Exemptions—If in Ch. 7, liquidation b/r, certain assets will be exempt.  This means that debtor can keep them—they won’t become part of estate and won’t be sold to pay off debts.  Idea is to help give debtor a fresh start, but not give so many exemptions that creditors don’t get paid.
a.    Choice of Federal or State exemptions—unless state opts out.  Under 522(b), debtor can choose federal or state exemptions.  Joint debtors can split choice—can’t have one choose fed and the other state exemptions.  If they can’t decide, then they will be deemed to have chose the fed exemptions.  States are allowed to opt out of this scheme so that debtors are only allowed to use state exemptions.  39 states so far have opted out.  If in state that hasn’t opted out, need to figure out which exemptions will be best for debtor.
b.    §522—Federal exemptions.
(i)    (a)—definitions.  Note that by definition, dependent includes a spouse.
(ii)    (b)—property that may be exempt.  Debtor can choose (1) fed scheme or (2) state scheme.
(iii)    (c)—exempt property can’t be used to pay debts excepts for those listed under this section.
(iv)    (d)—exemptions if debtor chooses to use federal exemptions.
(1)    Home
(2)    Car
(3)    Household furnishings, goods, clothes, appliances, books, animals, crops, or musical instruments held for personal use
(4)    Personal jewelry
(5)    Wildcard—able to cover any property you want w/ certain specified amount plus any excess exemption not used under (1).
(6)    Implements or tools of the trade
(7)    Unmatured life insurance K owned by the debtor, other than a credit life insurance K.  (death benefit)
(8)    Interest in accrued dividend or interest under or loan value of any unmatured life insurance K owned by debtor under which debtor or dependent is insured—up to 9300. (cash value)
(9)    Prescribed health aid
(10)    Right to receive SS, vet benefit, disability or alimony/support to the extent reasonably necessary to support debtor and dependents.  Also, certain pension benefit
(11)    Right to receive payment from certain tort claims.
(v)    (f)—certain liens on prop may be avoided if they interfere w/ exemptions.  These include judicial liens, except for those that secures a child support/alimony payment, and a nonpossessory, non-purchase money liens on (i) certain personal prop, (ii) tools of the trade and (iii) professionally prescribed health aids.
(vi)    (m)—stacking:  the section will apply separately w/ respect to each debtor in a joint case.  For example, under 522(d)(1), there is a 15k (see sheet for indexed amount) exemption for a residence.  If H and W file jointly, they get a 30k exemption.
(vii)    Overlap of categories:  Ex.  Try to say that computer is tool of trade and home furnishing to get bigger exemption for that piece of property.  Little case law on this, but what little is out there seems to indicate that you can overlap.
c.    If exemption covers nearly all of a piece of property, may go to TIB to convince him not to sell.  Ex.  Might have violin, that w/ combination of exemptions, is entirely exempt except for $1000.  Can try to convince TIB not to sell, or could get $1000 from someone post-pet and give to TIB so that he won’t sell.
d.    Valuing property subject to exemption:  One S. Ct. case say that replacement value is relevant amount, but footnote says that other factors may be considered.  Most courts just split the difference and pick a value that is somewhere in between replacement value and liquidation value.
e.    Pre-b/r exemption planning—
(i)    be careful of this b/c courts may get pissed about it.  Ex.  In re Coplan—Debtors moved to FL to get a bigger homestead exemption.  Court found that exemption should be denied to the extent that the debtors achieved a benefit greater than their entitlement under previous home state law.
(ii)    some argue that you should be able to turn non-exempt prop into exempt prop b/c that is what exemptions are for.  You should be able to use them to the fullest extent.  Ex.  In re Reed—debtor allowed to sell non-exempt prop and put into home which is exempt prop.  Note that under the relevant TX statute, you could not have done the same thing by buying exempt personal prop.
f.    Remember, that you don’t have to file b/r to get exemptions b/c they also operator under state law.
g.    Exemptions will only prevent prop being brought into estate to pay unsecured creditors—they won’t get over a voluntary lien.  IOW, someone w/ security interest in prop can still take—like mortgage holder.
h.    Empirical studies show that exemptions have nothing to do w/ filing rates.  A big reason for this is the fact that many people owe on secured property.  Still, a few well publicized cases make people lose confidence in the system.