Fifth Circuit affirms Camp v. Ingalls

On January 21 the Fifth Circuit affirmed the District Court opinion in Camp v. Ingalls.


In that case, the debtor moved from Florida to Texas in 2007 and filed a Chapter 7 in 2008, less than 730 days later. The question presented was what exemptions was the debtor allowed or required to claim.


Section 522(a)(3)(A) which was added by BAPCPA provides that a debtor may claim the exemptions of the state where he was domiciled for the 730 day period prior to filing. If he has not been domiciled in one place for the 730 day period, he claims the exemptions of the state where he resided for the 180 day period prior to the 730 day period. In this case, Mr. Camp would be required to claim Florida exemptions because he was not domiciled in Texas for 730 days prior to filing.


The problem is that Florida’s exemption statutes say that specified property may be claimed as exempt by “residents of this state.” Since Mr. Camp is no longer a resident of the state of Florida, he is not entitled to claim Florida exemptions. The Fifth Circuit held that although Florida has opted out, the Florida exemptions only apply to residents and since Mr. Camp was a non-resident, the Florida opt out statute did not bar him from claiming federal exemptions. (I personally think this is the wrong way to get to the right answer, but they got the right answer, so I’m not going to complain too much.)


In a footnote, the court declined to address the issues of whether 522(b)(3) preempts state law restrictions of extraterritorial application of exemptions and whether the savings clause at the end of 522(b) permits a debtor to claim the federal exemptions when state law opts out and at the same time restricts extraterritorial application of state exemptions.


I have previously written on this issue and opined that I think Judge Gargotta reached the result that Congress actually intended (If you have lived somewhere for less than two years, you have to use the exemptions where you came from), but the statute was not well thought through (i.e., the drafters at MBNA never thought about the issue or looked at individual state laws) and as result, poorly drafted. Because I have way too much time on my hands, I have actually looked at each state’s exemption statutes to see if they have a domicile or residency requirement. Please note that some states have a residency requirement for real property, but not personal property, and vice versa. I made a chart, which I offer for your consideration. Major disclaimer – the chart is about two years old. State laws may have changed since then. I know, for example, that New York is considering amendments to its exemption laws to address this issue.   


For what it’s worth………


Michael Baumer

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by Michael Baumer