Schwab v. Reilly - Post-Decision SCOTUScast
SCOTUScast 08-30-10 featuring Scott F. Norberg
On June 17, 2010, the Supreme Court announced its decision in Schwab v. Reilly. When a debtor files a Chapter 7 bankruptcy petition, all of the debtor's assets become the property of the bankruptcy estate. 11 U. S. C. §522(l), however, affords the debtor the right to reclaim certain property as "exempt." Property that a debtor claims as exempt will be excluded from the bankruptcy estate "[u]nless a party in interest" objects. In this case the debtor claimed a property interest as exempt and valued it as falling within the amount section 522(l) allows the debtor to exempt, but the interest sold at a price that substantially exceeded the statutorily authorized amount subject to exemption. The question in this case was whether in order to recoup the excess the trustee in bankruptcy had to object to the exemption.
In an opinion delivered by Justice Thomas, the Court held that the trustee did not have to object in order to recoup in such cases.
To discuss the case, we have Florida International University College of Law Professor Scott F. Norberg.
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