Cite as: Keith M. Lundin, Lundin On Chapter 13, § 36.10, at ¶ ____, LundinOnChapter13.com (last visited __________).
Exemptions are claimed on Schedule C to Official Bankruptcy Form 6 by describing the property claimed exempt, citing a specific law that provides for the exemption, valuing the property claimed exempt and listing the current market value of the property without deduction for the exemption. The debtor must indicate in Schedule C by a check box whether the debtor is claiming “federal” exemptions (11 U.S.C. § 522(b)(2)) or “state” exemptions (11 U.S.C. § 522(b)(3)). Then the specific state or federal statute creating the exemption must be stated.1 In a joint case, separate exemption schedules should be filed for each debtor. The value claimed exempt should be carefully calculated—it may be important to the best-interests-of-creditors test for confirmation under 11 U.S.C. § 1325(a)(4).2 Although some reported opinions contain gratuitous comments to the contrary,3 claiming exemptions in a Chapter 13 case is very important business. Debtor’s counsel should take the task seriously and complete Schedule C with great care.
Claiming exemptions in Schedule C is particularly important after the Supreme Court’s declaration in Taylor v. Freeland & Kronz4 that Bankruptcy Rule 4003(b) prohibits a creditor or trustee from challenging the debtor’s exemptions after 30 days after the conclusion of the meeting of creditors. Taylor has important implications for Chapter 13 practice.5 Careful identification of exemptions on Schedule C to Official Bankruptcy Form 6 is the predicate for the protection of a debtor’s exemptions under Bankruptcy Rule 4003(b) as interpreted in Taylor.
Assets of unknown value in which the debtor wishes to claim an exemption create special problems for Chapter 13 debtors. For example, if the debtor has a workers’ compensation claim that has not been reduced to a final award, the debtor has to list the claim as an asset on Schedule B and the debtor will want to claim whatever exemption is allowed under applicable law; but the precise numbers may not be known for purposes of filling in Schedule C. Be as accurate as possible even if precise numbers are not known. List the asset. Value the exemption, for example, “maximum allowed by (state law).” List the current market value as “unknown” or “in litigation.” Claiming a less than certain exemption with as much specificity as possible at the front end of the Chapter 13 case best positions the debtor to realize the maximum exemption available when the unknowns become known during administration of the case.
As a result of limitations on homestead exemptions contained in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),6 a check box was added to Schedule C, requiring the debtor to broadcast that an exemption is claimed in excess of $136,875.7 Be especially aware that BAPCPA dramatically changed the “domicile” rules that determine applicable state law for exemption purposes.8
1 See § 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1 Available and Important in Chapter 13 Cases.
2 See § 161.1 [ Exemption Issues ] § 90.2 Exemption Issues.
3 See § 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1 Available and Important in Chapter 13 Cases.
4 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992).
5 See §§ 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1 Available and Important in Chapter 13 Cases, 49.2 [ Timing and Procedure ] § 48.4 Timing and Procedure and 50.1 [ Available in Chapter 13 Cases ] § 49.1 Available in Chapter 13 Cases–51.2 [ Protecting Lienholder after Lien Avoidance ] § 49.5 Protecting Lienholder after Lien Avoidance.
6 See § 407.1 [ New Exemptions and New Exemption Limitations ] § 48.3 Exemptions and Exemption Limitations Added by BAPCPA.
7 See 11 U.S.C. § 522(p) and (q), discussed in §§ 407.1 [ New Exemptions and New Exemption Limitations ] § 48.3 Exemptions and Exemption Limitations Added by BAPCPA and 547.1 [ Delay of Discharge: § 522(q)(1) and Pending Proceedings ] § 156.6 Delay of Discharge: § 522(q)(1) and Pending Proceedings. See also § 11.1 [ Dollar Amounts ] § 14.1 Dollar Amounts for discussion of the periodic adjustment of monetary amounts provided in 11 U.S.C. § 104(b). The amount under Schedule C, which is tied to § 522(p) and (q), was automatically adjusted, effective April 1, 2010, to $146,450.
8 See 11 U.S.C. § 522(b)(3), discussed in § 406.1 [ New Domicile Rules ] § 48.6 Domicile Rules after BAPCPA.