June 17, 2010
Supreme Court Rules on Schwab v. ReillyThe Supreme Court has ruled, 6-3, majority opinion by Clarence Thomas, that the debtor exempts only a dollar interest in property, not the actual property itself and the trustee can sell the property after the objection period has expired. The opinion is here.
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The High Ct has just avoided a mud hole and stepped into a mine field.
At issue, was the argued amount of worth of an estate asset. The party claimed $10,718 and the Trustee, based on his auctioner, claimed the $17,200 value.
Problematic is the issue that the design of Congress and the Code is to reduce our Courts' burden through a some-what "fair" judicial process. In this case the ruling goes far beyond the purported issue at hand of cash v physical exempt; it has created a quagmire.
A fact undeniable is the auctioneer's appraisal is subjective as a fact not in evidence, but suggested to be possible (and if it was for the auctioneer to get the work - pure Conflict of Interest).
The only way to settle the issue on exempt is that the Trustee must present actual bids from 3 or more parties in an amount 50% or more above the claimed exception. The system needs the 50% minimum above to handle the addtional fees of advertising, insurance to secure, rent to store the to be sold assets and auctioneer/liquidator fees. That is to say at least $5000 above a $10k item; once above items with 3 bids at $20,000 or more there is no question at hand. This is the only proper way to assure a net amount to the estate that are clearly above the exempt amount; worth going through the additional time and expense of the court and estate.
Now a Trustee, through counsel for Trustee, auctioneer, appraiser etc., will seize and sell ANY item based on the theorized amount. An absurd burden upon the courts' most burdensome caseloads 13's and 7's.
Would have been much better to state that if a person claims property to be exempt, it automatically "IS" the exempt amount and all other unclaimed properties are to be sold by the Trustee.
A new can of worms much worse than BAPCPA arose here. Including all cars, trucks, hospital beds argued too elaborate etc etc.
Posted by: Laser Haas | Jun 19, 2010 9:47:16 AM