Schwab v. Reilly (2009)
- Docket
- 08-538
- Decided
- 2009-01-01
Summary
Question: 1) When a debtor claims an item "exempt" from bankruptcy proceedings, must an interested party object to the claimed exemption in order to preserve their right to claim any value in the item exceeding the value listed as exempt? 2) Does a creditor who wishes to sell a debtor's "exempted" item need to timely object to its exempt status in order to move for its sale, even if its real value exceeds the value claimed by the debtor? Conclusion: No. No. The Supreme Court held that a creditor is not required to object to a debtor's exemptions in order to preserve his right to claim any value in the item exceeding the value listed as exempt. With Justice Clarence Thomas writing for the majority, the Court reasoned that the bankruptcy code only requires a timely objection to an asset's categorization as exempt and does not apply to objections about the asset's value. Justice Ruth Bader Ginsburg, joined by Chief Justice John G. Roberts and Justice Stephen G. Breyer, dissented. She argued that the failure to object to the debtor's valuation of an exempt asset should prevent the creditor's later challenge to the valuation because the asset's valuation is critical in determining whether the debtor will be allowed to keep the property.