Exemptions: Claiming, timing & objections to exemptions.
Published: 2007 | Author: William J. Tucker

This paper discusses the procedure for claiming, timing and objections to exemptions. The Bankruptcy Code explicitly addresses exemptions in § 522. Indiana has exercised its right to opt-out of federal bankruptcy exemptions, and the claiming of exemptions by individuals domiciled in Indiana is controlled by Indiana Code 34-55-10 et seq.


In Indiana, it has been well-established that debts, salaries, earnings, wages, and income from trusts funds or profits due a judgment debtor constitute property within the meaning of Indiana exemption laws. The only requirement to claiming an exemption is that the judgment debtor must have an individual interest in the property claimed as exempt. It may generally be stated that Indiana’s exemption laws do no require a debtor to have equity in an asset to claim it as an exemption. See Matter of Sherbahn, 170 B.R. 137 (Bankr. N.D. Ind.1994). The case of In re Jackson, 74 B.R. 45 (Bankr. N.D. Ind. 1987), established the general principle that exempt property is not protected from the enforcement of valid liens; instead, the lien survives the bankruptcy discharge as an in rem liability.


In order to be effective, property claimed as exempt must be identified with specificity and its value must be stated. In Indiana, the value of property in which a debtor claims an exemption is determined upon sale or other disposition of the property. In making a claim to an exemption on Bankruptcy Schedule C, a debtor is required to identify both the “value of the claimed exemption” and the “market value of the property” in which the exemption has been claimed.


The filing of objections to exemptions is controlled by Bankruptcy Rule 4003 and § 522(l). If a debtor does not claim an exemption with respect to particular property, the rule of inclusion stated in Bankruptcy Code § 541 controls, and the property then goes to the trustee as part of the bankruptcy estate to be distributed to creditors. The timely filing of objections is required, § 522(l) renders property claimed exempt by the debtor automatically exempt if a party in interest does not object. Section 522(l) has been applied literally by the United States Supreme Court in Taylor v. Freeland, 503 U.S. 638 (1992). Since §522(l) has been applied literally by the Supreme Court, the trustee and creditors should take heed of Bankruptcy Rule 4003(b), which provides that a party in interest must file an objection to an exemption claim within 30 days after the meeting of creditors or the filing of any amendment to the list of claimed exemptions.


The paper further discusses objections to amendments of exemptions under Bankruptcy Rules 1009(a) and 4003(b), as well as objections to exemptions where a debtor’s bankruptcy case has been converted to Chapter 7.

Download the PDF