165 B.R. 176 (W.D.Va. 1994), 93-0038, Bryant v. Smith

Docket Nº:Civ. A. No. 93-0038-L.
Citation:165 B.R. 176
Party Name:. Debra M. BRYANT and William A. Bryant, Appellants, v. W. Alan SMITH, Jr. Trustee, and Crestar Bank, Appellees.
Case Date:February 17, 1994
Court:United States District Courts, 4th Circuit, Western District of Virginia
 
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Page 176

165 B.R. 176 (W.D.Va. 1994)

.

Debra M. BRYANT and William A. Bryant, Appellants,

v.

W. Alan SMITH, Jr. Trustee, and Crestar Bank, Appellees.

Civ. A. No. 93-0038-L.

United States District Court, W.D. Virginia, Lynchburg Division.

February 17, 1994

Page 177

[Copyrighted Material Omitted]

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Laurence P. Morin and Sidney H. Kirstein, Lynchburg, VA, for cross-appellees-appellants.

Alexander Wayne Bell, Alexander W. Bell Law Firm and Leighton Summerson Houck, Caskie & Frost, Lynchburg, VA, for cross-appellants-appellees.

MEMORANDUM OPINION

WILSON, District Judge.

The debtors, Debra M. Bryant and her husband William A. Bryant, appeal the bankruptcy court's decision finding that they are not entitled to homestead or retirement benefits exemptions because they were untimely in claiming them. The bankruptcy trustee, W. Alan Smith, Jr., and a creditor, Crestar Bank, appeal the bankruptcy court's determination that the debtors are entitled to a poor debtor's exemption. The appeals also raise related issues concerning the timeliness of the filing of the schedule of assets. This court affirms in part, reverses in part, and remands.

I.

The debtors filed a voluntary Chapter 7 petition on October 21, 1992. On October 26, 1992 the clerk gave notice that the initial § 341 meeting of creditors would be held on November 17, 1992. Before the initial meeting, debtors' counsel apprised the trustee that the schedules would not be filed by the November 17, 1992 creditors' meeting because appraisals were needed for the schedules. The debtors did not appear at the initial meeting of creditors on November 17, 1992, but their counsel was present. The trustee adjourned the meeting until December 1, 1992. The debtors filed the schedules on November 30, 1992. The schedules listed the debtors' equity in various parcels of real property and listed various personal property, including a retirement account, as exempt. On December 1, 1992 the meeting of creditors was adjourned on Crestar's motion until December 15, 1992, and the debtors filed their homestead deed. The homestead deed listed the same property that was listed in the schedules. At the December 15, 1992 meeting Crestar and the trustee objected to the exemptions claimed by the debtors and to the schedules as untimely. On December 21, 1992 the debtors filed a motion seeking an extension of time for the filing of the schedules.

The debtors contended that their late filing of the schedules should be excused because the complexity of the debtors' business affairs delayed appraisals that the debtors felt were necessary for the schedules. They also contended that they were simply following local practice and that the trustee had authorized the late filings. The bankruptcy court found that those contentions were "not supported by the evidence" and that there was neither cause shown nor excusable neglect for the late filing. The bankruptcy court concluded, nevertheless, that the late filing did not act as a waiver of the exemptions.

The debtors claimed exemptions under Virginia Code §§ 34-4, 34-26, 34-34. Virginia Code § 34-4 establishes a homestead exemption; § 34-26 establishes a poor debtor's exemption; and § 34-34 establishes an exemption for certain retirement benefits. The bankruptcy court held that the exemptions claimed under §§ 34-4 and 34-34 were waived because Virginia Code § 34-17 requires a debtor who claims an exemption in

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real or personal property to "set such real or personal property apart on or before the fifth day after the date initially set for the meeting held pursuant to 11 U.S.C. § 341, but not thereafter." Va.Code Ann. § 34-17 (Michie 1990). Virginia Code § 34-14, in turn, establishes the manner in which personal property is to be set apart--the filing of a homestead deed. The bankruptcy court found, however, that §§ 34-14 and 34-17 did not apply to the poor debtor's exemption of Virginia Code § 34-26. In so ruling, the bankruptcy court recognized, but declined to follow, a contrary decision from this court, Myers v. American Nat'l Bank & Trust Co., No. 89-01401, 1990 WL 542803, 1990 U.S. Dist. LEXIS No. 19849, (W.D.Va. Oct. 4, 1990) (Kiser, J.), affirmed by unpublished memorandum opinion, No. 90-2482, 1991 WL 161487, 1991 U.S.App. LEXIS No. 19698 (4th Cir. August 23, 1991). These appeals followed.

II.

The Bankruptcy Code establishes exemptions available to debtors in bankruptcy. 11 U.S.C. § 522. Pursuant to the Code, Virginia has opted to provide its own exemptions. See Va.Code Ann. § 34-3.1 (Michie 1990). In the instant case, the debtors have claimed the homestead exemption established by Virginia Code § 34-4 and the retirement benefits exemption established by Virginia Code § 34-34. Each of those exemptions must be claimed within the time limits prescribed by Virginia Code § 34-17. Section 34-17 requires a debtor who claims an exemption in real or personal property to "set such real or personal property apart on or before the fifth day after the date initially set for the meeting held pursuant to 11 U.S.C. § 341, but not thereafter." Because the first meeting of creditors pursuant to § 341 was scheduled for November 17, 1992, and the debtors did not claim their exemptions until December 1, 1992, the bankruptcy court found that those exemptions were waived. The debtors contend that the bankruptcy court misconstrued Virginia Code § 34-17 and that, even if the bankruptcy court properly construed § 34-17, they still did not waive their exemptions because they were not given required notice of the initial § 341 meeting. This court rejects both contentions.

Debtors assert that in enacting the present...

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