Volume 5 Winter 2011 Number 2 - Charleston Law Review

CHARLESTON LAW REVIEW [Volume 5exemptions. 204 Under §522(l) the trustee is required to file anobjection within the thirty-day period, or the property will beexempt. 205 Schwab failed to file his objection motion to allow himto auction the equipment within the thirty-day period. 206 Reillycontested the motion and filed a conditional motion saying shewanted her case dismissed if she had to sell her equipment. 207The bankruptcy court denied Schwab’s motion to auction theequipment and also denied Reilly’s conditional motion todismiss. 208 Both the district court and the Third Circuit agreedwith Reilly. 209 The rationale of the Third Circuit was thatSchwab was put on notice that Reilly intended to exempt all ofher equipment when she exempted the total value of theequipment on schedule C. 210 Therefore, Schwab was required toobject to the exemption within the thirty-day period in Rule4003(b)(1). 211B. United States Supreme Court DecisionThe United States Supreme Court disagreed with the lowercourts and reversed the bankruptcy court decision. 212 The Courtsaid that the Third Circuit failed to use the correct definition of“property” in § 522(l). 213 Whereas the Third Circuit defined theproperty as “the asset itself,” 214 the Court said that § 522(b)defines property as the debtor’s “interest” up to a specifiedamount within any particular category of exemptible assets. 215The Court then concluded that the debtor’s interest in theproperty is what the debtor estimated the value to be, in this case222204. FED.R.BANKR.P. 4003(b)(1) (2006).205. Schwab, 560 U.S. at ___, 130 S. Ct. at 2658.206. Id.207. Id.208. Id. at ___, 130 S. Ct. at 2659.209. Id.210. Id.211. Id.212. Id. at ___, 130 S. Ct. at 2659.213. Id. at ___, 130 S. Ct. at 2661–63.214. Id. at ___, 130 S. Ct. at 2661–62.215. Id. at ___, 130 S. Ct. at 2661–63.