Court Overrules Trustee’s Objection, Which was Based on Debtors’ Decision to Exercise the “Schwab option” with respect to their Exemption of their Home

Court Overrules Trustee’s Objection, Which was Based on Debtors’ Decision to Exercise the “Schwab option” with respect to their Exemption of their Home

 The Debtors filed a petition for relief under chapter 13 of the Bankruptcy Code on November 23, 2016.

The Debtors timely filed their bankruptcy schedules. In their Schedule A/B — Property (“Schedule A/B”), the debtors listed their interest in their home. The debtors are the 100% owners of their home. They listed the current value of their home as $78,950, and they disclosed a mortgage lien in the amount of $62,750 as of the petition date.

In their Schedule C — The Property You Claim as Exempt (“Schedule C”), the Debtors elected to claim federal exemptions under 11 U.S.C. § 522(d). The Debtors claimed 100% of the fair market value of their home as exempt from their creditors, see 11 U.S.C. §522(d)(1), as well as their interest in various items of personal property, see 11 U.S.C. § 522(d)(5).

As of the petition date, according to their Schedule A/B, the Debtors had an equity interest in their homestead in the amount of $16,200.

The total listed value of the personal property the Debtors claimed as exempt under § 522(d)(5) was $12,442 as of the petition date.

The trustee timely objected to the Debtors’ claimed exemptions. The trustee complains that the debtors have exceeded the statutory exemption limit in § 522(d)(5). The trustee requests that the Court limited the debtors’ exemptions under § 522(d)(5) to the statutory limit of $2,500.

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