, debtor cannot claim a higher automobile exemption after conversion.); In re Toronto, 165 B.R. 746, 758 (Bankr. D. Conn. 1994) (Arguably in dicta, upon conversion from Chapter 13 to Chapter 7, even though the debtors can amend their exemption schedules, they cannot claim exemptions pursuant to a state exemption statute that was changed after the filing of the Chapter 13 petition. “[T]he debtors may elect to employ only exemptions under the law ‘that is applicable on the date of the filing of the petition.’ . . . An exemption resulting from the postpetition amendment of state law may not be claimed in a pending bankruptcy case. . . . Several courts have held that because conversion does not effect a change in the filing date, a change in the substantive exemption law postpetition but preconversion will not be applicable in the converted case.”).

 

24  103 F.3d 20 (5th Cir. 1997).

 

25  103 F.3d at 23.

 

26  See, e.g., In re Lude, 291 B.R. 109, 110–11 (Bankr. S.D. Ohio 2003) (At conversion to Chapter 7, homestead exemption is determined as of the Chapter 13 petition; that the debtors moved during the Chapter 13 case does not entitle the debtors to amend their homestead exemption after conversion. At the Chapter 13 petition, the debtors resided on State Route 800. They also owned a mobile home and acreage on Harper Road that was occupied by purchasers under an installment sale contract. During the Chapter 13 case, the purchasers defaulted and moved out of the mobile home. The debtors then moved into the mobile home and converted to Chapter 7. They amended Schedule C to claim a homestead exemption in the Harper Road property. “The right to claim an exemption from property of the bankruptcy estate arises and is fixed in a voluntary case on the date the petition is filed. . . . Changes in either a debtor’s factual circumstances or the law after the petition date do not change the status of an exemption properly claimed as of the petition filing date. . . . [T]he debtors had no entitlement under Ohio law to a claim for a homestead exemption in the Harper Road property when their case was filed. They were not living in that property . . . and could not have intended to live there at that time because someone else resided in and was purchasing the property. . . . [T]he factual and legal right to claim an exemption from property of a bankruptcy estate is determined in a voluntary case as of the date the petition is filed. If the case later converts to a different chapter, the determinative date continues to be the original petition date. The effect of subsequent changed circumstances must be evaluated in connection with any decision to convert or dismiss and refile a chapter 13 case which has become unfeasible.”).

 

27  In re Patterson, 190 B.R. 84, 85 (S.D. Tex. 1995) (Applying Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984), debtor can claim new exemptions as of the date of conversion from Chapter 13 to Chapter 7. “Debtors filed a Chapter 13 proceeding and listed their residence as their homestead. There was subsequently a foreclosure and sale of the residence and, when the Chapter 13 proceeding was converted to Chapter 7, Debtors amended to claim forty acres of rural property as their exempt homestead. . . . The Trustee initially objected to the amendment, but later withdrew the objection based on In re Lindberg, 735 F.2d 1087 (8th Cir. 1984) in which the Eighth Circuit held the date of conversion of a Chapter 13 case to Chapter 7 determines the exemptions which may be claimed and, therefore, a different homestead may be claimed in the Chapter 7 case than was claimed in the Chapter 13. The Bankruptcy Court rejected the Eighth Circuit’s opinion in Lindberg and, based on the applicable statutory provisions and the Fifth Circuit’s holding in In re Williamson, 804 F.2d 1355 (5th Cir. 1986), decided the exemptions must be determined as of the date of the original filing and not as of the date of conversion. . . . [T]he Bankruptcy Court must be reversed. . . . [T]here are a number of considerations relating to the administration of Chapter 13 cases which override the statutory language. Additionally, the Fifth Circuit in Williamson specifically stated that it was not holding that Lindberg is wrong, only that it was inapplicable to conversions from Chapter 11 to Chapter 7. This Court finds that, if called upon to do so, the Fifth Circuit would likely reach the same decision as the Eighth Circuit in Lindberg. . . . Debtors’ amendment to claim the 40-acre property as exempt homestead is allowed.”), overruled by Lowe v. Sandoval (In re Sandoval), 103 F.3d 20 (5th Cir. 1997).

 

28  See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

29  11 U.S.C. § 348(f)(1)(A). See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

30  Bass: “[A]ny of various families of spiny-finned food and game fishes of fresh or salt water.” Webster’s New World Dictionary 117 (2d ed. 1972).

 

31  The bass boat would not be in the “possession . . . or . . . control” of the debtor for purposes of § 348(f)(1)(A). See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

32  279 B.R. 548 (Bankr. W.D. Mo. 2002).

 

33  See § 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994.

 

34  See above in this section.

 

35  See, e.g., In re Bejarano, 302 B.R. 559, 561–62 (Bankr. N.D. Ohio 2003) (Tax refund that arose after Chapter 13 petition and before conversion to Chapter 7 is not property of the Chapter 7 estate. Chapter 13 case was filed in December 2001and converted to Chapter 7 in September of 2002. The debtor’s tax refund for tax year 2002 did not become property of the Chapter 7 estate after conversion in good faith. “[U]nder § 348(f) the general rule is that when a case is converted from a Chapter 13 to a Chapter 7, any property acquired by the debtor after the commencement of the case, but prior to conversion, does not become property of the estate in the converted case.”). See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA for further discussion of postpetition acquisitions and property of the Chapter 7 estate at conversion from Chapter 13.

 

36  See § 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994.

 

37  See § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

38  See § 143.2  In Cases Filed after October 22, 1994 and § 143.5  Bad-Faith Conversion.

 

39  11 U.S.C. § 348(f)(2).

 

40  See § 48.4  Timing and Procedure, § 48.5  Timing and Procedure Considerations Added by BAPCPA and § 49.2  Procedure for Lien Avoidance.

 

41  503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992).

 

42  See also § 318.1 [ Lien Avoidance at Conversion ] § 144.2  Lien Avoidance at Conversion.

 

43  Fed. R. Bankr. P. 4003(b).

 

44  See § 48.4  Timing and Procedure and § 48.5  Timing and Procedure Considerations Added by BAPCPA.

 

45  173 B.R. 235 (M.D. Fla. 1994).

 

46  173 B.R. at 236–37. Accord Bell v. Bell (In re Bell), 225 F.3d 203, 218 n.20 (2d Cir. 2000) (In dicta, in an opinion holding that conversion from Chapter 11 to Chapter 7 does not trigger a new period within which the Chapter 7 trustee can object to exemptions: “Our holding is limited to conversions from Chapter 11 to Chapter 7. We express no view on the effect of other conversions, particularly those from Chapter 13 to Chapter 7, on the time period to file objections. However, because of the differences in the statutory provisions noted above we disagree with those courts that decline to distinguish between conversions from Chapters 11, 12 or 13. See, e.g., Matter of Bergen, 163 B.R. at 379.”); Moldo v. Clark (In re Clark), 266 B.R. 163, 170–71 (B.A.P. 9th Cir. 2001) (After conversion from Chapter 13, Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992), does not preclude objection to exemptions by the Chapter 7 trustee when the debtor claimed “ambiguous and imprecise” exemption in “‘FIVE LOTS LISTED IN QUALIFIED RETIREMENT PLAN.’” “[A]n ambiguous exemption claim that does not clearly specify the property being claimed exempt invokes no duty to object, and failure to object to such a claim does not render the claimed exemption effective. . . . Since the exemption claim does not by its terms, pertain to either the lots or Debtor’s interest in the trust that owns the lots, it cannot cause such property to become automatically exempt under [Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992),] when no timely objection is made to the claim.”); Alexander v. Jensen-Carter (In re Alexander), 239 B.R. 911, 914 (B.A.P. 8th Cir. 1999) (After conversion from Chapter 13, Chapter 7 trustee has a new 30-day period in which to object to the debtor’s exemptions. “[I]n the context of conversion from chapter 13 to chapter 7, the chapter 7 trustee may timely file an objection to the debtor’s claimed exemptions within 30 days after the creditors’ meeting in the converted chapter 7 case.”), aff’d, 236 F.3d 431 (8th Cir. 2001); Alderman v. Martinson (In re Alderman), 195 B.R. 106, 109–11 (B.A.P. 9th Cir. 1996) (Neither Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992), nor Bankruptcy Rule 4003(b) limits a trustee’s motion to value homestead after conversion from Chapter 13 to Chapter 7 when the exemption claimed by the debtor is ambiguous. In prior Chapter 13 case, debtors claimed homestead exemption in an interest in a partnership. The Chapter 13 trustee did not object to the exemption but objected to confirmation on the ground that the homestead exemption was not valid and thus the plan failed the best-interests-of-creditors test. Bankruptcy court held that failure to timely object to exemption barred § 1325(a)(4) objection at confirmation. Debtors later converted to Chapter 7 and filed amended schedules, but did not change homestead exemption. Chapter 7 trustee did not object to homestead exemption within the time prescribed by Bankruptcy Rule 4003(b). Five months after conversion, Chapter 7 trustee moved “to determine the homestead exemption value.” The exemption claimed by the debtors was the “maximum allowed” under Montana law. “Because we look to the date of conversion to Chapter 7 when determining the debtors’ exemptions, decisions made during the course of the Chapter 13 proceeding with respect to Chapter 13 exemptions have no bearing on the Chapter 7 case. . . . Upon conversion, the exemptions are reconsidered and the trustee or other interested parties are free to make timely objections under Rule 4003(b). Thus, neither the confirmed plan nor the bankruptcy court’s decision in Alderman are [sic] binding. . . . [T]he 30 day provision for objecting to amendments refers only to newly claimed exemptions and the debtors have maintained the same exemption throughout the entire course of these proceedings. Having already decided that the conversion to Chapter 7 allows the court to reconsider exemptions, it is doubtful that that aspect of Rule 4003(b) could be implicated at all. . . . [T]he debtors valued their exemption at the ‘maximum allowed.’ This represents an ambiguity in the amount of the claimed exemption. . . . Where a claimed exemption is ambiguous, it will be resolved against the debtor. . . . [A] motion to value an exemption is not bound by the 30 day bar of Rule 4003.”); In re Fish, 261 B.R. 754, 756 (Bankr. M.D. Fla. 2001) (At conversion, the Chapter 7 trustee has a new time period for objecting to exemptions. “F.R.B.P. 1019 is silent concerning setting the time frame after conversion to challenge the claim of exemptions. Contrary to this silence, F.R.B.P. 1019 does set new time frames for filing proofs of claims, a complaint objecting to discharge, and a complaint to obtain a determination of certain debts. However, this Court is satisfied that this omission is of no consequence and the timeliness of filing an objection is still governed by Rule 4003(b) . . . . [T]he only sensible construction of 11 U.S.C. § 348 and F.R.B.P. 1019 admits no other result except that a new time-frame is triggered by the conclusion of the meeting of creditors held after conversion.”); In re Mims, 249 B.R. 378, 382 (Bankr. D.N.J. 2000) (After conversion from Chapter 7 to Chapter 13 and then back to Chapter 7, second Chapter 7 trustee has new 30-day period in which to object to exemptions. “Code section 348(a) provides . . . that conversion of a case constitutes an order for relief under the chapter to which the case is converted. Therefore, upon conversion of a case a new meeting of creditors is scheduled pursuant to Rule 2003(a) . . . . All of the alternative national versions of [Official Bankruptcy Form 9] for individual debtors state that the deadline for objection to exemptions is 30 days after the conclusion of the meeting of creditors . . . . Rule 1019 is silent as to the effect of conversion or reconversion to chapter 7 on the time to object to exemptions under Rule 4003(b). . . . This court does not consider the arguments in favor of denying a new opportunity to object to exemptions upon conversion to be so compelling as to require judicial addition of an exception to Rule 4003(b) which the rule does not contain.” That the first Chapter 7 trustee successfully objected to the debtor’s exemptions does not affect the conclusion that the second Chapter 7 trustee gets a second attack on exemptions.); In re Davis, 167 B.R. 104, 107 (Bankr. S.D. Ohio 1994) (In dicta, exemption in a Chapter 13 case “does not bind creditors or a chapter 7 trustee if the case converts to chapter 7.” However, Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992), does require a timely objection, else the exemptions claimed in the Chapter 13 case will be binding “for the limited purpose of the ‘best interest of creditors’ test required for confirmation by 11 U.S.C. § 1325(a)(4).”); In re Walker, 153 B.R. 565, 569 n.2 (Bankr. D. Or. 1993) (“If, in the Chapter 13 case, the court had entered an order approving a claim of exemptions, should this be binding on the Chapter 7 trustee in a later conversion to Chapter 7? This would not seem appropriate since the Chapter 7 trustee has not had an opportunity to object.”). See also In re Booth, 259 B.R. 413, 416 (Bankr. M.D. Fla. 2001) (Bankruptcy court enters a “preconfirmation order” in every Chapter 13 case that extends the deadline for objecting to exemptions for 30 days after any conversion. Court acknowledges a split of authority whether there is an automatic 30-day period for objecting to exemptions after conversion under Bankruptcy Rule 4003(b). With respect to the “party in interest” and “cause” requirements in Bankruptcy Rule 4003, court finds authority in § 105(a) to sua sponte enter the preconfirmation order and finds cause “to prevent the potential abuses which otherwise occur absent such an extension.”); In re Toronto, 165 B.R. 746 (Bankr. D. Conn. 1994) (Court discusses but does not decide whether Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992), would preclude the Chapter 7 trustee from objecting when the debtor claimed an exemption in the Chapter 13 schedules that was not available because it was based on a postpetition change in state exemption law but neither the Chapter 13 trustee nor any creditor objected during the prior Chapter 13 case. Court suggests that defects in the service of the schedules during the Chapter 13 case and the availability of § 105(a) might provide the Chapter 7 trustee a strategy for attacking the improper exemption in the prior Chapter 13 case, notwithstanding Taylor.).

 

47  11 U.S.C. § 522(l) provides in part: “Unless a party in interest objects, the property claimed as exempt . . . is exempt.”

 

48  Contrast 11 U.S.C. § 522(c), which provides in part: “Unless the case is dismissed, property exempted . . . is not liable . . . for any debt” (emphasis added).

 

49  See § 48.4  Timing and Procedure and § 48.5  Timing and Procedure Considerations Added by BAPCPA.

 

50  See In re Rogers, 278 B.R. 201, 202 (Bankr. D. Nev. 2002) (At conversion to Chapter 7, questionable exemption in a $95,000 life insurance policy cannot be challenged because it was not objected to during Chapter 13 case. Applying Smith v. Kennedy (In re Smith), 235 F.3d 472 (9th Cir. 2000): “FED. R. BANKR. P. 4003(b) provides that an objection to an exemption must be filed within 30 days after the § 341 meeting of creditors. . . . 11 U.S.C. § 348(a) states that the conversion of a case from one chapter to another does not alter the filing date of the petition. . . . [U]pon conversion, the Bankruptcy Rules specify new deadlines under RULE 3002 . . . RULE 4004 . . . and RULE 4007 . . . but none for objections to exemptions under RULE 4003(b).”); In re Beshirs, 236 B.R. 42 (Bankr. D. Kan. 1999) (Chapter 7 trustee is not entitled to a new opportunity to object to exemptions after conversion; exemptions to which a carpenter was entitled at the filing of the Chapter 13 case control.); DiBraccio v. Ferretti (In re Ferretti), 230 B.R. 883, 887–91 (Bankr. S.D. Fla. 1999) (Debtor’s $1 exemption claim in personal injury lawsuit in Chapter 13 schedules is effective at conversion two and one-half years later; debtor keeps $70,000 settlement. In Chapter 13 schedules, debtor listed an automobile accident valued at $1 and claimed the value ($1) exempt in Schedule C. No one objected. Debtor settled the automobile accident for $70,000. Chapter 13 trustee objected to distribution of net proceeds to debtor. The bankruptcy court applied Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992), and rejected the trustee’s challenge in In re Ferretti, 203 B.R. 796 (Bankr. S.D. Fla. 1996). Two and one-half years later, the debtor converted to Chapter 7 and the Chapter 7 trustee again challenged the exemption. “[N]othing in the Rules or Code appears to require amended schedules at conversion. . . . [N]umerous courts have held that the right to exemptions after conversion should be determined by the facts and law as it existed on the date of the original bankruptcy petition. . . . [T]his court finds that objections to exemptions must also be raised within thirty days of the original filing date. . . . Post-petition creditors cannot unravel the effects of exemptions or other actions. While it may not be clear, based upon the language of 11 U.S.C. § 348(f)(1)(A), that once property is exempt in a Chapter 13 case it is removed from property of the estate in the converted case (as it is in a converted Chapter 11 case), it is nevertheless clear, that if a Chapter 13 debtor’s assets appreciate post-petition, or if the debtor acquires post-petition assets, such added value accrues to the benefit of the debtor. . . . Rule 4003(b) does not create a second opportunity for a Chapter 7 trustee in a converted case to object to the originally filed exemptions, and the court cannot eliminate this risk that faces post-petition creditors.”); In re Ruggles, 210 B.R. 57, 59–60 (Bankr. D. Vt. 1997) (In dicta, “if this case were to convert to one under Chapter 7, a trustee would not be given a second chance to object to Debtor’s claim of exemptions. Debtor’s estate was fixed at the time of the expiration of the thirty-day objection period of Rule 4003(b).”). See also In re Brown, 178 B.R. 722 (Bankr. E.D. Tenn. 1995) (Conversion from Chapter 11 to Chapter 7 does not trigger a new period for objections to exemptions under Bankruptcy Rule 4003(b).).

 

51  See § 142.1  New Schedules, Statement, Meeting of Creditors and Deadlines and § 142.2  Deadlines and Filing Requirements at Conversion after BAPCPA. See also In re Booth, 259 B.R. 413, 416 (Bankr. M.D. Fla. 2001) (Bankruptcy court enters a “preconfirmation order” in every Chapter 13 case that extends the deadline for objecting to exemptions for 30 days after any conversion. Court acknowledges a split of authority whether there is an automatic 30-day period for objecting to exemptions after conversion under Bankruptcy Rule 4003(b). With respect to the “party in interest” and “cause” requirements in Bankruptcy Rule 4003, court finds authority in § 105(a) to sua sponte enter the preconfirmation order and finds cause “to prevent the potential abuses which otherwise occur absent such an extension.”).

 

52  See § 35.4 [ Schedule C—Exemptions ] § 36.10  Schedule C—Exemptions.

 

53  See above in this section, and see §§ 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994 and 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994.

 

54  See §§ 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994 and 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994. See, e.g., In re Wegner, 243 B.R. 731, 734–37 (Bankr. D. Neb. 2000) (At conversion from Chapter 13 to Chapter 7, debtor can amend exemption schedule to exempt equity in real property that developed as a result of payments during the Chapter 13 case. At the Chapter 13 petition in 1995, residence was worth $42,000. Because the debtor was not married and there was no equity in the home, the debtor could not claim a homestead exemption. Plan was confirmed, and the debtor made payments to the mortgage holder. In 1999, at conversion to Chapter 7, the debt secured by the home had been reduced to $39,900, and the value of the home had appreciated to $51,500. The debtor filed an amended exemption schedule claiming the $11,600 equity. Applying § 348(f)(1)(B), the bankruptcy court concluded that the $42,000 value during the Chapter 13 case controlled. “Since the debtor’s home is valued at $42,000, there is a $9,500 increment of property value that is excluded from this Chapter 7 bankruptcy estate under § 348(f), and it constitutes property of the debtor. . . . Since the $9,500 increment of value is excluded from the estate by § 348(f), it is unnecessary and redundant to assert that the $9,500 is excluded from the estate because it is exempt.” However, the $2,100 difference between the $42,000 value of the house and the $39,900 mortgage that developed because of payments during the Chapter 13 plan became property of the Chapter 7 estate. Rejecting the conclusion of the Bankruptcy Appellate Panel for the Eighth Circuit that Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir. 1984), was no longer good law, see In re Alexander, 239 B.R. 911 (B.A.P. 8th Cir. 1999), aff’d, 236 F.3d 431 (8th Cir. 2001), bankruptcy court applied Lindberg: “[A] debtor is permitted to claim a homestead exemption at the time of conversion. . . . Fed. R. Bankr. P. 1009(a) allows the debtor, as a matter of right, to amend bankruptcy schedules any time before the case is closed. Bankruptcy Code sections 348 and 522 do not prohibit the claiming of an exemption at the time of conversion. . . . Because the purposes and consequences of exemptions differ so much in Chapter 13 and Chapter 7, a debtor should be permitted to claim exemptions based on circumstances which exist at the time of conversion from Chapter 13 to Chapter 7. . . . Bankruptcy Rule 1019 provides further support that the date of conversion controls what exemptions may be claimed. . . . [F]or all practical purposes, the $2,100 equity in the debtor’s home which is attributed to debt reduction is included in the Chapter 7 bankruptcy estate as of the date of conversion. The homestead exemption should be determined as of the date the property is included in the Chapter 7 bankruptcy estate. . . . Congress intends to provide Chapter 13 debtors a fresh start as of the date they file a Chapter 13 case. These purposes would be frustrated if a debtor was not permitted to claim an exemption with respect to equity which came into existence in their home after the filing of the Chapter 13 case.”), probably overruled in part by Alexander v. Jensen-Carter (In re Alexander), 236 F.3d 431 (8th Cir. 2001).

 

55  See discussion beginning at § 49.1  Available in Chapter 13 Cases§ 50.1  Turnover of Property and § 51.1  Can Debtor Sue and Be Sued?. See, e.g., Salamone v. Bank of Commerce, 46 B.R. 19 (Bankr. E.D.N.Y. 1984) (Court values the debtors’ equity in their homestead for purposes of § 522(f) on the date of conversion.).