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6500 Cherrywood Ln - Greenbelt, MD 20770 - Main Tel: 301-344-8018 map
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Debtor filed an amended list of exemptions on the eve of a consensual conversion from Chapter 11 to Chapter 7. The Chapter 7 trustee filed a timely objection to a portion of the newly exempted property and an amended objection within thirty days of the conclusion of the post-conversion 11 U.S.C. § 341(a) meeting, objecting to the remaining exemptions taken. The fundamental issue raised is whether the deadlines for objecting to exemptions set forth in Federal Rule of Bankruptcy Procedure 4003(b) automatically re-set following conversion so that the trustee and creditors are granted two thirty day periods to object to amended exemptions previously listed by a debtor; thirty days following the amendment and an additional thirty days following the conclusion of the 11 U.S.C § 341(a) meeting of creditors held in the converted case. The Debtor argued that there is no second meeting of creditors held pursuant to 341(a) upon conversion and thus the deadlines do not reset. Debtor likewise argued that because the deadlines do not reset, the trustee’s amended objection was untimely and any exemptions not objected to were therefore conclusively established resulting in the severance from the estate of the exempt property and its re-vesting in him. Debtor also argued that: (a) property exempted as tenants by the entirety was completely severed from the estate and was not subject to the claims of any creditors, (b) he was entitled to take exemptions allowed by the state of Florida, and (c) his exemptions of non-marital estate property were not limited by the exemption values that he assigned to such property. The Court concluded that a second 341(a) meeting of creditors is a statutory imperative in a converted case but the thirty day deadline for filing objections after the conclusion of the 11 U.S.C. § 341(a) meeting prescribed by Rule 4003(b)(1) does not apply to exempt property that had already re-vested in the Debtor; the Chapter 7 trustee’s amended objection to the Debtor’s amended list of exemptions was consequently untimely; that nevertheless, the long settled law in this Circuit provides that property held as tenants by the entirety may be administered by the trustee for the benefit of joint creditors whether a party files a timely objection or not; the Debtor, a Maryland resident for the relevant statutory period, may only utilize those exemptions provided by Maryland law; and the value of the Debtor’s permissible exemptions shall be limited by the dollar amount ceilings that he assigned to his claimed exemptions.

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Robert A. Gordon