United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-3070

___________ In re: Burma Jean Martin, * * Debtor, * *

----------------------- * * Burma Jean Martin, * Appeal from the United States * District Court for the Appellant, * Eastern District of Arkansas. * v. * * Richard L. Cox, Trustee, * * Appellee. *

___________ Submitted: February 6, 1998 Filed: April 10, 1998

___________ Before BOWMAN, WOLLMAN, and MORRIS SHEPPARD ARNOLD, Circui t Judges.

___________ BOWMAN, Circuit Judge. Burma Jean Martin appeals from the District Court & s order affirming th e Bankruptcy Court & s order denying her a “wild card” exemption under 11 U.S.C

. § 522(d)(5) (1994) for her claimed interest in two lawsuits. Because we conclude the-2-

Bankruptcy Court incorrectly interpreted section 522(d)(5), we reverse and remand for further proceedings.
Martin filed a Chapter 7 bankruptcy petition, and in July 1996, she file d amended exemptions. As relevant to this appeal, Martin claimed exemptions unde r se ction 522(d)(5) for $1,000 and for her interest in two lawsuits. Section 522(d)(5 ) provides that a debtor may exempt her “aggregate interest in any property, not t o exceed in value $800 plus up to $7,500 of any unused amount of the exemptio n provided un der paragraph (1) of this subsection.” Section 522(d)(1) provides that a deb tor may exempt her interest--up to $15,000--in property that the debtor uses as a residence.
The trustee objected to these exemptions, and the Bankruptcy Court sustained the obj ections in part. Concluding that section 522(d)(5) permitted only an $80 0 exemption, the Court sustained the trustee & s objection to $200 of the $1,000 claimed exem ption, and sustained his objection entirely to the claimed exemption for tw o law suits. The Bankruptcy Court denied Martin’s subsequent motion fo r reconsideration, stating that beca use Martin “has no homestead exemption, there is no

# unused portion’ to us e as an exemption.” Martin then appealed to the District Court, which affirmed, stating that the Bankruptcy Court correctly ruled a debtor must first use part of the homestead exemption under section 522(d)(1) before being eligible for the $7,500 exemption under section 522(d)(5).
This Court reviews de novo the Bankruptcy Court & s legal conclusions, an d reviews for clear error its findings of fact. See Gourley v. Usery ( In re Usery ), 12 3 F.3d 1089, 1093 (8th Cir. 1997). “Reversal is appropriate if the Bankruptcy Cour t mis understood or misapplied the law.” Id. The Bankruptcy Court & s interpretation of the statute is a question of l aw, and when interpreting a statute, this Court looks to its expr ess language and overall purpose. See Graven v. Fink ( In re Graven ), 936 F.2 d 378, 384-85 (8th Cir. 1991).-3-

The legis lative notes to section 522 state that the section 522(d)(5) wild car d exemption allows the exemption of an unused amount of the homestead exemption “in order n ot to discriminate against the nonhomeowner.” 11 U.S.C.A. § 522 (1993 ) (historical and statutory notes, includingH.R. Rep. 95-595). Based upon the language of section 522 and its legislative history, we conclude the Bankruptcy Court incorrectly ruled a debtor m

ust first take a homestead exemption in order to exempt up to $7,500 of the unused amount of the homestead exemption under the wild card provision. See In re Smit h , 640 F.2d 888, 891 (7th Cir. 1981) (stating § 522(d)(5) exemption wa s inten ded to eliminate discrimination between homeowners and nonhomeowners i n achieving goa

l of having debtor emerge from bankruptcy with adequate possessions), In re Patter son , 825 F.2d 1140, 1147-48 (7th Cir. 1987) (allowing Chapter 7 debtors, who were nonhomeowners, to include entire homestead exemption in wild car d exemption).
The tr ustee argues that Martin & s claimed wild card exemption properly may be denied because Martin engaged in misconduct and acted with bad faith. An y determination of Martin & s misconduct or bad faith must be made in the first instance by the Bankruptcy Court. We note that, before the Bankruptcy Court, the trustee urged misconduc t

and bad faith as grounds for opposing some of Martin’s claime d exemptions, and, at that time, the Court found there was insufficient evidence t o support a determination of bad faith.
The judgment of the District Court is reversed and the case is remanded with instructions to reman d to the Bankruptcy Court for a determination of whether Martin has an interest in the lawsuits and is entitled to a wild card exemption for them, i n accordance with this opinion. A true copy.
Attest: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.