IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-20641

In the Matter of: GREGORY D. HAWK; MARCIE H. HAWK,

 Debtors.

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GREGORY D. HAWK, 

 Appellant,

v.

EVA S. ENGELHART, Chapter 7 Trustee, 

 Appellee.

Appeal from the United States District Court

for the Southern District of Texas

Before STEWART, Chief Judge, and WIENER and PRADO, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

After filing for Chapter 7 bankruptcy, Gregory and Marcie Hawk claimed 

an exemption for funds held in an individual retirement account (“IRA”). The 

Hawks sought to exempt the funds from the bankruptcy estate because taxexempt or tax-deferred assets held in a qualifying retirement account are 

generally exempt from creditors’ claims under Texas law. However, the Hawks 

subsequently withdrew the funds from the IRA and did not roll them over into 

United States Court of Appeals

Fifth Circuit

FILED

July 19, 2017

Lyle W. Cayce

Clerk

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No. 16-20641

2

another IRA. Because Texas law provides that funds withdrawn from a 

retirement account remain exempt only if rolled over into another retirement 

account within sixty days, the bankruptcy court held that the funds had lost 

their exempt status and ordered that the Hawks turn over the funds to the 

Trustee, Eva Engelhart. The district court upheld the bankruptcy court’s 

decision on appeal. We AFFIRM.

I. BACKGROUND

On December 15, 2013, the Hawks filed a voluntary bankruptcy petition 

under Chapter 7 of the Bankruptcy Code. Approximately one month later, the 

Hawks filed their schedules of assets, which claimed an exemption for funds 

held in an IRA managed by NFP Securities, Inc. The Hawks claimed that the 

IRA funds were exempt from creditors’ claims under Texas Property Code 

§ 42.0021 and were therefore excluded from the property of the bankruptcy 

estate under 11 U.S.C. § 522(b). The meeting of creditors was held on March 

28, 2014, giving the parties in interest until April 28, 2014, to object to the 

Hawks’ claimed exemptions. See Fed. R. Bankr. P. 4003(b)(1). No party in 

interest objected to the IRA exemption during that time. On April 3, 2014, the 

Trustee filed a report declaring that the estate had no assets available for 

distribution to the Hawks’ creditors and proposing to abandon all nonexempt 

assets. In May 2014, however, one of the Hawks’ creditors, Res-TX One, timely 

filed an adversary proceeding objecting to the Hawks’ discharge.

Meanwhile, between December 11, 2013, and July 14, 2014, the Hawks 

withdrew all of the funds from the IRA and used most of those funds to pay for 

living and other expenses. The funds were never rolled over into another 

retirement account. When Res-TX One deposed Mr. Hawk in November 2014, 

Mr. Hawk stated that approximately $30,000 of the liquidated IRA funds 

remained in his possession and that the funds were being held “in a shoebox.” 

The Trustee first learned about the liquidated IRA funds from Mr. Hawk’s 

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deposition and subsequently demanded that the Hawks give the funds to the 

estate. After the Hawks refused to do so, the Trustee filed a motion with the 

bankruptcy court seeking to compel the Hawks to turn over the funds.

The bankruptcy court held an evidentiary hearing and then ordered the 

Hawks to turn over the funds that were withdrawn from the IRA ($133,434.64 

in total). The bankruptcy court concluded that the funds “lost their exempt 

status” under Texas law because the Hawks “did not roll them over to another 

individual retirement account within 60 days.” The Hawks appealed to the 

district court, which affirmed the bankruptcy court’s decision. This appeal 

followed.

II. STANDARD OF REVIEW

As a “second review court,” “[o]ur review is properly focused on the 

actions of the bankruptcy court.” In re Age Ref., Inc., 801 F.3d 530, 538 (5th 

Cir. 2015) (quoting In re T-H New Orleans Ltd. P’ship, 116 F.3d 790, 796 (5th 

Cir. 1997)). “We apply the same standard of review to the bankruptcy court’s 

findings of fact and conclusions of law as applied by the district court.” In re 

Pratt, 524 F.3d 580, 584 (5th Cir. 2008). “Determination whether an exemption 

from the bankruptcy estate exists is a question of law, which we review de 

novo.” In re Zibman, 268 F.3d 298, 301 (5th Cir. 2001). “Although we may 

‘benefit from the district court’s analysis of the issues presented, the amount 

of persuasive weight, if any, to be accorded the district court’s conclusions is 

entirely subject to our discretion.’” In re Age Ref., 801 F.3d at 538 (quoting In 

re CPDC, Inc., 337 F.3d 436, 441 (5th Cir. 2003)).

III. DISCUSSION

Under 11 U.S.C. § 541(a), the commencement of a bankruptcy case—

whether under Chapter 7 or Chapter 13 of the Bankruptcy Code—creates a 

bankruptcy estate comprising, among other things, “all legal or equitable 

interests of the debtor in property as of the commencement of the case.” The 

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debtor may then remove certain types of property from the estate by electing 

to take advantage of either the exemptions described in federal law or those 

described in state law. 11 U.S.C. § 522(b). To claim these exemptions, the 

debtor must file a list of property claimed as exempt on the schedule of assets. 

11 U.S.C. § 522(l); Fed. R. Bankr. P. 4003(a). A party in interest may then “file 

an objection to the list of property claimed as exempt within 30 days after the 

meeting of creditors . . . or within 30 days after any amendment to the list or 

supplemental schedules is filed, whichever is later.” Fed. R. Bankr. P. 

4003(b)(1). “Unless a party in interest objects, the property claimed as exempt 

on such list is exempt.” 11 U.S.C. § 522(l). “Anything properly exempted passes 

through bankruptcy; the rest goes to the creditors.” Payne v. Wood, 775 F.2d 

202, 204 (7th Cir. 1985).

This Court has not previously addressed whether a Texas debtor is 

entitled to an exemption when he or she withdraws funds from a retirement 

account and does not deposit the funds into another retirement account within 

sixty days. However, the parties agree that this Court’s case law regarding 

Texas homesteads is instructive. Indeed, there are clear parallels between the 

Texas statutes governing retirement accounts and those governing 

homesteads. Texas Property Code § 42.0021(a) states that “a person’s right to 

the assets held in . . . an individual retirement account . . . is exempt from 

attachment, execution, and seizure for the satisfaction of debts to the extent 

the . . . account is exempt from federal income tax, or to the extent federal 

income tax on the person’s interest is deferred until actual payment of benefits 

to the person.” Section 42.0021(c) then provides that amounts distributed from 

an exempt retirement account “are not subject to seizure for a creditor’s claim 

for 60 days after the date of distribution if the amounts qualify as a nontaxable 

rollover contribution.” Similarly, Texas Property Code § 41.001(a) indicates 

that a homestead is “exempt from seizure for the claims of creditors except for 

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encumbrances properly fixed on homestead property.” Section 41.001(c) goes 

on to explain that the “proceeds of a sale of a homestead are not subject to 

seizure for a creditor’s claim for six months after the date of sale.”

The Hawks make two primary arguments on appeal. First, they contend 

that the lower courts improperly applied the so-called “snapshot rule,” which 

dictates that exemptions must be determined based on the state law in effect 

when the petition is filed. Second, the Hawks seek to distinguish our previous 

decision in In re Frost, 744 F.3d 384, 387 (5th Cir. 2014), which held that the 

proceeds of a homestead sale were not exempt where a debtor sold his 

homestead after filing for bankruptcy and did not reinvest the proceeds in 

another homestead within six months. The Hawks argue that Frost’s holding 

applies only in Chapter 13 bankruptcy cases, not in Chapter 7 proceedings like 

the case at bar.

A. The Snapshot Rule

According to the Hawks’ interpretation of the snapshot rule, the property 

of the estate is permanently fixed “based upon the facts and applicable 

exemption law that existed on the petition date.” Alternatively, the Hawks 

argue that the facts and law are permanently fixed when the time for making 

objections passes. In support, they point to 11 U.S.C. § 522(c), which states 

that, as a general rule, “property exempted under this section is not liable 

during or after the case for any debt of the debtor that arose . . . before the 

commencement of the case.” The Hawks note that they claimed an exemption 

for the IRA funds and that no party in interest objected to the exemption within 

thirty days after the meeting of creditors. Thus, they contend that the snapshot 

rule and § 522(c) prohibited the bankruptcy court from later determining that 

the funds were no longer exempt.

In White v. Stump, a debtor filed for bankruptcy, and his wife later 

sought a homestead exemption for the land where the debtor and his family 

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resided. 266 U.S. 310, 310–11 (1924). The Supreme Court noted that “[t]he 

laws of the state of Idaho, where the land is situate, provide for a homestead 

exemption, but only where a declaration that the land is both occupied and 

claimed as a homestead is made and filed.” Id. at 311. Until the landowner 

filed such a declaration, state law provided that “the land is subject to 

execution and attachment like other land; and where a levy is effected while 

the land is in that condition the subsequent making and filing of a declaration 

neither avoids the levy nor prevents a sale under it.” Id. The Supreme Court 

went on to explain that “the state laws existing when the petition is filed [are] 

the measure of the right to exemptions.” Id. at 312. Moreover, the date of filing 

is the point at which “the status and rights of the bankrupt, the creditors and 

the trustee . . . are fixed.” Id. at 313. Because the land “was subject to levy and 

sale” under state law when the debtor filed his bankruptcy petition, the 

Supreme Court held that he was not entitled to a homestead exemption. Id. at 

314. This approach of looking to the state law in effect at the time of filing came 

to be known as the snapshot rule. See In re Zibman, 268 F.3d at 303.

Two decades later, the Supreme Court expanded on the snapshot rule in 

Myers v. Matley, 318 U.S. 622, 628 (1943). In that case, a debtor consented to 

an involuntary bankruptcy petition filed against him. Id. at 623. A month later, 

the debtor’s wife filed a declaration with a Nevada county recorder claiming a 

tract of land listed in the debtor’s bankruptcy schedules as a homestead and

then filed a petition with the bankruptcy court claiming the land as exempt. 

Id. at 623–24. The Supreme Court first characterized White as holding that 

because “the claim of exemption was not perfected until after the petition was 

filed, it was ineffective as against the trustee, as it would have been against a 

creditor then having a levy on the property.” Id. at 626. In contrast to the state 

law applicable in White, however, Nevada law provided that a debtor was 

entitled to an exemption so long as a homestead declaration was filed “at any 

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time before actual sale under execution.” Id. at 626–27. The Supreme Court 

explained that “under the law of Nevada, the right to make and record the 

necessary declaration of homestead existed in the bankrupt at the date of filing 

the petition, as it would have existed in case a levy had been made upon the 

property.” Id. at 628 (emphasis added). “The assertion of that right before 

actual sale in accordance with State law did not change the relative status of 

the claimant and the trustee subsequent to the filing of the petition.” Id. Thus, 

the Supreme Court concluded that the debtor’s spouse was entitled to the 

homestead exemption. Id.

In recent years, the Fifth Circuit has been guided by Myers and White in 

assessing the applicability of Texas’s homestead proceeds exemption. See In re 

Zibman, 268 F.3d at 303–04. In Zibman, the debtors sold their Texas 

homestead just over two months before filing for Chapter 7 bankruptcy and did 

not reinvest the proceeds in another homestead within six months of the sale. 

Id. at 300–01. We observed that under Myers and White, “the law and facts 

existing on the date of filing the bankruptcy petition determine the existence 

of available exemptions, but . . . it is the entire state law applicable on the filing 

date that is determinative.” Id. at 304. Although the bankruptcy petition was 

filed before the six-month exemption period had ended, “‘freezing’ the 

exemption for the proceeds simply because it was in effect at the date the 

petition was filed, [would] effectively read the 6-month limitation out of the 

statute, and transform[] an explicitly limited exemption into a permanent one.” 

Id. Furthermore, the legislative intent of “the proceeds exemption statute was 

solely to allow the claimant to invest the proceeds in another homestead, not 

to protect the proceeds, in and of themselves.” Id. at 305 (quoting In re England, 

975 F.2d 1168, 1174–75 (5th Cir. 1992)). Accordingly, we held that when the 

debtors “failed to reinvest the proceeds in another Texas homestead within the 

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statutory time period, those proceeds lost their exemption, freeing the Trustee 

to reach the proceeds as part of the bankruptcy estate.” Id. (footnote omitted).

The principles articulated in Zibman also apply when a homestead is 

sold during the pendency of bankruptcy proceedings. See In re Frost, 744 F.3d 

at 387. In Frost, the debtor sold his Texas homestead after filing for Chapter 

13 bankruptcy, but because he failed to reinvest the proceeds in another 

homestead within six months of the sale, we held that the proceeds were 

“removed from the protection of Texas bankruptcy law and no longer exempt 

from the estate.” Id. at 385, 387. In reaching this conclusion, we addressed 

many of the same arguments the Hawks raise in the present case. Frost argued 

that Zibman was “distinguishable because it concerned proceeds obtained 

prior to filing bankruptcy, whereas he sold his homestead after petitioning for 

bankruptcy, at a time when the homestead had already been declared exempt 

from the estate.” Id. at 387. Frost pointed out that § 522(c) provides that 

“property exempted under this section is not liable during or after the case for 

any debt of the debtor.” Id. at 387 (quoting 11 U.S.C. § 522(c)). He also 

suggested “that all bankruptcy exemptions are fixed at the time of the 

bankruptcy petition and do not later lose their exempt status.” Id. at 386. Thus, 

Frost argued that “while the proceeds in Zibman were already temporarily 

exempted at the time of filing, the homestead was a permanent exemption and 

placed forever outside the estate.” Id. at 388.

Responding to Frost’s arguments, we emphasized that an “essential 

element of the exemption must continue in effect even during the pendency of 

the bankruptcy case.” Id. (quoting In re Zibman, 268 F.3d at 301). Therefore, 

“a change in the character of the property that eliminates an element required 

for the exemption voids the exemption, even if the bankruptcy proceedings 

have already begun.” Id. We went on to explain:

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Adopting Frost’s argument would require rejecting this court’s 

determination in Zibman that § 522(c) does not prevent exempt 

property from losing its exempt status. If § 522(c) requires strict 

enforcement of the “snapshot rule” such that property exempted at 

the moment of filing can never be liable—regardless of restrictions 

placed on that exemption by state law or a change in the essential 

character of the property—then the proceeds from the sale in 

Zibman would have been exempted indefinitely, despite the six 

month limitation on that exception.

Id. at 389. When Frost sold his homestead, his “interest in his homestead 

changed from an unconditionally exempted interest in the real property itself 

to a conditionally exempted interest in the monetized proceeds from the sale of 

that property.” Id. Consequently, we concluded that “[o]nce the conditional 

exemption expired . . . Frost lost his right to withhold the sale proceeds from 

the estate.” Id.

Similarly, when the Hawks withdrew funds from the IRA, their interest 

in those funds changed from an unconditionally exempted interest in the 

amounts held in the retirement account to a conditionally exempted interest 

in the amounts distributed from the retirement account. See Tex. Prop. Code 

§ 42.0021(a), (c). “[I]t is the entire state law applicable on the filing date that is 

determinative,” and “[c]ourts cannot apply a juridical airbrush to excise 

offending images necessarily pictured in the petition-date snapshot.” In re 

Zibman, 268 F.3d at 304. Texas’s requirement that funds be rolled over into 

another retirement account within sixty days of distribution “is inextricably 

intertwined with the exemption the state has chosen to provide.” See id. Thus, 

when the Hawks failed to deposit the funds into another retirement account 

within sixty days of withdrawal, the conditional exemption expired, and the 

Hawks lost their right to withhold the funds from the estate. See § 42.0021(c).

Despite Zibman and Frost, the Hawks argue that once the time for 

objections passed, the exemption was automatically allowed, and the exempted 

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property was forever removed from the property of the estate. As noted above, 

11 U.S.C. § 522(l) provides that “[u]nless a party in interest objects, the 

property claimed as exempt on [the schedules] is exempt.” Moreover, Federal 

Rule of Bankruptcy Procedure 4003(b) indicates that parties in interest must 

generally object to claimed exemptions within thirty days after the creditors’ 

meeting. In Taylor v. Freeland & Kronz, the Supreme Court held that under 

§ 522(l) and Rule 4003(b), a party in interest cannot “contest the validity of an 

exemption after the 30-day period,” even if “the debtor had no colorable basis 

for claiming the exemption.” 503 U.S. 638, 639, 643–44 (1992). Although the 

Hawks do not cite Taylor directly, they suggest that the Trustee was unable to 

contest the exempt status of the IRA funds after the 30-day period ended.

Nonetheless, the Supreme Court’s decision in Taylor is not fatal to the 

Trustee’s position in the present case. In Frost, we stressed that it was “the 

land itself—not its monetary value—that [was] protected under Texas law and 

‘exempted under [§ 522].’” 744 F.3d at 391 (quoting 11 U.S.C. § 522(c)). In other 

words, “Frost’s homestead was exempted from the estate . . . by virtue of its 

character as a homestead.” Id. at 387. But when Frost sold the homestead, the

property’s “essential character . . . changed from ‘homestead’ to ‘proceeds,’”

permitting the trustee to “challenge[] the exemption of those proceeds from the 

estate.” Id. Likewise, when the Hawks claimed an exemption and no party in 

interest objected, the funds held in the IRA were exempted because of their

essential character as “assets held in . . . an individual retirement account.” 

See Tex. Prop. Code § 42.0021(a). The funds would have stayed exempt during 

the bankruptcy proceeding so long as they remained in the IRA and continued 

to comply with Section 42.0021(a)’s requirements. However, when the Hawks 

withdrew the funds, the essential character of the property changed from 

assets held in a retirement account to “[a]mounts distributed from a 

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[retirement] account,” see § 42.0021(c), which enabled the Trustee to contest 

the exemption of the distributed amounts.1

B. Chapter 7 and Chapter 13 Cases

The Hawks also contend that Frost is distinguishable because it was a 

Chapter 13 case, whereas the instant case was filed under Chapter 7. As an 

initial matter, this argument is unconvincing given that Frost relied heavily 

on principles established in Zibman, a Chapter 7 case. Furthermore, Frost does 

not limit its holding to Chapter 13 cases and does not even mention that the 

case was brought under Chapter 13. See In re Frost, 744 F.3d at 387; Lowe v. 

DeBerry, No: 5:15-cv-1135, slip op. at 17 (W.D. Tex. Mar. 10, 2017) (“[N]othing 

in Frost itself limits its holding to Chapter 13.”). “The only section of the 

Bankruptcy Code examined by the Frost court is Section 522, which applies to 

both Chapter 7 and Chapter 13 cases.” DeBerry, slip op. at 17. Nevertheless, 

the Hawks insist that Frost does not apply in the instant case because of 

important differences between Chapter 7 and Chapter 13 proceedings.

“Chapter 7 allows a debtor to make a clean break from his financial past, 

but at a steep price: prompt liquidation of the debtor’s assets. When a debtor 

files a Chapter 7 petition, his assets, with specified exemptions, are 

immediately transferred to a bankruptcy estate.” Harris v. Viegelahn, 135 S. 

Ct. 1829, 1835 (2015). The trustee then sells the property of the estate and 

distributes the proceeds to the debtor’s creditors. 11 U.S.C. §§ 704(a)(1), 726. 

The Hawks argue that when exemptions are allowed in a Chapter 7 case, the 

exempted property is permanently “removed from the property of the estate,” 

and “the debtor can later sell them and use the proceeds as he or she will.” See

In re D’Avila, 498 B.R. 150, 159 (Bankr. W.D. Tex. 2013).

 

1 The Hawks also argue that the funds were permanently exempted because the 

Trustee first objected to the exemption after filing a report declaring that there were no assets 

for distribution. However, the Hawks have not cited any authority in support of this position.

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Chapter 13 is a “wholly voluntary alternative to Chapter 7.” Harris, 135 

S. Ct. at 1835. In a Chapter 13 case, a debtor is allowed “to retain his property 

if he proposes, and gains court confirmation of, a plan to repay his debts over 

a three- to five-year period.” Id.; see 11 U.S.C. §§ 1321, 1322, 1325. “[T]he 

Chapter 13 estate from which creditors may be paid includes both the debtor’s 

property at the time of his bankruptcy petition, and any wages and property 

acquired after filing.” Harris, 135 S. Ct. at 1835; see 11 U.S.C. § 1306(a). 

“Except as otherwise provided in the plan or the order confirming the plan, the 

confirmation of a plan vests all of the property of the estate in the debtor.” 11 

U.S.C. § 1327(b). The Hawks argue that “unlike the operation of property 

exemptions in Chapter 7,” exempted property does not actually leave the

bankruptcy estate during Chapter 13 proceedings “because no property vests 

with the debtor prior to confirmation.” 

In support, the Hawks point to one case in which a bankruptcy court held 

that Frost does not apply to Chapter 7 cases. See In re Montemayor, 547 B.R. 

684, 713 (Bankr. S.D. Tex. 2016). In Montemayor, the bankruptcy court 

reasoned that the homestead in Frost “never truly left the chapter 13 estate, 

because it was exempt but would not vest in the debtor until the resolution of 

either an order granting plan confirmation or . . . completion of all plan 

payments under the plan and the entry of an order of discharge.”2 Id. at 710 

(emphasis omitted). The bankruptcy court noted that “there is no similar 

provision applicable in a chapter 7 bankruptcy.” Id. at 712. Accordingly, the 

court concluded that “Frost’s core holding is based on factually distinguishable 

underpinnings and, as such, is distinguishable in a chapter 7 where, such as 

here, the debtor sells a properly exempted homestead post-petition.” Id. at 713.

 

2 Though acknowledging that this rationale was “not specifically mentioned by the 

Fifth Circuit” in Frost, the bankruptcy court viewed this as the Fifth Circuit’s “implied 

analysis.” Montemayor, 547 B.R. at 709.

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Yet other district and bankruptcy courts have held that Frost is 

applicable in Chapter 7 cases. DeBerry, slip op. at 19; In re Smith, 514 B.R. 

838, 850 (Bankr. S.D. Tex. 2014). For example, in Smith, the debtor filed for 

Chapter 7 bankruptcy and claimed a homestead exemption under Texas law, 

without objection from the trustee or any creditors. 514 B.R. at 841. After the 

bankruptcy court issued an order discharging the debtor, the debtor sold his 

homestead but did not reinvest the proceeds in another homestead within six 

months of the sale. Id. The bankruptcy court held that the trustee was entitled 

to recover the proceeds from the debtor under Frost and Zibman, noting that 

“it is not the exempt status itself that carries through the entirety of a case, 

but rather the law governing the exemption.”3 Id. at 848, 850.

Likewise, in the instant case, the snapshot rule dictates that the law 

governing the IRA exemption (Texas Property Code § 42.0021) is applicable 

throughout the entirety of the case. Thus, the IRA funds were not forever

removed from the property of the estate when the exemption was allowed. 

“When a debtor elects to avail himself of the exemptions the state provides, he 

agrees to take the fat with the lean; he has signed on to the rights . . . but also 

to the limitations . . . integral in those exemptions as well.” In re Zibman, 268 

F.3d at 304. Texas law clearly placed a limitation on the Hawks’ IRA exemption

during the pendency of the bankruptcy proceeding: if the Hawks elected to 

receive a distribution from the IRA, they needed to reinvest those funds in 

another retirement account within sixty days or else lose their exemption. See 

Tex. Prop. Code § 42.0021(a), (c). Allowing a Chapter 7 debtor to retain 

distributions from an IRA that have not been rolled over into another account 

 

3 The Hawks argue that the bankruptcy court erred by “retroactively applying” Smith

to the instant case, even though the Hawks withdrew funds from the IRA before Smith was 

decided. But because we review legal conclusions de novo, any error by the bankruptcy court 

on this point is irrelevant. We simply view Smith as a persuasive interpretation of Frost.

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within sixty days would directly contradict § 42.0021(c) and “produce 

inequitable results, particularly when Chapter 13 debtors in [similar] 

situations are not permitted to retain such proceeds. It would effectively read 

the [sixty day] limitation out of the statute in Chapter 7 cases.” DeBerry, slip 

op. at 19.

The Hawks also note that pursuant to 11 U.S.C. § 1306(a)(1), the estate 

in a Chapter 13 case includes “all property of the kind specified in . . . section 

[541] that the debtor acquires after the commencement of the case but before 

the case is closed, dismissed, or converted.” The Hawks contend that this 

Court’s decision in Frost effectively brought “proceeds that became nonexempt 

after the expiration of the time-limited exemption back into the estate,” which 

was permissible in a Chapter 13 case because the proceeds supposedly

constituted property that the debtor acquired after the commencement of the 

case. Because Chapter 7 does not contain an analogous provision, the Hawks 

reason that previously exempted property that becomes nonexempt under 

state law after commencement of a Chapter 7 case remains excluded from the

bankruptcy estate.

This argument might make sense if the proceeds from the homestead 

sale in Frost constituted property that the debtor acquired after the 

commencement of the case, but Frost did not characterize the debtor as 

acquiring a new property interest when he sold his homestead.4 Rather, the 

opinion stated that Frost’s existing “interest in his homestead changed from 

an unconditionally exempted interest in the real property itself to a 

conditionally exempted interest in the monetized proceeds from the sale of that 

property.” 744 F.3d at 389 (emphasis added). After the conditional exemption 

 

4 In addition, Frost did not mention § 1306 and gave no indication that the Court’s 

reasoning was based on this attribute of Chapter 13 cases.

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expired, “Frost lost his right to withhold the sale proceeds from the estate,” not 

because the proceeds were a wholly new property interest that Frost acquired 

after commencement of the case, but because Frost’s interest in the property 

had changed and no longer met the conditions of the exemption. Id.

In the case at bar, the Hawks held a property interest in the IRA funds 

when their bankruptcy petition was filed. Although the essential character of 

the funds changed over time, the Hawks did not acquire new property within 

the meaning of § 1306(a)(1) when they withdrew those funds from the IRA. On 

the contrary, their existing interest simply changed from an unconditionally 

exempted interest in the funds held in the IRA to a conditionally exempted 

interest in the funds distributed from the IRA. Texas law dictated that the 

Hawks needed to roll over the distributed funds into another retirement 

account within sixty days in order to maintain the funds’ exempt status. But 

the Hawks did not do so. Accordingly, we hold that the bankruptcy court did 

not err in concluding that the Hawks could no longer claim the funds as exempt 

under Texas law.

IV. CONCLUSION

For the foregoing reasons, we AFFIRM the bankruptcy court’s order 

requiring the Hawks to turn over the funds to the Trustee.

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