from the United States Bankruptcy Court for the Southern
District of Texas
JOLLY, SMITH, and GRAVES, Circuit Judges.
GRADY JOLLY, CIRCUIT JUDGE.
appeal presents questions relating to the scope of a Chapter
13 debtor's claimed exemptions under § 522 of the
Bankruptcy Code. The bankruptcy court certified this direct
appeal pursuant to 28 U.S.C. § 158(d)(2). We answer the
certified question only, leaving the other issues the parties
raise for another case on another day.
December 1, 2015, the Advisory Committee on Bankruptcy Rules
adopted a new Schedule C form. This form allows Chapter 13
debtors, by checking the appropriate box on the form in the
column titled "Amount of the exemption you
claim, " to exempt from the bankruptcy estate "100%
of fair market value, up to any applicable statutory
limit" of certain property. When filing her Schedule C,
Debtor Yemisi Ayobami checked this box indicating her intent
to exempt "100% of fair market value, up to any
applicable statutory limit" for 14 of her 17 exemptions.
In the column titled "Specific laws that allow
exemption, " Ayobami identified 11 U.S.C. §§
522(d)(1), (3)-(5), which cap the value of a debtor's
interest that may be exempted at a designated statutory
Ayobami's Schedule C filing, the parties engaged in
multiple rounds of objections, hearings, and orders.
Ultimately, the district court allowed Ayobami's amended
exemptions that claimed "100% of fair market value, up
to any applicable statutory limit" of certain assets,
but only after she also listed a claimed amount within the
statutory limit in the "Specific laws that allow
exemption" column. The parties then jointly requested
certification to directly appeal the court's order
allowing Ayobami's amended exemptions. The bankruptcy
court certified a specific question for appeal, and this
court granted such leave.
bankruptcy court certified the following question: "May
a debtor claiming federal exemptions under § 522 of the
Bankruptcy Code ever exempt a 100% interest in an
asset?" In re Ayobami, No. 15-35488, 2016 WL
3708761, at *2 (Bankr.S.D.Tex. July 1, 2016) (emphasis
added). The answer is yes. A debtor may do so in certain
cases because the relevant provisions of § 522 cap the
value of the asset a debtor may exempt, not the debtor's
interest in that asset.
commencement of bankruptcy triggers the creation of the
bankruptcy estate, which includes "all legal or
equitable interests of the debtor in property as of the
commencement of the case." 11 U.S.C. § 541(a)(1)
(2012). A debtor is allowed, however, to exempt her interest
in certain assets from the property of the estate under 11
U.S.C. § 522(d). A "party in interest, " such
as a trustee, may object to the debtor's claimed
exemptions. 11 U.S.C. § 522(l) (2012). And
"[u]nless a party in interest objects, the property
claimed as exempt . . . is exempt." Id.
the trustee, argues that a debtor may never exempt a
100% interest in an asset under §§ 522(d)(1)-(6)
because allowing such an exemption effectively removes the
entire asset from the bankruptcy estate. And because the
relevant subsections of § 522(d) place a monetary-value
cap on the claimed exemptions, Peake argues, the exemption
itself must be "limited to the specific amount, not
[become] an indefinite [monetary] exemption in-kind to be
determined at a later date."
the bankruptcy court and Peake's counsel point us to
§ 522 of the Bankruptcy Code in addressing the legal
question here. The relevant exemptions set forth in §
522(d) of the Bankruptcy Code are phrased as follows: the
debtor may exempt her interest or aggregate interest in
certain property "not to exceed [a designated amount] in
value." 11 U.S.C. §§ 522(d)(1)-(6). Thus
§ 522(d) limits the value that may be exempted,
not the debtor's interest that may be exempted.
On its face, exempting a 100% interest in an asset
does not violate any provision of § 522. See also
Schwab v. Reilly, 560 U.S. 770, 794 n.21 (2010)
(contemplating a scenario where a debtor "claimed as
exempt a 'full' or '100%' interest" in
an asset). Of course, there are circumstances where
exempting a 100% interest in an asset would not be allowable
under § 522, e.g., when the statutory cap is exceeded.
But addressing only the certified question before us, we hold
that if, when considering any other exemptions claimed, the
debtor's entire interest in an asset is less than or
equal to any dollar-value limitation imposed by the
applicable § 522(d) subsection, then the debtor may
exempt her 100% interest in that asset.
the certified question does not ask us to determine, and thus
we decline to address, is whether claiming a 100% interest in
an asset as exempt allows the debtor to "walk away"
with the asset itself and potentially benefit from any
post-petition appreciation of it. This concern seems to be at
the heart of the question that the parties wish us to
address. Although we do not address the question today, we
note that the Supreme Court has found
"questionable" whether "a claim to exempt the
full value of the equipment would, if unopposed, ...