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1 The Honorable T.M. Weaver, United States Bankruptcy Judge, United States Bankruptcy Court for the Western District of Oklahoma, sitting by

designation.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE ALLISON PHILLIPS

CAMPBELL, also known as Allison

Phillips,

Debtor.

BAP No. WY-03-057

ALLISON PHILLIPS CAMPBELL, 

Appellant,

Bankr. No. 03-20145

 Chapter 13

v.

MARK R. STEWART, Trustee,

Appellee.

JUDGMENT

Filed August 16, 2004

Before MICHAEL, THURMAN, and WEAVER1

, Bankruptcy Judges.

This case originated in the United States Bankruptcy Court for the District

of Wyoming.

The judgment of that court is VACATED.

For the Panel:

Barbara A. Schermerhorn, Clerk of Court

By:

Deputy Clerk

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 1 of 17
1 The Honorable T.M. Weaver, United States Bankruptcy Judge, United States Bankruptcy Court for the Western District of Oklahoma, sitting by

designation.

FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

August 16, 2004

Barbara A. Schermerhorn

Clerk PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE ALLISON PHILLIPS

CAMPBELL, also known as Allison

Phillips,

Debtor.

BAP No. WY-03-057

ALLISON PHILLIPS CAMPBELL, 

Appellant,

Bankr. No. 03-20145

 Chapter 13

v. OPINION

MARK R. STEWART, Trustee,

Appellee.

Appeal from the United States Bankruptcy Court for the District of Wyoming

Georg Jensen of the Law Offices of Georg Jensen, Cheyenne, Wyoming, for

Appellant.

Mark R. Stewart, Chapter 13 Trustee, Cheyenne, Wyoming, pro se.

Before MICHAEL, THURMAN, and WEAVER1

, Bankruptcy Judges.

THURMAN, Bankruptcy Judge.

The Chapter 13 debtor timely appeals a final Order of the United States

Bankruptcy Court for the District of Wyoming denying her claim of a homestead

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 2 of 17
2 28 U.S.C. § 158(a)(1); Fed. R. Bankr. P. 8002(a).

3 28 U.S.C. § 158(c); Fed. R. Bankr. P. 8001(e).

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exemption.2 The parties have consented to this Court’s jurisdiction because they

have not elected to have the appeal heard by the United States District Court for

the District of Wyoming.3

 For the reasons stated below, the bankruptcy court’s

Order is VACATED. 

I. Background

The debtor was unable to obtain financing to purchase a house. As a result,

her former spouse, Kim Andrew Campbell (Campbell), purchased a house located

in Cheyenne, Wyoming for her to use. The debtor contributed funds that she had

received from the sale of the couple’s former marital home as a down payment on

the house, and Campbell financed the remainder of the purchase price. Campbell

did not live in the house, but rather leased it to the debtor, and the debtor paid

him rent. Campbell gave the debtor an irrevocable “Option to Purchase” the

home from him in consideration for her contribution of the down payment. The

Option to Purchase allowed the debtor to purchase the home when she was able to

obtain the necessary financing. 

When the debtor filed her Chapter 13 petition in January 2003, she

continued to live in Campbell’s house pursuant to the lease arrangement. She had

not exercised the Option to Purchase. 

The debtor listed the house as exempt under Wyoming homestead law in

her Schedules. The Chapter 13 trustee (Trustee) timely objected to the claimed

exemption, asserting that it should be disallowed because the debtor did not own

the house (Exemption Objection). In response, the debtor conceded that she did

not have a legal interest in the house, but maintained that she was entitled to a

homestead exemption based on her equitable interest therein. 

In the meantime, the bankruptcy court entered an order confirming the

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 3 of 17
4 Unless otherwise stated, all future statutory references in the text of this Opinion are to title 11 of the United States Code.

5 Exemption Order at 3, in Appellant’s Appendix at 15 (citations omitted).

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debtor’s Chapter 13 plan. Several months later, the bankruptcy court held a

hearing on the Exemption Objection. At that hearing, the debtor maintained that

the bankruptcy court lacked jurisdiction to consider the Exemption Objection. 

She argued that the Exemption Objection was moot because her Chapter 13 plan

had been confirmed, and under the terms of her plan and 11 U.S.C. § 1327(b)4

 she

had been revested of all property of the estate. 

The bankruptcy court entered an “Order on Trustee’s Objection to the

Debtor’s Claim of Exemption,” sustaining the Trustee’s Exemption Objection,

and overruling the debtor’s claim of exemption (Exemption Order). In so doing,

the bankruptcy court expressly rejected the debtor’s jurisdictional challenge. 

Acknowledging the effect of the debtor’s confirmed Chapter 13 plan, the

bankruptcy court stated that the Exemption Objection was not rendered moot

because:

[I]f [the debtor] were to convert this case to a chapter 7 case, a chapter 7 trustee would not have the ability to object to the

homestead exemption claimed. In re Ferretti, 230 B.R. 883, 891

(Bankr. S.D. Fla. 1999), aff’d Dibraccio v. Ferretti, 268 F.3d 1065

(11th Cir. 2001); but see In re Alexander, 236 F.3d 431, 432 (8th Cir. 2001). Thus, the exemption would be deemed valid regardless of its

factual and legal underpinnings to the possible detriment of the

estate.5

 

The debtor’s appeal of the Exemption Order followed. After considering

the papers filed and hearing oral argument, this Court entered an Order of Limited

Remand, remanding the case to the bankruptcy court for the purpose of entering

supplemental findings of fact stating the value of the property claimed by the

debtor as exempt. We requested supplemental findings because the record did not

determine the value of the property to the estate and, absent value, no case or

controversy existed on which to base jurisdiction. 

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 4 of 17
6 Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94-95 (1998) (“On every writ of error or appeal, the first and fundamental question is that of

jurisdiction, first, of this court, and then of the court from which the record

comes. This question the court is bound to ask and answer for itself, even when

not otherwise suggested, and without respect to the relation of the parties to it.”)

(internal quotations omitted); Bender v. Williamsport Area Sch. Dist., 475 U.S.

534, 541 (1986) (“[E]very federal appellate court has a special obligation to

satisfy itself not only of its own jurisdiction, but also that of the lower courts in a

cause under review, even though the parties are prepared to concede it.” (internal

quotations omitted)), quoted in Southwestern Bell Telephone Co. v. Brooks Fiber Communications of Okla., Inc., 235 F.3d 493, 496 (10th Cir. 2000).

7 See, e.g., Steel Co., 523 U.S. at 110; Arizonians for Official English v.

Arizona, 520 U.S. 43, 46 (1997); U.S. Bancorp Mortg. Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994); Bender, 475 U.S. at 549.

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The bankruptcy court entered a Supplemental Order on remand,

establishing that the property has a value of approximately $15,500. This being

the case, we are compelled to address the more difficult jurisdictional question

presented in this case--whether the bankruptcy court erred in concluding that it

had jurisdiction to consider the Exemption Objection. For the reasons stated

below, we conclude that the bankruptcy court lacked jurisdiction to enter the

Exemption Order. 

II. Discussion

Other than to acknowledge the debtor’s jurisdictional argument below, the

parties have not raised any issues regarding jurisdiction. We must, however,

satisfy ourselves that the bankruptcy court did not err in determining that it had

jurisdiction to enter its Exemption Order prior to considering the merits of this

appeal.6

 For the reasons stated herein, we conclude that the bankruptcy court

lacked jurisdiction over the Exemption Objection; accordingly, we will not review

the merits of the resulting Exemption Order. Rather, the Exemption Order must

be vacated.7

Article III of the United States Constitution limits the jurisdiction of

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 5 of 17
8 U.S. Const., art. III, § 2; see generally 19 Moore’s Fed. P. ¶ 205.02 (3rd ed. 2003).

9 See, e.g., Steel Co., 523 U.S. at 101 (advisory opinions have been “disapproved by this Court from the beginning.” (citing cases)); Church of Scientology of California v. United States, 506 U.S. 9, 12 (1992) (federal courts cannot make rules of law that do not affect the case before it); see generally 19

Moore’s Fed. P. ¶ 205.02[3][b] (3rd ed. 2003).

10 Renne v. Geary, 501 U.S. 312, 321-23 (1991); Lujan v. National Wildlife Fed’n, 497 U.S. 871, 890-92 (1990); see, generally, 19 Moore’s Fed. P.

¶ 205.02[3] (3rd ed. 2003).

11 When questioned on the importance of this appeal in this case, the parties both indicated that a ruling in this appeal is desired, not necessarily to resolve a

dispute between the debtor and the Trustee, but rather to establish a rule of law as

to the scope of the Wyoming homestead exemption for future cases. Under the

prohibition against advisory opinions, this is not a basis for federal court

jurisdiction. We need not address this Court’s appellate jurisdiction, however,

because our decision is that the bankruptcy court lacked jurisdiction to enter the

Exemption Order in the first instance.

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federal courts to the adjudication of actual “cases” and “controversies.”8

Accordingly, federal courts cannot give advisory opinions that do not have an

impact on the parties to the controversy,9

 nor can they address issues are not

germane to a real dispute between the parties before the court.10 

The parties agree that a decision in this appeal as to the merits of the

Exemption Order will have no impact on the debtor’s Chapter 13 case, but they

have raised no jurisdictional challenges.11 The bankruptcy court’s jurisdictional

ruling is premised upon the belief that the merits of the Exemption Objection

must be decided now because objections to the allowance or disallowance of the

debtor’s claim of exemption would be time-barred under Federal Rule of

Bankruptcy Procedure 4003(b) if the case were ever converted to Chapter 7. As

discussed below, the bankruptcy court’s conclusion is based on good law. Yet,

we disagree with that non-binding law. We hold that the time to object to claimed

exemptions under Bankruptcy Rule 4003(b) recommences when a Chapter 13 case

is converted to Chapter 7. Accordingly, it was unnecessary for the bankruptcy

court to resolve the Exemption Objection given that, but for the potential

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 6 of 17
12 Taylor v. Freeland & Kronz, 503 U.S. 638 (1992). 

13 Fed. R. Bankr. P. 4003(b).

14 503 U.S. at 638.

15 Id. at 644.

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conversion of the case to Chapter 7, its resolution would have no effect in the

Chapter 13 case. With no live controversy existing in the Chapter 13 case, the

bankruptcy court lacked jurisdiction to consider the Exemption Objection. The

Exemption Order sustaining the Exemption Objection, having been entered by a

court without jurisdiction, must be vacated.

It is well-established that a debtor may claim property exempt pursuant to

§ 522(b), and that absent timely objection, the property is exempt under § 522(l)

regardless of the validity of the claimed exemption.12 The timeliness of an

objection to a debtor’s claim of exemption is not addressed in § 522(l) or

anywhere else in the Bankruptcy Code. Rather, it is set forth in Bankruptcy Rule

4003(b), which provides, in relevant part, that:

A party in interest may file an objection to the list of property claimed as exempt only within 30 days after the meeting of creditors

held under § 341(a) is concluded or within 30 days after any

amendment to the list or supplemental schedules is filed, whichever

is later.13

Under Bankruptcy Rule 4003(b), therefore, parties in interest have a thirty-day

period after the conclusion of a meeting of creditors to object to a debtor’s claim

of exemption. In Taylor v. Freeland & Kronz,

14 the United States Supreme Court

held that this thirty-day period was strictly interpreted in conjunction with

§ 522(l) to bar any objections not made within that period of time. It stated:

“Deadlines may lead to unwelcome results, but they prompt parties to act and they

produce finality.”15

Not expressly addressed by the Bankruptcy Code or the Bankruptcy Rules,

and not addressed at all by the Court in Taylor or any decision of our Court of

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 7 of 17
16 See, e.g., In re Alexander, 236 F.3d 431, 432 (8th Cir. 2001) (per curiam);

In re Weissman, 173 B.R. 235, 237 (M.D. Fla. 1994); In re Mims, 249 B.R. 378,

383 (Bankr. D. N.J. 2000); In re de Kleinman, 172 B.R. 764 (Bankr. S.D.N.Y. 1994); In re Jenkins, 162 B.R. 579 (Bankr. M.D. Fla. 1993); see also In re Bell, 225 F.3d 203, 222 (2d Cir. 2000) (Moran, J., dissenting) (conversion from

Chapter 11 to Chapter 7); In re Lang, 276 B.R. 716 (Bankr. S.D. Fla. 2002) (same); In re Wolf, 244 B.R. 754 (Bankr. E.D. Mich. 2000) (same); In re

Havanec, 175 B.R. 920 (Bankr. N.D. Ohio 1994) (same); In re Bergen, 163 B.R.

377 (Bankr. M.D. Fla. 1994) (same); In re Leydet, 150 B.R. 641 (Bankr. E.D. Va. 1993) (same).

17 11 U.S.C. § 348(a).

18 Fed. R. Bankr. P. 4003(b).

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Appeals, however, is how the thirty-day deadline set forth in Bankruptcy Rule

4003(b) operates when a Chapter 13 case has been converted to Chapter 7. There

is a split of authority on this issue. 

Under one line of cases, designated as a “minority rule,” the thirty-day

period to object to a debtor’s claimed exemptions recommences when a Chapter

13 case is converted to Chapter 7.16 Courts adopting this minority rule state it is

supported by relevant Bankruptcy Code and Bankruptcy Rule provisions. In

particular, under § 348(a), the conversion of a Chapter 13 to Chapter 7

“constitutes an order for relief under the chapter to which the case is converted,

but . . . does not effect a change in the date of the . . . order for relief.”17 

Because the conversion of a Chapter 13 case to Chapter 7 constitutes an order for

relief, a new meeting of creditors must be called in the converted Chapter 7 case

pursuant to § 341(a) and Federal Rule of Bankruptcy Procedure 2003(a). The

objection period set forth in Bankruptcy Rule 4003(b) runs within thirty days

after the “meeting of creditors held under § 341(a) is concluded . . . .”18 Given

that there is nothing in Bankruptcy Rule 4003(b) limiting the “meeting of

creditors” to the initial meeting of creditors in the Chapter 13 case, courts

adopting the minority view hold that parties in interest have thirty days from the

conclusion of the meeting of creditors called in the converted Chapter 7 case to

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 8 of 17
19 See discussion infra.

20 See, e.g., In re Rogers, 278 B.R. 201 (Bankr. D. Nev. 2002); In re Ferretti, 230 B.R. 883 (Bankr. S.D. Fla. 1999), aff’d without opinion, Dibraccio v.

Ferretti, 268 F.3d 1065 (11th Cir. 2001); In re Beshirs, 236 B.R. 42 (Bankr. D. Kan. 1999); see also In re Bell, 225 F.3d 203 (2d Cir. 2000) (conversion from Chapter 11 to Chapter 7); In re Smith, 235 F.3d 472 (9th Cir. 2000) (same); In re

Page, 240 B.R. 548 (Bankr. W.D. Mich. 1999) (same); In re Halbert, 146 B.R.

185 (Bankr. W.D. Tex. 1992) (same).

21 Fed. R. Bankr. P. 1019(2).

-8-

object to a debtor’s claimed exemption. Under this view, exemptions claimed by

a debtor in his or her Chapter 13 case may be objected to within thirty days of the

conclusion of the meeting of creditors in the Chapter 13 case, or within thirty

days of the conclusion of the meeting of creditors in the converted Chapter 7 case. 

Courts adhering to the minority view also support it with policy and fairness

considerations.19

The other line of cases, designated as the “majority view,” holds that the

thirty-day objection period in Bankruptcy Rule 4003(b) does not commence anew

upon the conversion of a Chapter 13 case to Chapter 7.20 The majority view is

based in part on Bankruptcy Rule 1019(2), which states, in relevant part, that: “A

new time period for filing claims, a complaint objecting to discharge, or a

complaint to obtain a determination of dischargeability of any debt shall

commence pursuant to Rules 3002, 4004, or 4007 . . . .”21 Because the thirty-day

objection period in Bankruptcy Rule 4003(b) is not mentioned in Bankruptcy Rule

1019(2), courts adopting the majority view hold that it may not be reset upon the

conversion of a case. The refusal of some courts to recommence the thirty-day

period in Bankruptcy Rule 4003(b) is also based in part on the fact that § 348(a)

states that conversion of a case does not change the date of the order for relief

and, therefore, all deadlines, such as the exemption objection deadline, should not

be affected by conversion. Additionally, some courts reason that to allow a new

objection period upon conversion is not compatible with § 522(l) because, under

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 9 of 17
22 Although some of the case cited above for the opposing points of view are decided in the context of the conversion of a Chapter 11 case to Chapter 7, our

Opinion is limited to the case before us–a Chapter 13 case which potentially

could be converted to Chapter 7.

23 See nn.8-10 supra, and accompanying text.

24 See discussion infra at nn.36-39 (discussing why parties in interest in a Chapter 13 case would have no reason to object to a questionable claim of

exemption).

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that section, the property in the preconverted case is exempt and it cannot be

brought back into the estate. Finally, courts adhering to the majority view point

to the importance of finality in exemption matters articulated in Taylor. This is

the view that was adopted by the bankruptcy court. 

Being governed by no binding precedent, we adopt the minority view,

holding that the thirty-day period to object to a debtor’s claimed exemption in

Bankruptcy Rule 4003(b) recommences upon the conversion of a Chapter 13 case

to a Chapter 7 case.22 Our decision is based on principles of federal jurisdiction,

applicable provisions of the Bankruptcy Code and the Bankruptcy Rules, policy

considerations, some of which implicate federal jurisdiction, fairness, due

process, and common sense. 

The procedural posture of this case, in which the bankruptcy court

preemptively dealt with whether the deadline in Bankruptcy Rule 4003(b) would

apply if the debtor’s case were ever converted to Chapter 7, illustrates that

application of the majority view prospectively runs contrary to basic principles of

federal jurisdiction.23 To embrace the majority view means that trustees or other

parties in interest must object to a questionable claim of exemption, even if it

serves no purpose given the facts of the case as they presently exist.24 They must

plan, as the Trustee has in this case, for a future contingent event, i.e., possible

conversion of the case, and the impact that the claimed exemption would have in

the converted case. Furthermore, not only must they plan for a potential

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 10 of 17
25 Preclusion principles could bar relitigation of an objection to a claimed exemption in a converted Chapter 7 case if an objection was resolved in the

(continued...)

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conversion, but they must litigate the objection based on some unknown facts and

for an uncertain purpose. This is contrary to basic principles of federal

jurisdiction. Such concerns were not addressed in any of the published decisions

adopting the majority view because, in all of those cases, the courts were deciding

whether the trustee in the already converted case was barred from objecting to a

debtor’s claimed exemptions. This case shows why the majority view, applied in

a different procedural context, renders an undesirable result.

In addition to concerns about jurisdiction, we agree with the minority

view’s interpretation of the existing authorities. The most relevant authorities in

this dispute are § 522(l) and Bankruptcy Rule 4003(b). As noted above, § 522(l)

says nothing about the procedure for objecting to a debtor’s claimed exemption. 

Rather, it states that unless an objection to a claim of exemption is made, the

property so claimed is exempt. The objection referred to in § 522(l) must be

timely under Bankruptcy Rule 4003(b), which runs its deadline for exemption

objections from the conclusion of a meeting of creditors. The conversion of a

Chapter 13 case to Chapter 7 requires the United States trustee to call a new

meeting of creditors under § 341(a), § 348(a), and Bankruptcy Rule 2003(a). 

Nothing in Bankruptcy Rule 4003(b) limits the time to object to claimed

exemptions to any particular meeting of creditors, whether it be the initial

meeting of creditors in the Chapter 13 case or the later meeting of creditors in the

converted Chapter 7 case. There being no express limitation, the most logical

reading of Bankruptcy Rule 4003(b) is that the thirty-day objection period runs

from the conclusion of the meeting of creditors in the Chapter 13 case, and from

the conclusion of the meeting of creditors called in the converted Chapter 7

case.25 As stated by one court adopting the minority view: “Since the Code fails

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 11 of 17
25 (...continued) Chapter 13 case.

26 Weissman, 173 B.R. at 237, quoted in Mims, 249 B.R. at 383; accord

Bergen, 163 B.R. at 379 (“If the rules meant the initial meeting of creditors was the only time an objection could be made to exemptions, they would have been

drafted consistently.”). 

27 Wolf, 244 B.R. at 756, quoted in Lang, 276 B.R. at 720.

28 Havanec, 175 B.R. at 924; accord Bell, 225 F.3d at 225 (Moran, J., dissenting) (“Nothing in the advisory notes indicates that the Committee

considered and rejected provisions to deal with a host of other possible effects of

conversion.”); Leydet, 150 B.R. at 643 (by not limiting the meeting of creditors under Bankruptcy Rule 4003(b) to the initial meeting of creditors, explains “why

the drafters did not provide for a new time period for filing objections to

exemptions upon conversion in Rule 1019(2). It was unnecessary.”)

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to restrict which ‘meeting of the creditors’ triggers the time period for objections,

to hold that only the first § 341 meeting in a converted case prompts the period

would unnecessarily restrict Rule 4003(b) and the Code as a whole.”26 Indeed, a

fundamental purpose of the second meeting of creditors required under § 341(a),

§ 348(a) and Bankruptcy Rule 2003(a) would be “materially undercut” if the

Chapter 7 trustee were barred from reevaluating claimed exemptions–this is not a

result that could have been intended.27

To be sure, Bankruptcy Rule 1019(2), relied on so heavily by courts

adhering to the majority rule, is relevant in converted cases. But, that Rule does

not deal with exemptions, and we do not find its silence on exemption objections

to be more compelling than the express language of Bankruptcy Rule 4003(b). 

We agree with the statement that: “For all that appears the draftsmen of Rule

1019(2) might well have concluded that the language of Rule 4003(b) was

sufficiently clear to assure that the trustee could object to claims following the

conclusion of the Chapter 7 creditors meeting after the case had been

converted.”28

Additionally, we are not compelled by the majority view’s analysis of

§ 348(a) as it relates to Bankruptcy Rule 4003(b). We recognize, as do the courts

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 12 of 17
29 Bell, 225 F.3d at 213, quoted in Smith, 235 F.3d at 477; accord In re

Marcus, 1 F.3d 1050, 1051 (10th Cir. 1993).

30 See Bell, 225 F.3d at 215-218.

31 11 U.S.C. § 522(b) (a debtor may exempt from “property of the estate” the property listed under applicable state or federal law); Owen v. Owen, 500 U.S.

305, 308 (1991); Bell, 225 F.3d at 215; Carbaugh v. Carbaugh (In re Carbaugh), 278 B.R. 512, 520-21 (10th Cir. BAP 2002).

32 11 U.S.C. § 522(l).

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adopting the majority view, that § 348(a) expressly states that the date of the

order for relief is not altered by the conversion of a case, and that the purpose of

that provision “is to preserve actions already taken in the case before

conversion.”29 But, the deadline in Bankruptcy Rule 4003(b) is not based on the

date of the order for relief. It is based on the conclusion of a “meeting of

creditors.” This difference is real, and should not be ignored. If the drafters of

Bankruptcy Rule 4003(b) wanted to limit the time to file objections to claimed

exemptions based on the date of an order for relief, they would have expressly

stated so.

We agree with courts adopting the majority view that property exempt

under § 522(l) revests in the debtor.30 We disagree, however, with the opinion of

some of those courts that revesting precludes the recommencement of the deadline

in Bankruptcy Rule 4003(b) upon conversion of the case from Chapter 13 to

Chapter 7.

Property claimed as exempt is property of the estate on a debtor’s petition

date.31 It revests in the debtor when the exemption is allowed, either by court

order or because of the lack of a timely exemption.32 Property of the estate also

revests in the debtor upon the confirmation of a Chapter 13 plan under § 1327(b). 

Such revested property, being property that was property of the estate on the date

that a debtor files a Chapter 13 petition, is property of the Chapter 7 estate upon

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 13 of 17
33 Section 348(f) states, in relevant part, that when a Chapter 13 case is converted “property of the estate in the converted case shall 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[.]” 11 U.S.C.

§ 348(f)(1)(A) (emphasis added).

34 See Bell, 225 F.3d at 227 (Moran, J., dissenting).

35 See id. at 222 n.1 (Moran, J., dissenting).

36 11 U.S.C. § 1327(b).

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conversion under § 348(f) if it is still in the debtor’s possession.33 To allow

property revested under § 522(l) to be excluded from the scope of § 348(f) would

require that property revested under § 1327(b) to likewise be excluded. This

would have the effect of rendering § 348(f) meaningless in Chapter 13 cases

converted after the confirmation of a plan. The revesting of property under

§ 522(l) does not immunize it from being brought into the estate upon conversion

of a Chapter 13 case.34

By adopting the minority rule we are not, as implied by courts taking the

majority view, overlooking the interpretation of Bankruptcy Rule 4003(b) in

Taylor. Taylor reinforces the concept that strict enforcement of exemption

deadlines is necessary to produce finality. In accord with Taylor, enforcement of

the deadline in Bankruptcy Rule 4003(b) should be consistently vigorous.35 Our

decision does not run contrary to that principle.

Policy concerns also support adoption of the minority view. Chapter 13

debtors list property of the estate claimed as exempt, but the relevance of those

claims is not, as in Chapter 7, to allow the debtor to retain possession of the

property or to obtain a share of sale proceeds when the property is liquidated. 

Rather, the Chapter 13 debtor, remaining in possession of all property and being

revested of that property upon confirmation of a plan,36 claims exemptions to

facilitate a determination as to whether his or her plan is confirmable as being in

the best interests of creditors within the meaning of § 1325(a)(4). That section

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 14 of 17
37 Id. § 1325(a)(4).

38 Indeed, but for adoption of the majority view, it is not at all clear whether a Chapter 13 trustee ever has an incentive to formally object to a claimed

exemption. In In re Duncan, 329 F.3d 1195 (10th Cir. 2003), the court held that a trustee’s failure to object to a debtor’s claimed exemption within the thirty-day

period did not bar him from bringing an avoidance action outside of the thirty-day

period to avoid the debtor’s transfer of the property and to preclude the debtor

from claiming it as exempt once it was recovered. In bringing the avoidance

action, the trustee not subject to the thirty-day period in Bankruptcy Rule 4003(b)

because he “was not contesting the exemption per se[,]” but rather was seeking to avoid the debtor’s transfer of property. Id. at 1203. While the extension of the

holding in Duncan to matters such as Chapter 13 confirmation hearings is not before us and we expressly do not express any opinion as to such an extension,

we note that if the rule in Duncan were so extended there would be no incentive

for parties in interest in a Chapter 13 case, including trustees, to ever formally

(continued...)

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states that a plan must be confirmed if the value of the property to be distributed

under the plan on account of each allowed unsecured claim is “not less than the

amount that would be paid on such claim if the estate of the debtor were

liquidated under chapter 7. . . .”37 In some instances, although a claimed

exemption is not colorable as a matter of law or is at least subject to a good faith

objection, its allowance or disallowance will have no impact on the best interests

of creditors test in § 1325(a)(4)–the value of the property to be distributed under

the proposed Chapter 13 plan on account of each allowed unsecured claim could

not be shown to be less than the amount that would be paid on such claim if the

property were liquidated and the debtor were paid the amount of the claimed

exemption. In such cases, it does not make sense to require the Chapter 13 trustee

or other parties in interest to bear the expense and expend the time to object to a

spurious claim of exemption in hopes of obtaining its disallowance, not to further

the Chapter 13 estate, but to increase the value of the estate for creditors in an

unanticipated, yet potential, converted Chapter 7 case. This task would be best

borne by a Chapter 7 trustee if the Chapter 13 case were converted. She or he

will know the facts existing in the converted case, and have the proper incentive

to object when appropriate.38 

BAP Appeal No. 03-57 Docket No. 47 Filed: 08/16/2004 Page: 15 of 17
38 (...continued) object to a claimed exemption, except in cases where parties were concerned

about a potential conversion of the case to Chapter 7. For the reasons stated

Chapter 13 parties in interest should not litigate exemption issues for the purpose

of serving a potential Chapter 7 estate.

39 See nn.8-10 supra, and accompanying text. 

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This last point is made apparent by the facts of this case. Because the

bankruptcy court confirmed the debtor’s Chapter 13 plan prior to entering an

order on the Exemption Objection, it must have found that the plan met the

§ 1325(a)(4) best interests of creditors test, regardless of the merits of the

debtor’s claim of exemption. But, although the relevance of the debtor’s claimed

homestead exemption became moot in the Chapter 13 case, the Trustee has been

forced to go forward with the Exemption Objection, and the debtor’s appeal of the

Exemption Order, all for the purpose of serving a future contingent event–the

possibility of a conversion of the debtor’s Chapter 13 case to Chapter 7. Not only

is this situation undesirable from an administrative point of view, but, more

importantly, as discussed above, it contravenes very basic principles of federal

jurisdiction, and should not be encouraged.39

Finally, our decision is not unfair to debtors because it takes into account

basic assumptions related to a debtor’s choice to file Chapter 13 over Chapter 7,

and fosters due process. A Chapter 13 debtor, who retains possession of property

solely as a result of choosing to file a Chapter 13, as opposed to a Chapter 7,

petition should not be surprised to learn that possession of that property will be

reevaluated if the case is voluntarily or involuntarily converted to a liquidation

case under Chapter 7. As one court has stated:

In balancing the equities, the Court notes that in the event that a

debtor is claiming an exemption on property that is fully within the

debtor’s rights, then the existence of a renewed period to object to

exemptions will not prejudice the debtor. The debtor will be allowed

the exemption. However, in the event that a converted debtor is

claiming an exemption on property not properly claimed as exempt

and a newly-appointed Chapter 7 trustee is given no opportunity to

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40 Lang, 276 B.R. at 722.

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object due to conversion occurring post expiration of the initial

thirty-day deadline, then an inequity has resulted and due process has

been denied [to the Chapter 7 trustee], with resulting detriment to

creditors, the bankruptcy estate, and the bankruptcy system.40

For all of the reasons stated, we hold that the bankruptcy court erred in

determining that the thirty-day objection period under Bankruptcy Rule 4003(b)

would not recommence in the event that the debtor’s Chapter 13 case was ever

converted to a case under Chapter 7. This decision together with the concession

that the dispute will not impact the debtor’s Chapter 13 case means that the

bankruptcy court lacked jurisdiction over the Exemption Objection because it did

not give rise to a case and controversy in the debtor’s Chapter 13 case. The

resulting Exemption Order must be vacated. 

III. Conclusion

The Exemption Order is VACATED.

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