Opinion ID: 2655717
Heading Depth: 2
Heading Rank: 2

Heading: Schwab v. Reilly

Text: Even if Zibman were not determinative, Frost’s argument that Schwab v. Reilly requires the conclusion that §§ 522(c) & (l) protect his monetary interest in the homestead—and thereby preempts Texas’s limitation on exempting his property 6—is without merit. 560 U.S. 770 (2010). In Schwab, the debtor (“Reilly”) claimed exemptions on certain assets under §§ 522(b) & 6 See, e.g., In re Cunningham, 513 F.3d 318 (1st Cir. 2008) (holding that the proceeds from the post-petition sale of the debtor’s homestead retained the exempt status of the home, and that Massachusetts’ contrary provision was preempted); In re Weinstein, 164 F.3d 677 (1st Cir. 1999) (holding the Bankruptcy Code preempted the Massachusetts Homestead Act’s exceptions for preexisting liens and prior contracted debts); cf. In re Davis, 170 F.3d 475 (Fifth Circuit held that the Bankruptcy Code’s exceptions to the homestead exemption did not impliedly preempt Texas law and subject the debtor’s homestead to turnover and sale by the estate). 9 Case: 12-50811 Document: 00512550869 Page: 10 Date Filed: 03/05/2014 No. 12-50811 (d). 7 Reilly listed the exemptions on the Schedule C form and claimed the statutory maximum value on those assets. Schwab did not object. When an appraisal of the listed assets revealed that they were worth more than the statutory maximum exemption, Schwab moved to auction off the equipment to satisfy the obligations of the estate. Reilly argued that the property claimed as exempt on Schedule C was the asset itself—not the statutorily mandated maximum value of the exemption—and that by failing to object Schwab had waived its right to challenge that exemption. Schwab argued that Schedule C exempted only the value assigned to a debtor’s interest in the property, not the entire value of the asset itself. The Supreme Court ruled for Schwab, stating that the exemption applied to the “debtor’s ‘interest’—up to a specified dollar amount—in the assets described in the category, not [to] the assets themselves.” Id. at 782. Frost argues that the Schwab case “focuses on the ‘exempt is exempt’ language of § 522(l) by frequently referring to Schedule C valuations as authority for fixing the value of an exemption without qualifying reference to state or federal exemptions.” Because Schwab holds that the dollar value listed on Schedule C functioned to define the rights of the debtor, “then it must also (favorably or unfavorably) define the rights of her creditors.” As applied to the facts in this case, Frost argues that because he “claimed as exempt the 7 11 U.S.C. §§ 522(d)(5)-(6) provide: The following property maybe be exempted under subsection (b)(2) of this section: