Michigan Constitution Does Not Create Independent Personal Property Exemption
In re Caperton, Bankr. W.D. Mich., Dec. 21, 2009 (Case No. 09-09540, Hon. Scott W. Dales).
The Bankruptcy Court for the Western District of Michigan recently rejected a debtor's attempt to exempt property based on a provision of the state constitution. The chapter 7 debtor elected to rely on state exemptions and, in addition to those statutory exemptions, claimed an exemption in $750 in personal property under Article X, § 3 of the Michigan Constitution ("Section 3"). Section 3 provides in part that "personal property of every resident of this state in the amount of not less than $750, as defined by law, shall be exempt from forced sale on execution or other process of any court."
The trustee objected to the claimed exemption, arguing that Section 3 is not an independent exemption and that it contemplates further action by the Legislature. The debtor argued that Section 3 creates a "wildcard" exemption, separate from statutory state exemptions.
The court, after finding no case law on point, held that Section 3 establishes the minimum exemption amount but that the "as defined by law" language authorizes the Legislature to increase the exemption amount. The court noted that "personal property" includes a variety of tangible and intangible property and that it is "reasonable to conclude that the types or specific items of exempt personal property would be defined by the legislature." Thus, the court concluded that Section 3 is not a "self-executing" or independent exemption, and it sustained the trustee's objection.
Laura's practice focuses on bankruptcy, municipal law, collections, and trial-level and appeals litigation. In the bankruptcy arena, she represents primarily Chapter 7 trustees. Laura has handled a wide range of trial and appellate matters for individual and business clients and has appeared before the U.S. Sixth Circuit Court of Appeals, the Michigan Court of Appeals, and the United States Bankruptcy Court for the Western District of Michigan, as well as Michigan circuit and district courts across the state.View All Posts by Author ›