Rochelle's Daily Wire

I attended the Supreme Court oral arguments in Schwab and have written many article on the opinion and its aftermath. Following Schwab, there was an effort in the Rules Committee to revise the Schedule C Form to provides an option to exempt "100% of FMV." A colleague and I argued to the Rules Committee against it. We were not optimistic because not a single chapter 7 or chapter 13 trustee was on that Committee despite administering about 98% of all bankruptcy cases. But the Committee welcomed our testimony, and the Article III judges agreed with it. The proposed amendment failed. Later, the Committee came back and adopted the current option that added "up to the applicable statutory limits." The court here completely missed the way this option is abused by some debtor counsel by checking the box as to every asset. I have one firm that routinely lists debtor's ownership in multiple LLC with an unknown value for each and checking the box to fully exempt each up to the applicable statutory limit. A wild-card exemption is all that would be applicable, but how can anyone know where it is being applied. If the applicable limit is a single $10,000, and the box is checked for dozens of LLC interests, it is an abusive use of this loophole. I am constrained to spend estate resources objecting every time to require that debtor designate where and to what extent the exemption is being applied to each asset. Counsel knows it is wrong but is slipping it past some of the trustees and wants to avoid a court hearing, so they capitulate each time and then use it the next time and the next time to see if they can slip it by. That is abusive and the real problem with being able to check such a box--it creates ambiguity that does not exist with a specific dollar amount exemption.

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