BANKRUPTCY CORNER
BANKRUPTCY CORNER
Objections to Unlimited Exemptions are Required
JASON S. RIGOLI
In her October 15, 2025, opinion Judge Isicoff explained that notwithstanding Schwab v. Reilly, 560 U. S. 770, 130 S. Ct. 2652, 177 L. Ed. 2d 234( 2010), interested parties must file timely objections to unlimited exemptions. See In re Pelucarte, Case No. 24-12212-LMI, 2025 Bankr. LEXIS 2665,( Bankr. S. D. Fla. Oct. 15, 2025).
Florida is an“ opt out” state, meaning Florida has opted out of the federal exemption scheme found in the Bankruptcy Code 1 and residents claim exemptions in property available under Florida’ s Constitution and Statutes, see Fla. Stat. § 222.20, or other applicable laws.
In Pelucarte, the debtor claimed real property exempt under Florida’ s unlimited homestead exemption under“ Florida Constitution article X, section 4( a)( 1) and Florida Statute sections 222.01 and 222.02.” 2025 Bankr. LEXIS 2665 at * 9. Pertinent to the dispute was that the debtor scheduled the value of the house at $ 688,000, scheduled a mortgage with a balance of $ 515,429.00, and indicated on his statement of financial affairs that the debtor intended to retain the property. Id. at * 3-4. The debtor also claimed $ 172,571.00( the difference between the value and the mortgage) as exempt on his schedule C, instead of checking the box“ 100 % of fair market value, up to any applicable statutory limit [.]” Id. at * 3. The chapter 7 trustee did not object to the claimed exemption. Id. at * 4-5.
After the exemption deadline expired the trustee tried to gain access to the house and employ a real estate agent to sell the property after the trustee determined the house was worth closer to $ 1 million, creating about $ 300,000 in equity. Id. at * 5. The debtor opposed the relief.
The trustee argued that 11 U. S. C. § 522( p)
( 1), automatically caps the homestead exemption at $ 189,000 2 for real property acquired within 1,215 days of the petition date and, with the debtor’ s specific dollar amount below that cap, was not required to object under Schwab v. Reilly, 560 U. S. at 774. See 2025 Bankr. LEXIS 2665 at * 6- 8. The debtor opposed relying on Taylor v. Freeland & Kronz, 503 U. S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280( 1992)
Judge Isicoff disagreed with the trustee’ s position, stating that Taylor controlled, which Schwab refined but did not overrule. Judge Isicoff interpreted Schwab as applying only to“‘ an asset that is not subject to an unlimited or in-kind exemption under the Code’ and only to an asset‘ the value of which may not exceed a certain dollar amount, in a particular type of asset’.” See 2025 Bankr. LEXIS 2665 at * 17. In Pelucarte, the debtor’ s claimed Florida homestead exemption is” unlimited” and, therefore, as Judge Isicoff found, required the Trustee to timely object to claimed exemption or as held in Taylor, the debtor gets the benefit of the claimed exemption even if exceeds the value permitted by the Bankruptcy Code. Id. at * 13-18.
Conclusion
Reviewing and timely objecting to a debtor’ s claimed exemptions is the prudent course of action for a creditor or other interested party who believes an asset may have value for the benefit of a bankruptcy estate.
This article was submitted by Jason S. Rigoli, Esq., Furr and Cohen, P. A., 2255 Glades Road, Suite 419A, Boca Raton, FL 33431, jrigoli @ furrcohen. com
1
11 U. S. C. §§ 101, et seq.
2
This amount has been adjusted to $ 214,000 as of April 1, 2025, pursuant to 11 U. S. C. § 104( b) and 90 FR 8941
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