RECOMMENDED FOR PUBLICATION

File Name: 22b0004p.06

BANKRUPTCY APPELLATE PANEL

OF THE SIXTH CIRCUIT

IN RE: KATHY ELLEN RICHARDS,

Debtor.

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No. 22-8002

Appeal from the United States Bankruptcy Court 

for the Western District of Kentucky at Owensboro.

No. 4:21-bk-40438—Charles R. Merrill, Judge.

Argued: May 17, 2022

Decided and Filed: August 25, 2022

Before: BAUKNIGHT, DALES, and GUSTAFSON, Bankruptcy Appellate Panel Judges.

_________________

COUNSEL

ARGUED: Russ Wilkey, WILKEY & WILSON, P.S.C., Owensboro, Kentucky, for Appellant. 

Mark Little, THE LAW OFFICES OF MARK LITTLE, Madisonville, Kentucky, for Appellee. 

ON BRIEF: Russ Wilkey, WILKEY & WILSON, P.S.C., Owensboro, Kentucky, for 

Appellant. Mark Little, THE LAW OFFICES OF MARK LITTLE, Madisonville, Kentucky, for 

Appellee.

_________________

OPINION

_________________

JOHN P. GUSTAFSON, Bankruptcy Appellate Panel Judge. This appeal concerns the 

“uses as a residence” requirement in 11 U.S.C. § 522(d)(1).1 Kathy Ellen Richards (“Debtor”) 

appeals from the bankruptcy court’s order sustaining an objection to a claimed exemption in 

$23,298.78 that was held in escrow when Debtor filed her bankruptcy petition. Debtor claimed 

1Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. 

§§ 101–1532.

>
No. 22-8002 In re Richards Page 2

the funds as exempt pursuant to § 522(d)(1). The Trustee, Mark Little (“Trustee”), objected 

because although the funds are directly traceable proceeds of Debtor’s prepetition sale of her 

residence, the proceeds were not being “used as a residence” at the time the petition was filed.2 

The bankruptcy court sustained Trustee’s objection, holding that the plain language of 

§ 522(d)(1) does not apply to proceeds from a prepetition sale of a residence. The Panel 

AFFIRMS.

ISSUE ON APPEAL

The Debtor’s sole issue on appeal is “[w]hether or not the bankruptcy court erred when it 

held that 11 U.S.C. § 522(d)(1) does not permit the exemption of the proceeds from the prepetition sale of the Debtor’s homestead.” (Appellant’s Statement of Issues on Appeal, Bankr. 

Case No. 21-40438, ECF No. 41.)

Trustee raises a jurisdictional issue, asserting that this appeal is moot because Debtor 

amended her Schedule C to add a claim that the proceeds from the sale are exempt under the 

“wildcard” exemption found in § 522(d)(5). Accordingly, Trustee argues that a ruling on 

whether the exemption under § 522(d)(1) is available would be an advisory opinion.

JURISDICTION AND STANDARD OF REVIEW

Under 28 U.S.C. § 158(a)(1), the Panel has jurisdiction to hear appeals “from final 

judgments, orders, and decrees” issued by a bankruptcy court. “Orders in bankruptcy cases 

qualify as ‘final’ when they definitively dispose of discrete disputes within the overarching 

bankruptcy case.” Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 586 (2020) (citing 

Bullard v. Blue Hills Bank, 575 U.S. 496, 501, 135 S. Ct. 1686, 1691 (2015)). “An order 

sustaining a trustee’s objection to debtor’s claim of exemptions is a final, appealable order.” In 

re Zingale, 451 B.R. 412, 414 (B.A.P. 6th Cir. 2011) (determining that the order “ends the 

litigation on the merits and leaves nothing for the court to do but execute the judgment” (citing 

Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989))), aff’d 

2Although this Panel will not refer to “homestead” and “residence” as interchangeable terms under 

§ 522(d)(1), any quoted material that references the term “homestead” in place of the term “residence” set forth in 

§ 522(d)(1) has not been altered or displaced. 
No. 22-8002 In re Richards Page 3

on other grounds, 693 F.3d 704 (6th Cir. 2012); see also In re Aubiel, 534 B.R. 300, 301–02 

(B.A.P. 6th Cir. 2015) (holding that an order sustaining or overruling an objection to a debtor’s 

claim of exemption is a final order); Menninger v. Schramm (In re Schramm), 431 B.R. 397, 399 

(B.A.P. 6th Cir. 2010) (same); Wicheff v. Baumgart (In re Wicheff), 215 B.R. 839, 840 (B.A.P. 

6th Cir. 1998) (same).

“A debtor’s entitlement to a bankruptcy exemption most often involves a legal question 

and is reviewed de novo, except where facts are in dispute.” Aubiel, 534 B.R. at 302 (citation 

omitted). This appeal, however, does not involve any factual dispute. “De novo review requires 

the Bankruptcy Appellate Panel to interpret statutes independently of the determination of the 

bankruptcy court.” I.R.S. v. Juntoff (In re Juntoff), 636 B.R. 868, 872 (B.A.P. 6th Cir. 2022).

In his brief, Trustee asserts that this appeal is moot because after the bankruptcy court 

entered the order sustaining Trustee’s objection to Debtor’s exemption, Debtor amended her 

exemptions by claiming the “wildcard” exemption in § 522(d)(5) to exempt $10,698.00 of the 

proceeds. She then remitted the remaining $12,570.78 to the Trustee. Accordingly, Trustee 

asserts there is not a live case and controversy. See In re Hake, 398 B.R. 892, 899 (B.A.P. 6th 

Cir. 2008) (“This court determine[s] mootness ‘by examining whether an actual controversy 

between the parties exists in light of intervening circumstances.’” (quoting Fleet Aerospace 

Corp. v. Holderman, 848 F.2d 720, 723 (6th Cir. 1988))), aff’d, 348 F. App’x 80 (6th Cir. Aug. 

14, 2009).

At the outset, the Panel must address Trustee’s argument that this appeal is moot because 

mootness in the Article III sense implicates a federal court’s jurisdiction. Because we conclude 

that a live controversy continues to exist and we can grant effective relief based on the record 

before us, we reject Trustee’s suggestion of mootness, constitutional or otherwise. 

As Trustee acknowledged during oral argument, he is holding a substantial portion of the 

proceeds from the sale of Debtor’s former residence and has postponed filing his final report 

pending the Panel’s decision on this appeal. As a result, the Panel could, if it were so inclined, 

grant Debtor effective relief at least with respect to the proceeds Trustee is holding. Mission 

Prod. Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652, 1660 (2019) (finding that an 
No. 22-8002 In re Richards Page 4

appellate court may dismiss a case for mootness only if “it is impossible for a court to grant any 

effectual relief whatever” to the appellant, assuming it prevails). 

Trustee’s argument that Debtor waived her right to challenge the bankruptcy court’s 

decision by amending Schedule C to claim the “wildcard” exemption under § 522(d)(5) presents 

a closer question, but ultimately lacks merit under the circumstances of this case. First, Debtor’s 

vigorous prosecution of the appeal belies any notion that she intended to waive her claim of 

exemption under § 522(d)(1). Second, the amended exemption document (entered on the 

bankruptcy court docket at ECF No. 34) could be viewed as an attempt to supplement, not 

supplant, Debtor’s exemption claims. Debtor did not restate all her claimed exemptions using 

the Official Form; instead, she filed an attorney-prepared document indicating that she “omitted” 

her claim under § 522(d)(5) from the original iteration of Schedule C.3

Debtor’s post-decision amendment to Schedule C is not so inconsistent with her 

exemption claim under § 522(d)(1) as to warrant a finding of waiver under the circumstances. 

The better reading of the record as a whole is that, in filing the amendment, Debtor endeavored 

to comply with the bankruptcy court’s order pending appeal, as her counsel asserted during the 

oral argument before the Panel. The Supreme Court recently stated that compliance with a 

bankruptcy court’s decision pending appeal does not moot the case if it remains possible on 

appeal, as it does here, to “undo the effects of compliance.” Mission Prod. Holdings, Inc., 139 S. 

Ct. at 1660–61 (quoting 13B Wright, A. Miller & E. Cooper, Federal Practice and Procedure

§ 3533.2.2, p. 852 (3d ed. 2008)). As the Panel views the record, the relief Debtor requests 

3

Indeed, Debtor’s “Amendment to Schedules” provides the following: 

Comes now the debtor and states through error and inadvertence the following was 

omitted from her bankruptcy petition:

AMENDED SCHEDULE C:

proceeds of sale of house put into escrow account held by Wilkey & Wilson PSC, value 

$23,268.78, exempt under 11 U.S.C. § 522(d)(5) for $10,698.00

(Am. Schedules C, Bankr. Case No. 21-40438, ECF No. 34.)
No. 22-8002 In re Richards Page 5

would not be merely advisory but would, if granted, require Trustee to disburse the remaining 

proceeds to Debtor. Accordingly, the appeal is not moot.4

FACTS

Turning to the merits of the appeal, the underlying facts are not in dispute.

Debtor sold her home six days before filing a chapter 7 bankruptcy petition. The sale of 

the home netted $36,793.60, which Debtor placed into escrow with the law firm Wilkey & 

Wilson, PSC. Wilkey & Wilson, PSC represents Debtor in her bankruptcy proceeding. Debtor 

disclosed the sale of her residence on her Statement of Financial Affairs and provided a copy of 

the escrow ledger to Trustee.

Debtor claimed the federal exemptions pursuant to § 522(b)(2). She asserted that the 

proceeds from the sale of her home are exempt under § 522(d)(1) as proceeds from the sale of 

Debtor’s residence. The chapter 7 Trustee filed an objection to the claimed exemption.

The parties’ initial briefing before the bankruptcy court reflected an agreement as to the 

facts, but a dispute as to whether Debtor’s federal exemption claim should be allowed. 

Following briefing, the bankruptcy court held a hearing and required additional briefing on the 

legal issues. After briefing was complete, the bankruptcy court entered an order sustaining 

Trustee’s objection to the claimed exemption, finding:

[T]here is no language in 11 U.S.C. § 522(d)(1) that would permit the exemption 

of the proceeds from the prepetition sale of the Debtor’s homestead. In relevant 

part, § 522(d)(1) provides for an exemption in “the debtor’s aggregate interest, not 

4During oral argument, the Panel asked Trustee to address the distinction between one of the alternatives 

for obtaining appellate review in a bankruptcy proceeding identified by the Supreme Court in Bullard v. Blue Hills 

Bank, 575 U.S. 496, 507, 135 S. Ct. 1686, 1695 (2015)—a debtor proposing an amended plan under protest and then 

appealing its confirmation—and a debtor amending Schedule C to claim the “wildcard” exemption after an objection 

to a separate exemption has been sustained. Courts have held that this alternative identified by the Supreme Court 

(after denial of confirmation, proposing an amended plan and then appealing its confirmation) does not prevent a 

debtor from seeking appellate review partly because the reviewing court can provide a debtor with effective relief. 

See, e.g., Zahn v. Fink (In re Zahn), 526 F.3d 1140, 1142–44 (8th Cir. 2008) (recognizing that a debtor who 

proposes and objects to his own plan may be an aggrieved party with standing to appeal confirmation of such plan); 

Giesbrecht v. Fitzgerald (In re Giesbrecht), 429 B.R. 682, 689 (B.A.P. 9th Cir. 2010) (holding debtor had standing 

to appeal from an order confirming her own plan). Additionally, during oral argument, this Panel asked Trustee 

whether his argument distinguished between waiver and mootness. Trustee’s response was that the focus of his 

argument was on mootness. For the reasons stated above, the appeal is not moot.
No. 22-8002 In re Richards Page 6

to exceed $25,150 in value, in real property or personal property that the debtor or 

a dependent of the debtor uses as a residence.” – The language of the Code is 

clear and unambiguous in this instance, vesting no exemption power in the 

proceeds arising out of the prepetition sale of a debtor’s homestead. See In re 

Healy, 100 B.R. 443, 445 (Bankr. W.D. Wis. 1989) (holding that “the exemption 

laws of many states, including Wisconsin, exempt proceeds from the sale of a 

homestead. There is, however, no equivalent language in section 522(d)(1), and 

none can be inferred.”); In re Lawrence, 469 B.R. 140, 142 (Bankr. D. Mass. 

2012) (the court found that for the homestead exemption to apply, “usage [of a 

residence] must transcend the petition date or at least exist as of the petition 

date”); In re Boward, 334 B.R. 350, 352 (Bankr. D. Mass. 2005) (“The statutory 

language is free of ambiguity and plain in its meaning: the debtor must be residing 

in the property at the time of the commencement of the bankruptcy case”).

In re Richards, No. 21-40438-CRM, 2022 WL 99503, at *2 (Bankr. W.D. Ky. Jan. 10, 2022)

(alteration in original).

DISCUSSION

Generally, courts construe exemptions liberally in favor of debtors. In re Demeter, 

478 B.R. 281, 286 (Bankr. E.D. Mich. 2012). A party objecting to a claimed exemption bears 

the burden of proving, by a preponderance of the evidence, that “the exemptions are not properly 

claimed.” See Fed. R. Bankr. P. 4003(c). Unless a state has opted out, the Bankruptcy Code 

allows a debtor to choose between either the federal exemptions provided in the Bankruptcy 

Code or exemptions allowed under state law, but not both. See Raynard v. Rogers (In re 

Raynard), 354 B.R. 834, 838 (B.A.P. 6th Cir. 2006) (“In those states . . . that have not opted out 

of the federal bankruptcy exemptions, debtors are free to choose between two sets of exemptions 

provided by the Bankruptcy Code[.]”). Here, Debtor chose the federal exemptions. “Unlike 

some state homestead exemptions, section 522(d)(1) does not expressly exempt proceeds from 

the prepetition sale of homestead property.” 4 Collier on Bankruptcy ¶ 522.09[1] (16th ed. 

2022); accord In re Healy, 100 B.R. at 445.
No. 22-8002 In re Richards Page 7

Section 522(d)(1) provided,5in relevant part, an exemption for:

The debtor’s aggregate interest, not to exceed $25,150 in value, in real property or 

personal property that the debtor or a dependent of the debtor uses as a residence, 

in a cooperative that owns property that the debtor or a dependent of the debtor 

uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.

11 U.S.C. § 522(d)(1) (emphasis added). Debtor claimed this exemption for the proceeds from 

the prepetition sale of her residence. Trustee objected, asserting that the exemption may only be 

claimed in property a debtor or dependent is using as a residence. The bankruptcy court agreed, 

holding that money sitting in an account is not being used as a residence.

The Supreme Court has adopted the “plain meaning” approach as the standard for 

statutory construction. See United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240–42, 109 

S. Ct. 1026, 1030–31 (1989) (“[A]s long as the statutory scheme is coherent and consistent, there 

generally is no need for a court to inquire beyond the plain language of the statute.”); Caminetti 

v. United States, 242 U.S. 470, 485, 37 S. Ct. 192, 194 (1917) (“It is elementary that the meaning 

of a statute must, in the first instance, be sought in the language in which the act is framed, and if 

that is plain . . . the sole function of the courts is to enforce it according to its terms.”).

Debtor attempts to overcome the plain language of § 522(d)(1) by urging the Panel to 

look at state law.6 Debtor asserts that “the federal bankruptcy code does not define ‘homestead’ 

or ‘proceeds’, but rather relies on the law of the state where the debtor lives.” (Appellant’s Br. at 

25.) Citing Kentucky Revised Statute § 427.170, Debtor argues that “Kentucky courts . . . have 

found that exempt property converted to another form maintain that same exempt status, 

provided that the proceeds are traceable.” (Appellant’s Br. at 20.) Debtor cites cases decided 

under Kentucky’s exemption statute. See, e.g., United States v. Robinson, No. 3:13-CV-27-

GFVT, 2016 WL 3041879, at *3 (E.D. Ky. May 26, 2016) (addressing proceeds from liquidation 

of a 401(k) account and citing cases for the general proposition that funds traceable to exempt 

5The bankruptcy court entered the order sustaining Trustee’s objection when the dollar amount reflected in 

§ 522(d)(1) was $25,150. However, § 522(d)(1) was adjusted to $27,900 effective April 1, 2022. 

6

In asking the Panel to bypass the statutory text and look at applicable state law to determine what 

constitutes a “residence” under § 522(d)(1), Debtor cites, among other cases, Erie R. Co. v. Tompkins, 304 U.S. 64, 

58 S. Ct. 817 (1938), and Butner v. United States, 440 U.S. 48, 99 S. Ct. 914 (1979). (Appellant’s Br. at 12.) For the 

reasons below, we find no reason for departing from the plain meaning of the statute.
No. 22-8002 In re Richards Page 8

funds retain their status). Debtor also argues that the Kentucky Court of Appeals has held that 

when a person is entitled to a homestead, the fact that the property is indivisible and must be 

converted into cash does not destroy the right to the homestead exemption. (Appellant Br. at 25 

(citing John Staun & Co. v. Proctor, 153 S.W. 196 (Ky. 1913); Roberts v. Adams, 96 S.W. 554 

(Ky. 1906)).)

This Panel must dismiss Debtor’s argument under Kentucky law. Debtor opted to use the 

federal exemptions. Section 522(d), not Kentucky law, sets forth what property may be claimed 

as exempt in this case. Thus, Kentucky law is inapplicable under these facts.

For the reasons discussed below, the Panel rejects Debtor’s argument that the exemption 

under § 522(d)(1) can attach to proceeds from a prepetition residential sale.

In the present case, Trustee argues, and the bankruptcy court held, that Debtor was not 

entitled to claim an exemption under § 522(d)(1) because at the time the petition was filed, she 

was not using the property as a residence. A “debtor may claim only those exemptions available 

at the time of the bankruptcy petition filing[.]” Holley v. Corcoran (In re Holley), 661 F. App’x 

391, 395 (6th Cir. Oct. 25, 2016) (citing In re Wengerd, 453 B.R. 243, 250 (B.A.P. 6th Cir. 

2011) (citing White v. Stump, 266 U.S. 310, 313, 45 S. Ct. 103, 104 (1924))). Thus, the proceeds 

could not “retain” exempt status because, at the time of filing, there was no property being used 

as a residence to claim as exempt. Instead, there were only funds held in escrow. Debtor 

acknowledges that none of the case law cited holds that the proceeds of the pre-bankruptcy sale 

of a residence can be claimed as exempt under the federal statute. 

In addition to the argument that state law would allow an exemption under § 522(d)(1) to 

apply to traceable proceeds, Debtor also asserts that the bankruptcy court focused “too narrowly” 

on the “use as a residence” requirement of the statute. Instead, Debtor asserts that the phrase 

“aggregate interest” intends to “encompass more than a physical structure.” (Appellant’s Br. at 

20.) Debtor refers to the purpose of the Bankruptcy Code to give a debtor a fresh start and the 

directive to construe exemptions liberally in favor of the debtor as further support for the 

argument that the proceeds of a residence sold prepetition can be held exempt under the federal 

exemption provision.
No. 22-8002 In re Richards Page 9

The Panel does not find Debtor’s arguments persuasive. As Trustee argued and the 

bankruptcy court held, the statutory language is plain. Section 522(d)(1) applies to property that 

the debtor “uses” as a “residence.” The debtor must be residing in the property at the time of the 

commencement of the bankruptcy case to claim this exemption pursuant to § 522(d)(1).7 In this 

case, Debtor did not “use” the property “as a residence” as § 522(d)(1) requires.

While the Bankruptcy Code does not define “residence,” the term is not 

ambiguous. According to Black’s Law Dictionary a residence is “the place where 

one actually lives,” and elaborates that a person thus may have “more than one 

residence at a time.”

In re Lawrence, 469 B.R. at 142 (citation omitted). We “must presume that [the] legislature says 

in a statute what it means and means in a statute what it says there.” Dodd v. United States, 

545 U.S. 353, 357, 125 S. Ct. 2478, 2482 (2005) (alteration in original) (citing Conn. Nat’l Bank 

v. Germain, 503 U.S. 249, 253–54, 112 S. Ct. 1146, 1149 (1992)).

This Panel agrees with the result in Healy, which directly addressed this issue and held 

§ 522(d)(1) does not provide for an exemption in the proceeds of the sale of a residence. 

100 B.R. at 445; accord Hoffman v. Cent. Pa. Nat’l Bank (In re Hoffman), 96 B.R. 46, 49 

(Bankr. W.D. Pa. 1988) (“The debtor is not trying to recover the house. Nor does he allege that 

the property (money from the sale) is used as a residence. Because neither the debtor nor a 

dependent use the proceeds as a residence, the homestead exemption is not available.”); 9A Am. 

Jur. 2d Bankruptcy § 1429, Westlaw (database updated August 2022) (“The federal homestead 

7

It should be noted that the “plain meaning” interpretation of this statute does not necessarily favor either 

debtors or creditors. For example, there is a split of authority as to whether a state law definition of “homestead” 

should be read into § 522(d)(1) to limit the exemption—disallowing an exemption in property that is used as a 

residence, but which is not used as debtor’s principal residence. Compare In re Demeter, 478 B.R. at 286–88 

(rejecting the chapter 7 trustee’s argument to limit the word “residence” under § 522(d)(1) to what is a “homestead” 

under state law), with In re Stoner, 487 B.R. 410, 417–21 (Bankr. D.N.J. 2013) (sustaining the chapter 7 trustee’s 

objection after looking at state law interpretations of the term “homestead” to determine the meaning of “residence” 

under § 522(d)(1)). That issue is not before this Panel, but we note, as the Lawrence court did, that Congress used 

the term “debtor’s primary residence” in § 707(b)(2)(A)(iii)(II). In re Lawrence, 469 B.R. at 142 n.2. In addition, 

the term “debtor’s principal residence” is a defined term in the Bankruptcy Code, § 101(13A), that is used to limit 

mortgage modifications under § 1322(b)–(c), and in a homestead limitation under § 522(p). Id. at 141–42. Finally, 

Congress used the term “principal residence of the debtor” in § 524(j)(1) and § 1190(3). Congress did not use any 

of those more limiting “residence” terms in § 522(d)(1).
No. 22-8002 In re Richards Page 10

exemption does not provide an exemption for the proceeds of the sale of a homestead.” (footnote 

omitted)).8

The broader case law also supports denial of the claimed exemption. Several courts have 

held that one of the requirements for eligibility under § 522(d)(1) is that the debtor presently 

“uses” the property as a residence. In re Tankersley, 575 B.R. 848, 861–65 (Bankr. E.D. Ark. 

2017); In re Demeter, 478 B.R. at 286–88; In re Lawrence, 469 B.R. at 142 (“The Code speaks 

in the present tense which indicates that usage must transcend the petition date or at least exist as 

of the petition date. Thus, where a debtor had never used a residence prior to filing, bankruptcy 

courts have held that the residence may not be exempted under § 522(d).”); In re Gandy, 327 

B.R. 807, 809–10 (Bankr. S.D. Tex. 2005); cf. Lubin v. Mason (In re Mason), 607 B.R. 360, 

365–66 (Bankr. N.D. Ga. 2019) (analyzing identical language under Georgia’s exemption 

statute); In re Cole, 185 B.R. 95, 97–98 (Bankr. D. Me. 1995) (analyzing identical language 

under Maine’s exemption statute). This additional case law supports the bankruptcy court’s 

order sustaining Trustee’s objection and the denial of the claimed exemption.

Looking at the cases where the “residence” requirement has been in issue, the grounds for

equitably expanding9 what constitutes a “residence” do not apply here. For example, courts have 

held that when a debtor has used a property as a residence but is not residing there at the time of 

filing, that in addition to a self-serving statement of intent to return, the debtor must also 

demonstrate a meaningful ability to occupy the property imminently or within a reasonable time. 

See Sikirica v. Yanovich (In re Yanovich), 544 B.R. 306, 312 (Bankr. W.D. Pa. 2016) (quoting In 

re Bennett, 192 B.R. 584, 588 (Bankr. D. Me. 1996)). Here, the property was sold prior to filing, 

so Debtor has no meaningful ability to occupy the property in the future, and she presented no 

evidence of either intent or ability to the trial court.

8Of course, when a residence is claimed as exempt under § 522(d)(1), a postpetition sale of the residence 

and retention of the proceeds does not affect its exempt character under § 522(d)(1). In re Sparks, No. 09-30238-

H3-7, 2009 WL 2824868, at *2 (Bankr. S.D. Tex. Aug. 31, 2009).

9We are not expressing any view on the cited case law interpreting the meaning of “residence” using 

constructive occupancy concepts. Even if these equitable expansions of the residence exemption are applicable, 

they are not applicable to the denial of Debtor’s § 522(d)(1) exemption based on the record in this case. 
No. 22-8002 In re Richards Page 11

More directly applicable to this case is the discussion in Healy regarding how the use of 

the proceeds might equate to “constructive occupancy.” 100 B.R. at 445. The Healy court stated 

that “any claimed exemption in the proceeds must be denied when, as in this case, there is no 

evidence that the proceeds were intended to be reinvested in a new residence which the Healys 

planned to occupy.” Id. Again, if this type of constructive occupancy argument were to be 

viable, it would fail when—as is the case here—no evidence was presented to the trial court 

regarding reinvestment of the proceeds in a new residence that Debtor intended to occupy.

Further, Debtor’s argument runs afoul of the Supreme Court’s directive that “‘whatever 

equitable powers remain in the bankruptcy courts must and can only be exercised within the 

confines of’ the Bankruptcy Code.” Law v. Siegel, 571 U.S. 415, 421, 134 S. Ct. 1188, 1194–95 

(2014) (quoting Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206, 108 S. Ct. 963, 969 

(1988)). Specifically, the Supreme Court noted that “§ 522 does not give courts discretion to 

grant or withhold exemptions based on whatever consideration they deem appropriate. Rather, 

the statute exhaustively specifies the criteria that will render property exempt.” Id. at 423–24, 

134 S. Ct. at 1196. Here, the Bankruptcy Code only grants an exemption in property the debtor 

or a dependent “uses as a residence.” An expansion of that exemption to include sale proceeds is 

for Congress, not the courts.

Finally, the use of equity to expand the scope of § 522(d)(1) is particularly inappropriate 

where Congress has provided an alternative when that exemption is not available: § 522(d)(5). 

Section 522(d)(5) enables certain debtors to exempt up to $13,950 in “any” property. 

This enhanced exemption can be taken if and only if a debtor has “any unused amount of the 

exemption provided under” § 522(d)(1). Accordingly, in striking this balance, Congress gave 

certain debtors, such as non-homeowners, the opportunity to claim an increased exemption. See 

Law, 571 U.S. at 424. When Congress has explicitly enumerated certain exceptions to a general 

prohibition, additional exceptions are not to be implied. See id. (“The Code’s meticulous—not 

to say mind-numbingly detailed—enumeration of exemptions and exceptions to those 

exemptions confirms that courts are not authorized to create additional exceptions.”). Thus, 

Congress’s decision to give certain debtors an enhanced exemption for any unused amount of the 
No. 22-8002 In re Richards Page 12

residency exemption is another reason why we may not look to other law or use equitable powers 

to expand § 522(d)(1) to include proceeds.

For these reasons, we conclude the language in § 522(d)(1) does not permit Debtor to 

exempt the proceeds from the prepetition sale of her former residence.

CONCLUSION

Section 522 allows an exemption in real or personal property being used as a residence. 

The funds held in escrow were not being used as a residence at the time the bankruptcy petition 

was filed. Kentucky law allowing for an exemption in proceeds is not applicable because Debtor 

chose the federal exemptions. Simply, this Panel cannot extend the exemption scheme beyond 

what is provided for by the Bankruptcy Code. The bankruptcy court’s order sustaining the 

Trustee’s objection is AFFIRMED.