Exemptions

by on

Bankruptcy-Specific Exemptions Found Constitutional by Tenth Circuit BAP

The Bankruptcy Appellate Panel for the Tenth Circuit found that Kansas’s bankruptcy-only exemption scheme, under which a debtor in bankruptcy is permitted to exempt his Earned Income Tax Credit, is constitutional. Williamson v. Westby (In re Westby), No. 12-27 (B.A.P. 10th Cir. Feb. 4, 2013). [Read more…] about Bankruptcy-Specific Exemptions Found Constitutional by Tenth Circuit BAP

by on

Bankruptcy-Specific Exemptions Found Constitutional

In a comprehensive opinion, the Sixth Circuit today joined the Fourth Circuit and upheld bankruptcy-specific exemptions against a challenge based on the Bankruptcy and Supremacy Clauses of the Constitution. Richardson v. Schafer (In re Schafer), No. 11-1340 (6th Cir. Aug. 20, 2012) (rev’g 455 B.R. 590 (B.A.P. 6th Cir. 2011)). See also Sheehan v. Peveich, 574 F.3d 248, 252 (4th Cir. 2009). [Read more…] about Bankruptcy-Specific Exemptions Found Constitutional

by on

Third Circuit Allows Trustee Retention of Post-Discharge Appreciation

Relying on Schwab v. Reilly, 130 S.Ct. 2652 (2010), the Third Circuit has found that the Chapter 7 trustee is entitled to the value of future appreciation in an asset the debtor has exempted under the wildcard exemption to the extent the value exceeds the dollar amount exempted. In re Orton, No. 11-4157 (3rd Cir. July 20, 2012) (affirming the decisions of the bankruptcy and district courts for the Western District of Pennsylvania). [Read more…] about Third Circuit Allows Trustee Retention of Post-Discharge Appreciation

by on

Seventh Circuit to Address Inherited IRAs

On May 4, NACBA filed an amicus brief in the consolidated cases of Rameker v. Clark, No. 12-1241 and Adili v. Clark, No. 12-1255 (7th Cir.) on the issue of whether a debtor may exempt an inherited IRA under Section 522(b)(3)(C). NACBA has been actively involved in the successful presentation of this issue in courts around the country, arguing that the plain language of the Bankruptcy Code and the Internal Revenue Code militates in favor of recognizing the exemption. The Bankruptcy Code exempts from the debtor’s estate “retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under Sectiond 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.” Section 408(e) of the IRC provides that any IRA, including one that is inherited from a non-spouse, is exempt from taxation.

Recently, debtors obtained favorable outcomes on this issue in the Fifth Circuit, In re Chilton, No. 11-40377 (5th Cir., March 12, 2012) (exemption under section 522(d)(12)), and the Bankruptcy Appellate Panel for the Ninth Circuit, In re Hamlin, No. 11-1083 (B.A.P. 9th Cir. February 21, 2012). NACBA has also filed an amicus brief on this issue in the Bankruptcy Court District of Massachusetts. In re Seeling, No. 11-30957 (Bankr. D. Mass.)

by on

Bankruptcy-Only Exemptions Constitutional

In a lengthy and comprehensive opinion, Judge Karlin of the Bankruptcy Court of Kansas overruled the trustee’s objection to the debtor’s claimed exemption for earned income tax credits under a state bankruptcy-only exemption scheme. In re Westby, No. 11-40986, 2012 Bankr. LEXIS 1428, (Bankr. Kan. April 4, 2012). The trustee had challenged the exemption in Westby and several other cases based on the contention that the state exemption violated the Uniformity and Supremacy Clauses of the U.S. Constitution. [Read more…] about Bankruptcy-Only Exemptions Constitutional