How Far Can We Push Law v. Siegel?
I was casually reading a couple of bankruptcy cases and I came across a case where the debtor reopens his case to amend his exemptions. The trustee objects to the exemption based on an argument that when the case was closed, the Debtors lost their ability to amend their exemptions as a matter of course under Rule 1009(a) of the Federal Rules of Bankruptcy Procedure. When you read Rule 1009(a), it says (in part),
“A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.”
But, what happened to Law v. Siegel? In that case, the U.S. Supreme Court said that the debtor may amend his exemptions at any time. In particular, Scalia’s opinion contains the following:
“But even assuming the Bankruptcy Court could have revisited Law’s entitlement to the exemption, §522 does not give courts discretion to grant or withhold exemptions based on whatever considerations they deem appropriate. Rather, the statute exhaustively specifies the criteria that will render property exempt.”
Nothing in Section 522 says that it no longer applies to cases which are closed. Scalia even went on to state that:
“the subject of “may exempt” in §522(b) is the debtor, not the court, so it is the debtor in whom the statute vests discretion. A debtor need not invoke an exemption to which the statute entitles him; but if he does, the court may not refuse to honor the exemption absent a valid statutory basis for doing so.”
If you would like to read this case, you can find it for free via IN RE LIBBUS. This was published on the same day my daughter was born (March 23, 2018).
An original blog post written by our Partner Attorney, Michael Avanesian, Esq.
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