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13.2.4 Validity of Bifurcated Exemption Schemes

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  4. 13.2 Constitutionality and Validity of Exemption Laws
  5. 13.2.4 Validity of Bifurcated Exemption Schemes

13.2.4 Validity of Bifurcated Exemption Schemes

Some states provide two exemption schemes, one in bankruptcy and another for execution upon judgments.36 The differences may be significant.37 Courts have generally upheld bifurcated exemption schemes against constitutional and preemption challenges.38

Footnotes

  • 36 See In re Watts, 298 F.3d 1077 (9th Cir. 2002) (briefly discussing California’s complex bankruptcy/non-bankruptcy, automatic/non-automatic exemptions); In re Reaves, 285 F.3d 1152 (9th Cir. 2002) (bankruptcy debtor using California bankruptcy exemptions could exempt her car even though, before she filed bankruptcy, state court had denied her the California non-bankruptcy exemption for the vehicle); In re Sassak, 426 B.R. 680 (E.D. Mich. 2010) (bankruptcy-specific exemptions not exclusive; debtor may claim exemptions from Michigan’s general exemptions also); In re Dean, 470 B.R. 643 (Bankr. M.D. Ga. 2012) (Georgia’s bankruptcy-only exemptions, which cap the amount of insurance exemption, are exclusive; unlimited exemption found in Insurance Code not applicable in bankruptcy); In re Petrozelli, 139 B.R. 241 (Bankr. E.D. Cal. 1992) (discussing California’s dual exemption scheme); MPM Fin. Grp., Inc. v. Morton, 2007 WL 1452536 (Ky. Ct. App. May 18, 2007) (Kentucky exemption statute that incorporates federal bankruptcy exemptions applies to all debtors whether in bankruptcy or not; it and another Kentucky statute provide complementary exemption schemes, one a floor and the other a ceiling).

  • 37 See generally Appx. H, infra (summarizing state exemption laws).

  • 38 McFarland v. Wallace, 790 F.3d 1182 (11th Cir. 2015) (Georgia’s bankruptcy-only exemptions not preempted by bankruptcy statute, nor do they violate equal protection provisions of United States or Georgia constitutions); In re Murray, 586 Fed. Appx. 477 (10th Cir. 2014) (Kansas’ bankruptcy-only exemption for tax refunds attributable to earned income credit is constitutional); In re Schafer, 689 F.3d 601 (6th Cir. 2012) (Michigan’s bifurcated exemption scheme not preempted); Sheehan v. Peveich, 574 F.3d 248 (4th Cir. 2009) (West Virginia exemptions not preempted; opt-out provision does not require that state’s exemptions be uniform in and out of bankruptcy); In re Westby, 486 B.R. 509 (B.A.P. 10th Cir. 2013); In re Applebaum, 422 B.R. 684 (B.A.P. 9th Cir. 2009); In re McFarland, 481 B.R. 242 (Bankr. S.D. Ga. 2012) (upholding Georgia’s bifurcated exemption scheme); In re Earned Income Tax Credit Exemption Constitutional Challenge Cases, 477 B.R. 791 (Bankr. D. Kan. 2012) (Kansas’ bankruptcy-only exemption for tax refunds attributable to earned income credit is constitutional); In re Morrell, 394 B.R. 405 (Bankr. N.D. W. Va. 2008); In re Brown, 2007 WL 2120380 (Bankr. N.D.N.Y. July 23, 2007), aff’d, 2007 WL 4560671 (N.D.N.Y. Dec. 18, 2007).