Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.


The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)
Consumer: Exemptions
ID Name Group Other Code
Sec
Cross
Ref
Problem Referenced Proposed Solutions
NBRC-
0004
Edgar M. Rothschild, III Rothschild, Bloom, Hoover, Allison & Ryan. Chapter 7 & 13 Debtor's counsel. Oral Comments: May 17th Meeting

Lack of uniformity of exemption scheme Abolish opt-out provisions to federal exemption scheme
NBRC-
0004
Edgar M. Rothschild, III Rothschild, Bloom, Hoover, Allison & Ryan. Chapter 7 & 13 Debtor's counsel. Oral Comments: May 17th Meeting 522(d)
Lack of uniformity of exemption scheme Abolish opt-out provisions to federal exemption scheme
NBRC-
0012
Saul Eisen President; National Association of Bankruptcy Trustees October 12, 1995, Working Paper 522(l) F.R.B.P. 4003(b) Thirty-day time period within which to object to exemptions is too short. Extend the time period in Bankruptcy Rule 4003(b).
NBRC-
0012
Saul Eisen President; National Association of Bankruptcy Trustees October 12, 1995, Working Paper 522(l)
"Exemption by Declaration" provides debtors with an unfair windfall. Overrule the Supreme Court decision of Taylor v. Freeland Kronz and eliminate the effect of a trustee's failure to object to a claim of exemption to which there is no colorable statutory basis.
NBRC-
0012
Saul Eisen President; National Association of Bankruptcy Trustees March 29, 1995, Letter 522
More and more assets are slipping through the hands of trustees. The primary culprit is exemptions, both under state and federal statutes. The exemption scheme should be changed in a manner which would make the application of exemptions more consistent between the various states and prevent abuse of the bankruptcy process when a debtor exempts an exorbitant amount of property.
NBRC-
0101
Ike Schulman President; National Association of Consumer Bankruptcy Attorneys Invited Participant to numerous NBRC meetings.

Since bankruptcy exemptions are determined on a state-by-state basis, there are significant differences among the states in amounts of exempt property allowed. At the same time, the bankruptcy code provides its own exemption amounts for debtors in those states that have not yet opted out of the federal exemption scheme. This has resulted in somes states providing exemption amounts which are less than those provided under the federal system, leaving debtors in those states with a substantially diminished fresh start. NACBA recommends that the Bankruptcy Code be amended to allow all debtors to choose either their own state's exemptions or the federal bankruptcy exemptions.
NBRC-
0105
Gary Klein Staff Attorney; National Consumer Law Center, Inc. Invited participants - April Meeting 522(b)(1)
Nobody foresaw the degree to which states would seek to impose draconian exemption limitations which interfere with the congressional policy of allowing a discharge and accompanying fresh start. Similarly, nobody foresaw the perception of unfairness which wuld undermine the bankruptcy system because similarly situated creditors in neighboring states are allowed to retain wholly different amounts of exempt property. The NBRC should recommend that a floor be set on the opt-out from the federal exemptions so that states cannot impose limitations which are more restrictive than those available under section 522(d). The in forma pauperis pilot program has worked well. It has not had a measured impact on the financial viability of the bankruptcy system. This pilot program should be extended to make relief from bankruptcy fees for very poor debtors available nationwide.
NBRC-
0109
Karen Gross Professor of law; New York Law School
522(b)
Problem of inconsitency between federal and various state exemption schemes. Federal rather than state exemptions should be employed to create uniformity and predictability (and eliminate the appearance of impropriety). This would require, among other things, the amendments of 11 U.S.C. § 522(b).
NBRC-
0116
Kenneth J. Doran Law Offices of Kenneth J. Doran Participated at Consumer Bankruptcy Working Group on July 19.

Bankruptcy law indirectly prohibits debtors from taking advantage of exemption laws and preference laws. The Bankruptcy "system" should explicitly permit pre-bankruptcy planning in consumer cases to allow debtors to benefit from exemption and preference laws.
NBRC-
0119
William C. Whitford Professor


Inadequate exemptions frustrate the consumer bankruptcy policy to provide the overburdened debtor with a fresh start. Establish mandatory minimum exemptions in bankruptcy, while establishing upper limits on state exemptions when they are elected. Also, repeal Patterson v. Shumate, and deal with pension rights as a matter of exemptions policy.
NBRC-
0120
Judith Elston Chrysler Financial Services, Toyota Motor Credit Company, Ford Motor Credit Company, General Motors, and American Financial Services


Creditors are deprived of a reasonable opportunity to review and object to the debtor's scheduled exemptions. The Code should be amended to provide an aggregate ceiling for exemptions even for those who elect a state exemption. The Code should provide an incentive for counsel to accurately plead debtors' exemptions.
NBRC-
0124
Wayne Johnson Attorney; Brobeck, Phleger & Harrison, LLP
522
As a result of Taylor v. Freeland & Kronz, a debtor essentially has the ability to exempt any property he or she desires under section 522(1) unless a timely objection is filed to the claim of exemption. The effect of Taylor is magnified by the extraordinary short time frame for objecting to claims. Under Rule 4003, interested parties have thirty days after the conclusion of the meeting of creditors... to object to exemptions. While this rule probably gives creditors a sufficient period of time to consider exemptions, trustees are being hard-pressedunder this deadline. In most cases a trustee does not have a working knowledge of the assets until the end of the 341 meeting. At that point if assets are sufficient to administer the estate, the trustee hires counsel and that process takes time. Thus, once an attorney is hired, she must file an objection to the exemptions immediately or file a motion to extend the time to object, as the court must act on any extension motion "within the thirty days." The proposed revision would be to modify Rule 4003(b) so that the period to object to exemptions can be extended so long as a motion requesting such extension is filed within such thirty-day period. Such a modification would conform Rule 4003(b) to other rules such as Rules 4004(b) and 4007(c) governing time to object to a discharge. It is not necessary for the court to actually rule prior to the deadline.
NBRC-
0121
Brian L. McDonnell Navy Federal Credit Union
522
Exemptions are not uniform. Revise § 522 to provide a framework for greater uniformity of exemptions among the bankruptcy courts.
NBRC-
0123
Henry J. Sommer National Bankruptcy Conference Submitted report entitled "Reforming the Bankruptcy Code" 522(b)
Federal bankruptcy exemptions are not available in all states. The language in § 522(b) permitting a state to make the federal bankruptcy exemptions unavailable to its resident should be repealed.
NBRC-
0123
Henry J. Sommer National Bankruptcy Conference Submitted report entitled "Reforming the Bankruptcy Code" 522(b)(2)
The law regarding exemption of entirities property in bankruptcy is confused and variable amount circuits and districts. Amend § 522(b)(2) to resolve the confusion over exemption of entirities property in a way that does not cause the liquidation of all entirities property in the bankruptcy case and protects a modest amount of entirities property as exempt.
NBRC-
0123
Henry J. Sommer National Bankruptcy Conference Submitted report entitled "Reforming the Bankruptcy Code" 522
The law regarding whether, and to what extent, consumer debtors may convert nonexempt property to exempt property prepetition is confusing and unpredictable. Clarify that the conversion of nonexempt to exempt property should be grounds to bar a discharge.
NBRC-
0152
Kenneth L. Robinson President; National Ass'n of Federal Credit Unions


Problem of disparate application of the Code has led to no unifomrity in the Code, particularly in the area of exemptions. Code should be amended to establish uniform federal limit on personal exemptions which will help establish equality for debtors filing in different jurisdictions.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor Section Attorney
522 F.R.B.P. 4003(b) Thirty day time period under Rule 4003(b) during which objections to a debtor's claimed exemptions can be made is too short, unnecessarily restrictive, and sometimes results in debtors being entitled to unwarranted exemptions. Time period for objecting to a debtor's claimed exemptions should be extended, possibly to 60 days from the first meeting of creditors, in order to coincide with the deadline under Rule 4004 for objecting to the debtor's discharge in Chapter 7 cases.
NBRC-
0193
James V. Stanton and Richard A. Steyer, on behalf of Natl. Assoc. of Bankruptcy Trustees Attorneys and bankruptcy trustees Statement by Saul Eisen, NABT's president

In the attached statement, the president of the National Association of Bankruptcy Trustees ("NABT") states that the period within which the trustee must object to exemptions is too short. Also, in cases where the trustee "fails to object to exemptions to which there is no statutory basis," the Code should be amended to eliminate the effects of that failure to object. Period within which the trustee must object to exemptions should be extended.
NBRC-
0212
William H. Brown and Lawrence Ponoroff Bankruptcy Judge (W.D. Tenn.) and Tulane Law School Professor of Law, respectively
522(b)
"Opt-out" and "election" provisions in § 522(b) should be eliminated because the present approach to exemption policy has introduced an enormous level of uncertainty into the consumer bankruptcy system which has eroded public confidence, increased administrative costs, and in many cases, undermined the ability of the system to afford effective relief to debtors and creditors alike. This postition is based on the recognition that the fresh start in bankruptcy is a matter of federal, not state, concern. "Opt-out" and "election" arrangements in § 522(b) should be eliminated in favor of a single list of mandatory, uniform bankruptcy exemptions such as: homestead, tangible personal property, unused homestead, certain personalty, and income exemptions. The authors include an in-depth discussion of these issues and the guiding principles that influenced their recommendations.
NBRC-
0214
A. Jay Cristol Chief Bankruptcy Judge, S.D. Fla.
522(b) F.R.B.P. 4003(b) Debtors should not be able convert non-exempt property to exempt property by using a loophole in §§ 522(b) and (1). The author attaches an article/memorandum he and his law clerk wrote entitled "Bankruptcy Alchemy: Conversion of Nothing to Golden Opportunity," addressing bankruptcy exemptions and the repercussions of the Supreme Court's decision in Taylor v. Freeland & Koonz, 503 U.S. 638, 112 S.Ct. 1644 (1992). The author states that the Supreme Court in this case unnecessarily broadened debtors' exemption opportunities so that "debtors may load up non-exempt property and with a little cosmetic scheduling, drive it across the line into the wonderful world of exemptions. And even better, of the effort fails, there is no penalty." The case involved the consequences flowing from the trustee's failure to object to a claimed bad faith exemption under § 522(1) and Rule 4003(b). The Court held that absent a request for an extension of time, Rule 4003(b) places a 30-day limit upon the trustee and creditors to object to the claimed exemptions of a debtor in bankruptcy. Moreover, Rule 4003(b) must be read in conjunction with § 522(1), which provides that the property claimed as exempt shall be exempt unless an objection to said exemption has been timely filed, whether or not the exemption was claimed in good faith. Consequently, where a bad faith challenge is not allowed simply because it was not timely filed, "a debtor may claim anything of value as exempt whether there is a solid legal basis, a marginal legal basis, or no legal basis whatsoever." Code should be amended to close the loophole provided in §§ 522(b) and (1) which allows exemptions claimed in bad faith to remain unchallenged if the exemption is not challenged within the 30-day time limit provided in Rule 4003(b).
NBRC-
0223
Frank R. Kennedy Professor, Michigan Law School; former Executive Director, Commission on the Bankruptcy Laws of the United States (1973) Cover letter discussing various areas of concern

Author provides a list of 30 "Topics for Consideration by Commission on Bankruptcy Laws." The recommended topic relating to exemptions is: Federalization of exemptions None.
NBRC-
0299
Robert R. Weed Attorney


Author supports the concept of uniform federal exemptions with a floor and ceiling on the homestead. He is concerned that the floor on the homestead is so high that it will feul the credit card industry's demands for a mandatory chapter 13. Supports concept of uniform federal homestead exemptions, which would provide much more uniformity than the present system.
NBRC-
0302
Brian L. Mc Donnell President, Navy Federal Credit Union
522
Bankruptcy is increasingly being perceived as an "easy way out" for debtors seeking to avoid responsibility for their actions. In addition, many people no longer consider bankruptcy to be a financial stigma. Bankruptcy filings represent significant time and money burdens for creditors and the courts, the costs of which are often passed on to customers of the creditors in the form of higher prices. It is imperative that bankruptcy procedures be revised to discourage financial irresponsibility in today's highly leveraged personal economic environment. To reduce the administrative burden of bankruptcy proceedings, fair and equitable guidelines should be established. In the interest of establishing fair and equitable guidelines, § 522 should be revised to provide a framework for greater uniformity of exemptions among various bankruptcy court jurisdictions.
NBRC-
0303
Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issues should be considered by the NBRC: Should property exemptions in bankruptcy be uniform in all fifty states If not, should the federal exemptions provide a ceiling on the state exemptions Is retail or wholesale valuation more appropriate for determining a creditor's allowed secured claim for property that a debtor wants to keep in a chapter 13 The CLLA believes that these issue should receive top priority (no additional details are provided). The CLLA believes that use of the terms "retail" and "wholesale" when describing valuation is confusing, and that it would probably be better to use "market" and "liquidation" respectively.
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy Institute American Bankruptcy Institute ("ABI") Numerous position papers, memoranda and research material

"If we have uniform laws of banktupcy in all 50 states, it would appear to be equitable to have uniform federal exemptions in al 50 states." Supports uniformity of property exemptions among the states.
NBRC-
0324
Richard H. Walker General Counsel, U.S. Securities and Exchange Commission
522(b)(2)(A)
In this submission representing the preliminary views from SEC staff, the author states that: (1) the SEC has a strong interest in ensuring that the bankruptcy courts are not used as a "haven for wrongdoers" in subversion of congressional intent; (2) scare enforcement resources should not be diverted into unnecessary or duplicative litigation in bankruptcy court; and (3) the SEC also has an interest pursuant to § 1109(a) as a party-in-interest, in protecting the interest of public investors who hold securities in companies involved in the bankruptcy system, ensuring adequate disclosure of reorganization plans that provide for the issuance of unregistered securities, and preventing the misuse of the Bankruptcy Code's exemption from Securities Act Registration. In furtherance of these interests, the author proposes that the Bankruptcy Code be amended to establish a ceiling for the homestead exemption in order to eradicate the enormous disparities in between different states' allowed exemptions.
NBRC-
0338
Lisa Hill Fenning Bankruptcy Judge, Los Angeles, CA


Some standardization of federal bankruptcy exemptions is desirable. The Working Group proposal seems to be a reasonable approach, but the following concerns should be kept in mind: (1) Some wage-earner debtors have extremely large retirement funds that would qualify for exemption; (2) Unless abusive filings by creditors seeking to limit exemptions become a significant problem, there is no reason to return to holding trials on acts of bankruptcy for every contested involuntary petition. With these concerns in mind, the author recommends (1) that the NBRC consider a cap or upper limit on the retirement fund exemption; and (2) a wait-and-see period before acts of bankruptcy are written back into the Code, or consider amending § 109(I) to make the filing an involuntary solely or primarily to limit debtor's exemptions grounds for a "bad faith" finding, justifying imposition of sanctions.
NBRC-
0341
George J. Wallace Attorney, on behalf of the American Financial Services Association ("AFSA")


The bankruptcy Code's exemption provisions are neither uniform in application from one state to another, nor fundamentally fair to creditors. Debtors often change state of residence a few months before seeking bankruptcy relief so as to secure favorable exemptions (a Wall Street Journal describing such a case is attached). The NBRC should address the nearly complete breakdown in bankruptcy policy with respect to exemptions. Exemptions in states which "opt out" should be subjected to both a floor and a ceiling which are based on cost of living in each state.
NBRC-
0353
Undersigned Bankruptcy Attorneys, Eastern District of Missouri Fourteen Bankruptcy Attorneys


The signatory attorneys "have review Judge William H. Brown and Professor Lawrence Ponoroff's Memorandum, dated January 3, 1997, outlining their revisions to federal bankruptcy law to create a single, national exemption scheme." Support the proposed revisions to federal bankruptcy law to create a single, national exemption scheme, and encourage the Commission to adopt the proosal in its entirety.
NBRC-
0377
Lawrence Ponoroff Professor, Tulane Law School; presenting a paper by Mr. Ponoroff and Judge William Houston Brown


The author attaches a paper he co-wrote on exemption limitations. In this paper, the authors state that a uniform system of exemptions is preferable to a floor and ceiling system because exemption policy should be based on national policy concerns, and not regional economic needs. A uniform system would also be the only sensible response to the increasing chaos and inconsistency in exemption case law. Bankruptcy Code should be amended to provide a uniform system of exemptions rather than a floor and ceiling approach.
NBRC-
0384
American Bankruptcy Institute American Bankruptcy Institute ("ABI")


ABI presents this "Report on the State of the American Bankruptcy System," which is the capstone of ABI's three-year Bankruptcy Reform Study Project. The Project's efforts culminated with a 65-question survey covering a broad spectrum of possible areas of reform. The study indicates that: (1) in general, the Code of 1978 is working well; and (2) probelms of delay, excessive costs, unfairness, and abuse need to be addressed in the current round of reforms. ABI recommnds: (1) strict deadlines for dismissal or appointment of trustees to help combat abuse; (2) reorganization of chapter 11 policy to provide stricter time limits, elimination of non-viable debtors, and reduction of excessive professional fees; (3) relaxing eligibility requirements for consumer reorganizations under chapter 13, and providing time limits, limited discharge and uniform national exemptions; (4) high standards of integrity for all professionals; (5) a balance between creditors' and debtors' rights, and equality of distribution; and (6) not adopting priority classes of claimants.
NBRC-
0409
Mrs. William H. Behan Debtor


The author was forced to declare bankruptcy when the court awarded her tenants $55,000 in rent overcharges and $26,000 in attorneys fees based on the author's violation of rent control provisions. Her home is now being put up for public auction as part of the bankruptcy process. She feels that peoples' homes should be protected from bankruptcy proceedings such as these. Code should be amended to provide a homestead exemption in states where it is currently not available.
NBRC-
0459
Jerome S. Lamet Attorney


Need for a uniform federal bankruptcy exemption policy. Author supports Professor Lawrence Ponoroff's suggestions in his memo of January 3, 1997. Author would add that the tangible personal property single lump sum cash allowance should be at least $20,000 rather than the $15,000 the Professor suggests to give individuals a fresh start.
NBRC-
0472
List of 14 signatures Consumer Bankruptcy Attorneys in the Eastern District of Missouri


Need for a single, national exemption scheme. "We have reviewed Judge William H. Brown and Professor Lawrence Ponoroff's Memorandum, dated January 3, 1997, outlining theri revisions to federal bankruptcy law to create a single, national exemption scheme. We encourage the Commission to adopt the proposal in its entirety.
NBRC-
0483
Robert R. Weed Attorney


Author is concerned "that the floor on the homestead is so high that -- coupled with the $25,00 all other exemption and the one-half homestead for renters--that this will fuel on the fire of the demand of the credit card industry for a mandatory Chapter 13." Author agrees with the concept of uniform Federal exemptions with a floor and ceiling on the homestead, but would trade lower exemptions, if necessary, to get the Basic Bankruptcy concept of the reporter, Prof. Warren.
NBRC-
0485
Lisa Hill Fenning United States Bankruptcy Judge,


Author agrees that some standardization of federal bankruptcy exemptions is desireable, but has two areas of concern: 1) Retirement funds - doctors and lawyers sometimes exit from bakruptcy with $500,000 or more on deposit, while creditors receive nothing. 2) Revival of acts of bankruptcy - unless abusive filings by creditors seeking to limit exemptions become a significant problem, author sees no reason to return to holding trials on acts of bankruptcy for every contested involuntary petition. The Commission should specifically addresss the fact pattern of retirement funds given above in its recommendations. Perhaps a "needs" cap or upper limit would be appropriate. Author would urge a wait-and-see period before acts of bankruptcy are written back into the Code. A more direct preventative measure might be to amend §109 (I) to make the filing and involuntary solely or primarily to limit debtor's exemptions grounds for a "bad faith" finding, justifying imposition of sanctions.
NBRC-
0487
George J. Wallace Attorney Statement of American Financial Services Association Concerning Reaffirmations in Chapter 7 Bankruptcy and Exemptions; Article from Wall Street Journal, 11/8/96, Some Folks Hide Cash in Darnedest Places.

Author encloses a Statement fromt he American Financial Services Association which asserts that "As is widely recognized, the exemption provisions of the Bankruptcy Code are neither uniform in application from one state to another, nor fundamentally fair to creditors." "The Commission should directly address the nearly complete breakdown in bankruptcy policy with respect to exemptions. Exemptions in states which "opt out" should be subjected to both a floor and a ceiling."
NBRC-
0505
Jennie Deden Behles Attorney

10 Author is responding to the 2/12/97 Exemption Memorandum. With regard to uniformity, author questions whether this is possible or even good. "In all fairness, I think we must also rememeber tht there is something to be said for the concept of taing your debtor as you find them." "We also have to remember there are great differences between the States in living costs and living conditions which to some extent account for the changes or variations in exemption laws across the country." If the goal of exemptions is to help provide the fresh start and keep people off welfare, regional differences must be taken into account.
NBRC-
0505
Jennie Deden Behles Attorney
10
Author is responding to 2/12/97/ Exemption Memorandum. Author feels that certain underlying premises are inaccurate, i.e. that Federal Bankruptcy Law must also determine what property shall be available for distribution to creditors and what may be retained. "Unfortunately, that is never going to be true so long as we are dealing with state property laws which are not uniform." There is an underlying assumption that debtors want uniformity, which author does not feel is the case.
NBRC-
0505
Jennie Deden Behles Attorney
10
Author is responding to the 2/12/97 Exemptions Memorandum. Author feels not enough has been done to accomodate differences caused by state laws. "I think you need to make sure that you have some built-in floater or increase in these things to take into account inflation.
NBRC-
0505
Jennie Deden Behles Attorney

10 "I'm not sure it is appropriate to apply the same exemptions to single persons as sto married persons in terms of ensuring a fresh start and keeping people off the Welfare roles."
NBRC-
0505
Jennie Deden Behles Attorney

10 Author is responding to the 2/12/97 Exemption Memorandum. No mention is made of life insurance benefits either owned by the debtor or in which the debtor is the beneficiary. "I can't imagine that you want to treat this as future income (since it isn't) and its use and purpose may be very different."
NBRC-
0505
Jennie Deden Behles Attorney

10 "I'm not sure of the purpose for the exemption for persons who do not own a home. What is the point of it If the object is to provide them a place to live, how does this accomplish that Will it apply to cash If it doesn't apply to cash that can be used as rental or something of that sort, it would seem to me to defeat the purpose." "I think there would be a large hue and outcry with the retention of large sums of cash option out."
NBRC-
0505
Jennie Deden Behles Attorney
10
"As to the proposal on involuntary petitions, this is a gigantic leap backwards."
NBRC-
0519
Gerald R. Miller Attorney and Chapter 7 Trustee

10 Author is concerned that homestead exemption may be too low in some areas of country, which may lead to mortgaging the non-exempt portion. Further, author is opposed to $25,000 cash gift to each debtor, unless it is limited to household goods reasonably necessary to maintain the household. Finally, the proposal does not discuss specific categories of goods which author feels should be considered. "I strongly oppose the proposed exemptions amendments, as they are not realistic proposals in the real world."
NBRC-
0529
H.F. White Bankruptcy Judge, Northern District of Ohio


Author is of the opinion that "it is essential that we have on national exemption that is applicable to the debtor regardless of where he files in the United States." There should be a uniform, national exemption statute and more liberal monetary provisions for exemptions.
NBRC-
0530
Samuel L. Bufford Bankruptcy Judge, Central District of California


The adoption of uniform exemptions in bankruptcy law has been a political problem historically. Three quarters of the states have opted out of the federal exemptions in the Bankruptcy Reform Act of 1978. "Notwithstanding the political problems, I agree that the bankruptcy system would be better off with a uniform set of exemptions."
NBRC-
0533
Geoffrey R. Louis President, West Point Federal Credit Union Two examples of recent cases author was involved in.

Author is angry that exemption levels are so high and houses and retirement income are exempt, and feels that it is unfair for debtors to hold high equity in a house or have a high retirement income and not be required to repay part of the debt out of these monies. Retirement income, social security and other future income, including payments from claim settlements, should not be exempt. The proposed exemptions should be less generous, for example the exemption a debtor's house.
NBRC-
0536
Lee C. Butke President/CEO, DAYAIR Credit Union Copy of letter dated 2/18/97 from Stephen D. Miles to Lee Butke RE: Bankruptcy Filings, with enclosures.

"...[I]n the Dayton District of Southwestern Ohio the handling of Chapter 13 cases is grossly different thant the handling of similar cases in Cincinnati and Columbus...Why, if there is one Federal Law, are the local districts permitted such wide latitude in interpreting and implementing the Law[]" "Day Air Credit Union supports The Working Group draft on exemptions as presented...The National Bankruptcy Review Commission must also set forth standardized rules in each State and District as there are gross discrepancies found from District to District."
NBRC-
0539
Wayne E. Johnson Attorney


Author believes proposed uniform set of federal bankruptcy exemptions "is quite sound and is long overdue"; however, author is concerned that the floating exemption in the amount of $25,000 which can be applied to any property owned by a debtor (known as a "wild card" exemption) is too narrow. First, he feels it is inequitable to limit a non-homeowner to 1/2 the value of the homeowner exemption. Second, he is concerned about homeowners who have no equity in their homes. They would receive no benefit from the proposed change, and should if the goal of federal law is to promote home ownership. 1. The wildcard exemption should be increased to the full amount of the homestead exemption. 2. Delete the language in the proposal which makes the increased wild card exemption available only to debtors who are not home owners.
NBRC-
0554
Karen S. Williams Senior Counsel, NationsBank


Author was "astonished" to find that three weeks after an initial draft of the Exemptions Proposal by the working group was distributed as subject to significant modification, it was stated that the proposal "already has been tentatively approved by the full Commission." Author also feels that the proposed federal exemptions are too high, and sigificantly higher than the states now allow. The Commission should announce specific deadlines for comments.
NBRC-
0560
Jeff Girmus Accounts Control Manager, Kitsap Federal Credit Union


"While I agree with most to [sic] the recommendations that are being made by the commission, I do take exception to the amount exemptions [sic] that are being recommended for homestead and for other property....The exemptions you are proposing actually give the member a head start instead of a fresh start." "I implore you to re-evaluate the exemptions you are proposing and to set much more moderate floor and ceilings for homestead and personal property exemptions."
NBRC-
0561
Ernest William Ball Staff Attorney, Redstone Federal Credit Union

11 Author is responding to letter with questions on exemptions from Melissa Jacoby.
NBRC-
0563
Robert H. Waldschmidt Attorney


Author writes on behalf of NABT Board of Directors to express concern over the "floor" containted in the exemption proposal ($40,000 for real property and $25,000.00 for personal property). NABT is conducting a survey of its membership, and author feels that the results will show that this proposal will result in a drastic reduction in the number of asset cases in Chapter 7. The Review Commission should consider the adverse consequences of a uniform minimum exemption standard and re-work the proposal to allow for maximym exemptions only.
NBRC-
0566
James A. Pusateri Chief Bankruptcy Judge, District of Kansas

10 Author is concerned that in states such as Kansas, where the Bankruptcy Judges do not allow creditors to get any property in bankruptcy proceedings which is exempt under state law, and where the state law is more generous in its exemptions then the proposed uniform federal exemptions, creditors could force a debtor into involuntary bankruptcy in order to reach assets they now cannot. "It would be one thing to apply federal exemptions to a debtor who has voluntarily chosen to file for bankruptcy, knowing only those exemptions would be available, but it would be quite another to forcibly deprive a debtor of exemption protections available under state law." No specific proposal.
NBRC-
0567
JOhn D. Leahy CEO, Cinfed Employees Federal Credit Union


Author feels that many debtors abuse Chapter 7 and 13, and that this will increase if proposed increases in the exemptions are adopted. Do not adopt the new homestead exemption. Take each states's economic profile into account when setting exemptions. Retirement plans whould not be entirely exempt. Future income should not be exempt.
NBRC-
0568
Kenneth E. Salomon Concerned Citizen; President, Salomon Enterprises, Inc.
11
The Homestead property exemption is extremely low. Author feels the retirement plan exemption is long overdue, and is infavor of the future income and medical devices exemptions. He feels the homestead exemption amount should be raised.
NBRC-
0570
Darren T. Crossett Vice President, Beacon Federal Credit Union


While applauding the notion of exclusive federal bankruptcy exemptions, author feels that the amounts are too high. Lower the amounts of the proposed homestead and property exemptions.
NBRC-
0571
Kenneth T. Boylan Manager, Queens Postal Federal Credit Union A second letter from same author on same date.

Bankruptcy laws are too easy on the debtor. Federal exemptions should apply in all states and chapter 13 should prevail in most cases. There shold be no exemption of retirement funds. Secured debts should not be exempted. "A simple sentence stating "No debts incurred within the past year will be exempt from discharge, except if there is loss of income or excessive medical expense. this [sic] would eliminate 50% of bankruptcies."
NBRC-
0572
Don R. Athearn President, SunState Federal Credit Union A second letter of same date from same author on Proposed Changes to Chapters 7 & 13 of the U.S. Bankruptcy Code.
11 Author gives his views on Proposed Changes on Federal Exemptions Author likes uniform set of exemptions with floor and ceiling amounts. Medical and health aids should be exempt. Payments for bodily injury should not be exempt. Twenty-five thousand dollars for property not specifically exempt is too generous - examine a percentile for property instead of a flat amount. Author favors a heightened standard for filing involuntary petitions, but feels they must be clearer. More frequent adjustments for inflation should be made. "It should be mandatory that all creditors are provided with financial schedules of debtor upon completion without cost to the creditor."
NBRC-
0573
Celia Woodham Director of Compliance, Chartway Federal Credit Union


Author is concerned that bankruptcy is too easy for debtors. Adopt federal exemptions, but allow states to "opt out" if their exemptions are more restrictive. Medical devices, health aids, and retirement benefits should be exempt, unless the latter is being used to protect assets. The $25,000 exemption for Other Property is reasonable. The floor of $40,000 for the homestead exemption is too high. The period for inflation adjustment should be 5 years, rather then 3.
NBRC-
0577
Judge William Houston Brown Judge


Author is in favor of uniformity in bankruptcy exemptions. Author accepts the floor and ceiling approach for the homestead exemption, provided the range between the two remains narrow. Some thought must be given to how to restrict homestead exemptions to one per household, i.e. if one spouse files bankruptcy and the other files at a later time in another state. The floor and ceiling on homestead exemptions should remain $40,000 - $100,000. The future income exemption should be exteded not only to future payments but to funds on hand that can be traced to previous protected income. Any unused portion of the homestead exemption should be available to the homeowner as well as the nonhomeowner. In conversion from one chapter to another, the case trustee, creditors, and other parties in interest should have a second opportunity to object to the debtor's claimed exemptions.
NBRC-
0586
Warren W. Bentz Bankruptcy Judge, Western District of PA
522(d)(10)(E)
"There is a disparity in the way private entrepreneurs are treated with respect to their pension plans, or IRAs, as compared with persons who are employees of larger corporations and have benefits under ERISA-qualified plans. Nationwide a debtor's benefits under an ERISA-qualified plan is not included in his estate under 11 U.S.C. § 541." In the Third Circuit, a debtor is not entitled to an exemption with respect to his Keogh or IRA plan unless he is, at the moment of filing bankruptcy, receiving benefits from the plan. This disparity of treatment should be revisited.
NBRC-
0604
Richard H. Walker General Counsel, Securities and Exchange Commission Document entitled "Issues Identified by Division of Enforcement and Office of General Counsel of Securities and Exchange Commission for Consideration by Bankruptcy Review Commission. 522(b)(2)(A)
Defendants in SEC actions have filed bankruptcy to undermine asset freezes, stop law enforcement actions and contempt proceedings, and to seek discharge of nondischargeable claims. Author is transmitting with this letter a document outlining issues of concern to the Division of Enforcement and Office of General Counsel of the SEC, among which is the following: States which authorize unlimited exemptions for homesteads open the potential for abuse. Establish a ceiling for the homestead exemption which applies uniformly to all states.
NBRC-
0605
Kenneth L. Robinson President, National Association of Federal Credit Unions (NAFCU)


Lack of national uniformity in exemptions leads to unfairness. While members agree with the proposed homestead exemption, they feel it is too high. The $25,000 exemption for property which is not specifically exempted is too high. Adopt uniform national exemptions and do not let the states opt out. The ceiling on the homestead exemption should be decreased to $75,000. Members support a reasonable exemption for medical devices. Debtors should not be able to completely shelter retirement accounts. Bodily injury payments should be exempt for individuals who cannot work. The exemption for property which is not specifically exempted should be lowered to $10,000.
NBRC-
0649
Elizabeth S. Petersen Attorney


With regard to saving homes, "often the debtor gets into trouble because the second mortgage payments are for a very short period of time and for a very high monthly payment at a very high interest rate. If we had the ability to modify the second mortgage to extend it, lower the interest rate, or do something else to make the payments lower, the plan would be feasible and many of the refilings about which you have been concerned would not occur." Allow the debtor to modify the second or third mortgage on a residence if it is a nonpurchase money lien.
NBRC-
0652
Kenneth E. Salomon Concerned Citizen

11 Author is in favor of uniform exemptions, but feels the $40,000 - $100,000 ceiling is too low.
NBRC-
0658
Robert H. Waldschmidt Attorney Copy of NABT Poll

NABT does not oppose the concept of Federal Exemptions. Trustees would have no objections to a "cap" wih no floor.
NBRC-
0687
A. Stevens Quigley Attorney, panel Chapter 7 trustee



"I support inclusion of IRA'a in exempt property, so as to bring certainty to the law. I am worried that a per household homestead will promote divorce."
NBRC-
0694
James H. Cossitt Attorney


Author agrees that present exemption system has "introduced an enormous level of uncertainty into the consumer bankruptcy system." With regard to the Working Group proposals, why is a non-homeowning debtor entitled to only 1/2 of the homestead exemption Why should someone be able to be forced into the federal bankruptcy system by involuntary bankruptcy Author agrees that "the exemption should be stated in a single lump sum cash value allowance rather than "paternalistic, predetermined categories." Non-homeowners should get the same exemption as homeowners. If someone is forced into involuntary bankruptcy they should be able to elect state or federal exemptions.
NBRC-
0703
Steven J. Abelson Attorney


Generally, the Bankruptcy Code as it presently exists works reasonably well at protecting debtors from what otherwise would be a life sentence of unpaid bills, collection harassments and the absence of disposable income from which to support even a minimum quality of life for themselves and their families; however, the Code as it exists penalizes many who need and deserve its protection the most. For instance, under the current Code, those who have worked hard to pay down their mortgage suffer the most, while those who mortgage their residence to the hilt retain their homes without concern. "...I strongly oppose the restrictive limits proposed for homestead exemptions. A $100,000 ceiling can certainly be justified to protect the integrity of the system, but a floor of $30,000 will do little to help those who the Bankruptcy Code is designed to assist. I therefore respectfully propose to the Commission that the Homestead Floor exemption revision for 11 U.S.C. §522(d)(1) be modified to no less than $50,000 and preferably a uniform exemption of $100,000 per petition, irrespective of individual or joint status. Alternatively, I would ask the Commission to consider a "Senior Citizen Exception" in Chapter 13 which would allow such individuals to fund their Chapter 13 plans for less than the full liquidation value, simply on disposable income." Section 1322(a)(1) should be modified to permit debtors to retain a portion of their earnings for savings such as IRA's, 401(k)'s and the like.
NBRC-
0724
Louis A. LeLaurin, III Attorney


"The value of property an individual may exempt under Texas law may and often does run into the millions of dollars, permitting a debtor to emerge from bankruptcy with a balance sheet free of debt and reflecting net worth of seven figures....It is not unusual in my experience for debtors to move to Texas one or two years prior to bankruptcy to take advantage of this state's generous exemption laws." "The privilege of the shield of bankruptcy is often abused to sanction the transfer of wealth from unsophisticated small-busines credit grantors to conspicuous consumers who seek bankruptcy protection while laughing at the unfortunate creditors whose own lives and businesses may be ruined while their wealthy debtors enjoy a "fresh start". Egregious examples abound among former bank and savings and loan executives. "I urge the Commission to adopt uniform federal personal and real property exemptions, with no state 'opt out' provisions, as part of its recommendations for change in the statutes governing the area of individual bankruptcy." 11 U.S.C. §522 should be amended to delete the option permitting a debtor to elect state exemptions.
NBRC-
0727
Wendell J. Sherk Attorney, Eric Taylor & Associates, P.C.


Author discusses the proposal for uniform national exemptions and a single lump sum personal exmeption and the homestead exemption. Author seems to support these proposals. He feels that raising the amount for the homestead exemption would amount to inflation indexing from his state's exemption, which hasn't been changed in years. "The ability to transfer unused homestead exemptions to personalty is critical to the entire picture." Although it may provide a few with a "head start", it is necessary. Adopt uniform national exemptions.
NBRC-
0728
John C. Akard U.S. Bankruptcy Judge, Northern District of Texas Copy of letter dated 5/2/97 to Susan Jane Darnold from office of United States Trustee; Copies of 4 letters dated 3/26/97 from Judge Akard to the Bankruptcy Commissioners on different topics.

By creating uniformity in exemptions at the national level, disuniformity will be created at the state level, meaning the neighbor who files bankruptcy will have different exemptions then the neighbor who is subject to state law. "The uniform set of exemptions will satisfy the rare, but highly publicized, cases. It is not clear whether the amounts stated in the exemptions represent the debtor's interest (equity) in the property or the market value." No specific solution proposed.
NBRC-
0730
Thomas C. Leduc Director of Regulatory Issues, Michigan Credit Union League


"The Task Force concurred that one of the bigtest problems for creditors in the 1994 amendments to the Bankruptcy Code was the doubling of personal exemptions allowed for debtors." "The Task Force recommends that provision of the 1994 Bankruptcy Reform Act be repealed."
NBRC-
0776
Keith Hilliard Individual

11 "Florida is probably the worst state for enabling petitioners to claim bankruptcy, dismiss their debts, and have millions of dollars in assets." "I live in Florida and am very interested in seeing a national cap placed on the amount of property and possesions that an individual could claim."
NBRC-
0787
Bart DeCamp VP-Lending, School Employees Credit Union Clark County


Author feels that the lack of penalty or social stigma encourages bankruptcy filings. "Debts simply disappear. Many petitioners exhibit sufficient income to repay debts or have equity exempted that could be used. Any proposal to increase the homestead exemption further excalates the peceived lack of penalty. Friends and family recommend bankruptcy as an 'easy solution'." Do not increase the homestead exemption.
NBRC-
0806
Jill M. Sturtevant Assistant General Counsel, Bank of America


The Commission's proposed exemption amounts are too generous. The NBRC proposal "fails to address the fundamental flaw of the current bankruptcy system, the fact that employed debtors who have the ability to pay a portion of their obligations are not incented to pa