In re Doyle
| Decision Date | 17 June 1997 |
| Docket Number | Bankruptcy No. 97 B 05554. |
| Citation | 209 BR 897 |
| Parties | In re Prestent L. DOYLE and Elaine M. Doyle (deceased), Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
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Roy Safanda, St. Charles, IL, Chapter 7 Trustee.
Daniel J. Winter, Feld & Korrub, Westmont, IL, for Prestent L. Doyle.
This matter comes before the Court on the objections of Roy Safanda, the Chapter 7 Trustee (the "Trustee") for the estate of Prestent L. Doyle and Elaine M. Doyle (collectively the "Debtors") to the Debtors' claims of exemptions and the response in opposition thereto. For the reasons set forth herein, the Court hereby sustains various objections by the Trustee for the Debtors' failure to adequately describe some of the individual items of personal property and the retirement plans claimed exempt so as to allow the Trustee to properly evaluate those claims. Leave is hereby granted Prestent Doyle to amend his Amended Schedules B and C within 30 days hereof pursuant to Federal Rule of Bankruptcy Procedure 1009(a) and to provide the Trustee with the proper documentation. Failure to do so will result in the loss of such non-exempt property to the Trustee. The Court sustains the Trustee's objection to the claim of exemption under 735 ILCS 5/12-1001(b) as the total value of the personal property claimed exempt thereunder exceeds the statutory maximum of $2,000. Prestent Doyle shall turnover forthwith $1,900 worth of these items or the sum of $1,900 cash to the Trustee. In addition, the Court overrules the Trustee's objection to the personal property claimed exempt under 735 ILCS 5/12-1003 because he has failed to meet his burden of proof that Elaine Doyle was not a "head of the family" unit. The Trustee's objection to the claim of exemption by Prestent Doyle in the insurance proceeds on the life of Elaine Doyle, who died post-petition, is overruled pursuant to 735 ILCS 5/12-1001(f). Finally, the Court holds that the decedent Debtor, Elaine Doyle, is entitled to claims of exemption as well as a discharge.
The Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and Local General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. It is a core proceeding under 28 U.S.C. § 157(b)(2)(B).
The Debtors filed a Chapter 7 petition on February 24, 1997. On March 21, 1997, after a lengthy illness, Elaine Doyle died. Subsequently, Prestent Doyle filed an Amended Schedule B (Personal Property) and an Amended Schedule C (Property Claimed as Exempt) on April 3, 1997. The 11 U.S.C. § 341 meeting of creditors, over which the Trustee presided, was initially held on April 7, 1997 and continued to May 5, 1997. On May 5, 1997, within the time limit prescribed by Federal Rule of Bankruptcy Procedure 4003(b), the Trustee filed objections to certain exemptions claimed by the Debtors. Thereafter, on May 15, 1997, Prestent Doyle filed a response to the Trustee's objections. The Trustee filed a reply thereto on May 30, 1997. On that date, the parties appeared before the Court. The Court gave the parties leave to file any additional papers by July 11, 1997, including the opportunity to request an evidentiary hearing. On June 6, 1997, the parties filed a stipulation which stated that neither side desired to present any evidence in support of their respective positions and requested the Court to rule based on the filed pleadings.
The Trustee objects to the Debtors' claims of exemption on the following bases: (1) various items of personal property claimed exempt are not described with adequate particularity, the amount claimed exempt exceeds the available statutory maximum, and no head of the family has died; (2) the identity of the retirement plans was not disclosed and the amount listed as "unknown" is insufficient; (3) the insurance proceeds are insufficiently described by policy issuer or number, and the surviving Debtor may not properly claim exempt the insurance proceeds payable to him as a result of the post-petition death of the co-Debtor under 735 ILCS 5/12-1001(f), as the proceeds are part of the bankruptcy estate under 11 U.S.C. § 541(a)(5)(C); and (4) the decedent Debtor, Elaine Doyle, should not receive a discharge nor should she be entitled to any claims of exemption by reason of her demise. The Court will address each of the objections in turn.
Under the Bankruptcy Code, either the applicable state or the federal exemptions may be selected pursuant to 11 U.S.C. § 522 unless a state chooses to "opt out" of the federal exemption scheme. See 11 U.S.C. § 522(b)(1). The Illinois General Assembly "opted out" by enacting Ill.Rev.Stat. ch. 110, ¶ 12-1201, now recodified and cited as 735 ILCS 5/12-1201. Illinois exemption statutes are to be liberally interpreted in favor of the debtor. In re Barker, 768 F.2d 191, 196 (7th Cir.1985). The purpose of the exemption provision is to protect a debtor's fresh start in bankruptcy. In re Wright, 156 B.R. 549, 554 (Bankr.N.D.Ill.1992).
Federal Rule of Bankruptcy Procedure 4003 governs hearings on disputed claims of exemption and objections thereto. Section 522(l) of the Bankruptcy Code and Bankruptcy Rule 4003(a) require debtors to "list" the property claimed as exempt on the schedule of assets required to be filed. "Unless a party in interest objects, the property claimed as exempt on such list is exempt." 11 U.S.C. § 522(l). See also Taylor v. Freeland & Kronz, 503 U.S. 638, 642, 112 S.Ct. 1644, 1647, 118 L.Ed.2d 280 (1992). Bankruptcy Rule 4003(b) establishes the time limits within which a trustee or any creditor may file objections to the list of property claimed exempt. Bankruptcy Rule 4003(c) expressly places the burden of proof on the objecting party to prove the exemptions are not properly claimed. See also In re Ritter, 190 B.R. 323, 325 (Bankr.N.D.Ill.1995). In the matter at bar, the Trustee, as the objecting party, has the burden of proving that the exemptions are not properly claimed. The standard of required proof is presumably a preponderance of the evidence. See 1 T. Salerno and J. Udall, Bankruptcy Litigation and Practice: A Practitioner's Guide § 8.65(11) (2d ed. 1995).
First, the Trustee challenges some of the personal property claims of exemption on the basis that the items are not described with the particularity required by 11 U.S.C. § 522 and Federal Rules of Bankruptcy Procedure 4003 and 1007. The Amended Schedule B lists, in relevant part, the following personal property and its current market value:
DESCRIPTION OF PROPERTY CURRENT MARKET VALUE
Cash $ 200.00
Amcorp Bank $ 300.00
Household Furnishings — 4 rooms $ 1,200.00
Jewelry Wedding Ring $ 200.00
Whole Life Insurance Policy $ 27.00
Whole Life Insurance Policy $ 49.00
Retirement; unable to acquire until debtor quits or
retires (Husband & Wife) (401K (H)) Unknown
Anticipated Tax Refund $ 2,000.00
Proceeds from insurance policy $25,000.00
The Amended Schedule C lists, in relevant part, the following property claimed as exempt under the pertinent statute:
PROPERTY CLAIMED SPECIFIC LAW PROVIDING VALUE OF CLAIMED
EXEMPT EACH EXEMPTION EXEMPTION
Personal Property ... Jewelry 735 ILCS 5/12-1001(b) $ 200.00
Wedding Ring
Cash 735 ILCS 5/12-1003 $ 200.00
Amcorp Bank $ 300.00
Household Furnishings — 4 $1,200.00
rooms
Anticipated Tax Refund $2,000.00
Retirement: unable to acquire 735 ILCS 5/12-1006 100%
until debtor quits or retires. 735 ILCS 5/12-1003
(Husband & Wife)
(401K(H))
Proceeds from insurance policy 735 ILCS 5/12-1001(f) 100%
Whole Life Insurance Policy 100%
Whole Life Insurance Policy 100%
A debtor claims exemptions by designating property as exempt on Schedule C of the Schedule of Assets and Liabilities. Such exempt property must be listed separately with sufficient detail to put the trustee and interested parties on notice of questionable claims. See Payne v. Wood, 775 F.2d 202, 206 (7th Cir.1985), cert. denied, 475 U.S. 1085, 106 S.Ct. 1466, 89 L.Ed.2d 722 (1986); see also In re Wenande, 107 B.R. 770, 772 (Bankr.D.Wyo.1989) (); In re Wright, 99 B.R. 339, 341-42 (Bankr.N.D.Tex.1989) (). The court in Payne aptly noted regarding the specificity of claims of exempt property:
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