In re Charlesworth
| Decision Date | 06 March 2018 |
| Docket Number | CASE NO. 17-12260 |
| Parties | IN THE MATTER OF: ROBERT L. CHARLESWORTH BARBARA F. CHARLESWORTH Debtors |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana |
NOT FOR PUBLICATION
This matter is before the court on the trustee's objection to debtors' claimed exemptions, following a hearing at which the parties stipulated to the relevant facts and presented their respective arguments.
Debtors are relatively recent newcomers to the State of Indiana, having lived here less than 730 days. As such, they may not claim Indiana's exemptions, but must, instead, use those of Florida, the state where they previously lived. See, 11 U.S.C. § 522(a)(3)(A). Like Indiana, Florida has opted out of the federal bankruptcy exemptions, making only the state exemptions available to its residents. Compare, Fla. Stat. § 222.20 () with, I.C. 34-55-10-1 ().
Debtors are not residents of the State of Florida and have claimed the federal bankruptcy exemptions found at § 522(d). The trustee has objected, particularily with regard to a $30,000 exemption, claimed pursuant to § 522(d)(11)(a), as victims of some sort of investment fraud - the recovery for which is being pursued by the U.S. Department of Justice. The trustee contends the debtors' exemptions should be those of the State of Florida, which, for this asset, are more limited. See, Fla. Stat. Ann. § 960.14 (crime victims compensation). The trustee supports his argument with a decision from Judge Klingeberger in which he came to the conclusion that the effect of § 522(b)(3)(A) is to treat the debtor as a resident of its former state for the purpose of electing and claiming exemptions, in effect preempting any domiciliary or residency requirements that state may have placed upon its exemptions. See, In re Shell, 478 B.R. 889 (Bankr. N.D. Ind. 2012). Judge Klingeberger's decision in Shell represents a minority position, which, at last count, had been followed by only two other courts. See, Eugene R. Wedoff, "A Mobile Debtor Asks: Where Do I Find My Exemptions?" 37 No. 6 Bankruptcy Law Newsletter NL1, pg. 6 (June 2017). Of those three, two have been reversed on appeal for one reason or another, id., including Judge Klingeberger. See, Shell v. Yoon, 499 B.R. 610 (N.D. Ind. 2013).
The majority position is represented by the 5th Circuit's decision in In re Camp, 631 F.3d 757 (5th Cir. 2011) which, like the present case, dealt with former residents of Florida and the effect of the opt out language in its exemptions statutes. Camp concluded that "Florida's opt out statute, by its own express terms, does not apply to nonresident debtors, who remain eligible to use the federal exemptions because nothing in Florida law specifically disallows them from doing so." Id. at 760. Consequently, because Camp "was not a Florida resident at the time he filed his bankruptcy petition, Florida law [did] not restrict his access to the federal exemptions." Id. at 761. Other decisions which either follow Camp or come to a similar conclusion include: In re Cline, 2015 WL 3988992 (9th Cir. BAP 2015) (applying Missouri law); Matter of Willis, 495 B.R. 856 (Bankr. W.D. Wis. 2013) (applying Indiana law); In re Beckwith, 448 B.R. 757 (Bankr. S.D. Ohio 2011) (applying Florida law); In re Battle, 366 B.R. 635 (Bankr. W.D. Tex. 2006) (applying Florida law).
This court agrees with and will follow the majority position. When § 522(b)(3) requires a debtor to claim the exemptions of a former state, the court should apply those exemptions just as they have been written, along with whatever conditions, restrictions or other limitations they may contain. Here, the debtors must look to Florida law for their exemptions. While Florida restricts its residents to the state exemptions, that restriction does not apply to non-residents. Compare, Mo. Rev. Stat. § 513.427 (...
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