In re Brent, Case No. 05-31232 (Bankr. W.D.N.C. Aug. 31, 2005)(Hodges) - This matter came before the court on the Objection to Motion to Avoid Judicial Lien, Objection to Confirmation of Plan and Request for Hearing of CreditOne, LLC (“CreditOne) and the debtor’s response thereto. The court concluded that the objections of CreditOne should be overruled and the debtor’s motion to avoid lien of CreditOne should be granted as CreditOne’s lien attached to a portion of the value of the debtor’s property and impaired an exemption to which the debtor would otherwise have been entitled.

In re Cook, Case No. 02-11321 (Bankr. W.D.N.C., March 4, 2003)(Hodges) - The requirements for the North Carolina homestead exemption are satisfied where 1) the debtor uses the property as his or her residence and 2) where the debtor owns and "interest" in the property. Under N.C. Gen. Stat. § 1C-1601(a)(1) a debtor may exempt his or her interest in a prepaid leasehold.

In re Hodson, Case No. 02-31407 (Bankr. W.D.N.C. Dec. 27, 2002)(Whitley) - Debtor's Motion to Avoid Lien and the counter Motion for Relief from Automatic Stay or, in the Alternative, for Adequate Protection, of Four Oaks Bank & Trust Company ("Four Oaks Bank"). The Court denied the Debtor's Motion to Avoid Lien holding that pursuant to Farrey v. Sanderfoot, 500 U.S. 291, 111 S.Ct. 1825, 114 L.Ed.2d 337 (1991), a debtor may not avoid a judicial lien in tenancy by the entireties property to secure an exemption if the lien attached to the property while the debtor owned it in fee simple and before the entireties estate was created. The Court cited In re Jackaman, 2000 WL 192973 (Bankr. E.D.Pa. 2000), as being "on all fours" with the current case. Finally, the Court granted the motion for relief from stay of Four Oaks Bank.

In re Nelson, Case No. 00-10968 (Bankr. W.D.N.C. April 12, 2001)(Hodges) - Debtors filed a joint petition under Chapter 7 of the Code. The debtors' owned their residential real property as tenants by the entireties. The real property contained $9,000.000 of equity above two mortgages encumbering the property. The female debtor claimed the entire equity interest in the residence as exempt from the Trustee's administration pursuant to North Carolina General Statute § 1C-1601(a)(1) and the male debtor claimed the "wildcard" exemption for miscellaneous items of personal property. The Chapter 7 Trustee objected to this exemption election scheme, asserting that when a husband and wife file a joint Chapter 7 petition, neither spouse may alone claim as exempt the equity interest in the couple's homestead owned by them as tenants by the entirety. The court overruled the Trustee's objection, allowing the debtors' exemption scheme. The court reached this conclusion, in part, because the North Carolina General Statute § 1C-1601(a)(1) broadly allows a debtor to exempt any property "interest", not merely specific types or amounts of property interests. As a fee simple owner of entireties property, the female debtor owned and enjoyed the entire estate and consequently this property interest was within the broad ambit of North Carolina General Statute § 1C-1601(a)(1).

In re Mullins, Case No. 98-50517 (Bankr. W.D.N.C. Jan. 19, 2001)(Whitley) - The Chapter 7 debtor owned 100% of the stock in a Virginia corporation (which was also in its own bankruptcy), but did not list the stock in his petition. The trustee objected when the debtor amended his schedules to claim the stock as exempt with a value of $1.00. In response, the debtor argued that by claiming the stock with a nominal value, he effectively exempted his entire interest from the bankruptcy estate. The Court held that the debtor's exemption was limited to $1.00. The debtor could have exempted a greater value under the NC wildcard statute but chose not to do so. Therefore, the Court found he intentionally limited his claim to $1.00. Further, to the extent the nominal value created an ambiguity as to the amount the debtor intended to exempt, the ambiguity was construed against the draftsman. The stock (less the $1.00 claimed as exempt) would remain an asset of the bankruptcy estate and would be subject to the trustee's control.

In re Marion Florence Fick, (Bankr. WDNC May 26, 2000)(Whitley) - North Carolina General Statute 58-58-165 exempts group life insurance proceeds from claims by creditors of the insured employee only. The exemption will not apply to claims against the bankruptcy estate of a debtor-beneficiary.

IN RE LAVOIE, 98-50635 (Oct. 16, 1998)(Whitley) - The North Carolina General Statutes define a SeaDoo personal watercraft as a "vessel," therefore it cannot be classified as a "motor vehicle" for exemption purposes.

IN RE HEAFNER, Case No. 95-50071 (Bankr. W.D.N.C., April 17, 1996)(J. Wooten) - The Chapter 7 debtor listed ownership of real estate, but he claimed no exemption in the property. The debtor obtained a divorce from his wife post-petition, thereby converting his interest in the real estate from an interest in entireties property to a tenancy-in-common, but he did not inform his attorney or the trustee of this change. The trustee undertook efforts and incurred expenses to sell the property for the benefit of the estate based on the debtor's representation that he was not claiming an interest in the property. After these efforts were undertaken, the debtor filed a motion to amend his exemptions to claim a $10,000 exemption in the sale proceeds pursuant to N.C.G.S. 1C-1601(a)(1), and the trustee objected to this motion. The Court held that to allow the debtor to amend his exemptions one year after filing the petition, in light of the facts of this case, would constitute substantial prejudice to the estate and the trustee. Therefore, the Court denied the debtor's motion to amend exemptions.

IN RE BLAKENEY, Case No. 95-31760 (Bankr. W.D.N.C., Feb. 5, 1996) - Although the debtor's claimed exemption in an ERISA-qualified retirement plan did not affect the Chapter 13 Trustee's confirmation analysis, the Trustee objected to the claimed exemption on the ground that it was premature. The Trustee filed his objection out of an abundance of caution and concern over the Supreme Court decision in Taylor v. Freeland & Kronz, 112 S.Ct. 1644 (1992). The Trustee feared that a Chapter 7 trustee would be barred from objecting to this exemption claim if the case later converted to a Chapter 7 case. The Court overruled the Trustee's objection and held that Federal Rule of Bankruptcy Procedure 4003(b) permits a Chapter 7 trustee to object to exemptions within thirty days of the Chapter 7 first meeting of creditors.

IN RE COMBS, Case No. 95-31608 (Bankr. W.D.N.C., Jan 25, 1996)(J. Hodges) - A Chapter 7 debtor, who claimed his equity in real property as exempt under N.C.Gen.Stat. 1C-1601(a)(1), may not subsequently avoid judicial liens on the property if neither the debtor nor his dependents reside on the property.

IN RE HYDE, Case No. 95-20070 (Bankr. W.D.N.C., Nov. 28, 1995)(J. Hodges) - Under N.C.G.S. 1C-1601(a)(3), a debtor may exempt up to $1,500 in only one automobile. In a case in which the debtor owns multiple automobiles with a small total value, the trustee should be permitted to abandon the cars under 11 U.S.C. 544. The trustee should have this discretion where 1) the total value of all of the debtor's automobiles is less than the allowed exemption under the statute, 2) disposition of the non-exempt vehicles would not produce a substantial benefit to the estate, and 3) abandonment would not cause any substantial abuse.

IN RE CLINE, Case No. 92-31782 (Bankr. W.D.N.C., Aug. 15, 1995)(J. Whitley) - The Court held that a Chapter 13 debtor's post-petition, lump-sum distribution from an ERISA-qualified pension plan becomes property of the estate under 11 U.S.C. 1306 when the debtor fails to roll the funds over into another ERISA-qualified plan. The Court drew a distinction between funds paid as part of retirement (which are subject to the anti-alienation provisions of ERISA) and funds voluntarily withdrawn prematurely (which are not subject to these provisions). The Court permitted the debtor to amend his exemptions to claim up to $3,500.00 of these funds as exempt under his "wild card" exemption. However, the Court held that the distribution represented an unanticipated change in the debtor's circumstances that were sufficient under the standard set down in In re Arnold, 869 F.2d 240 (4th Cir. 1989) to grant the Chapter 13 Trustee's motion to modify the plan base to include the value of the distributions that exceeded this "wild card" exemption amount.

IN RE LUTHER, Case No. 95-30574 (Bankr. W.D.N.C., Aug. 11, 1995)(J. Hodges) - When a husband and wife file a joint Chapter 7 petition, either spouse alone may not claim as exempt the entire equity interest in the couple's homestead owned by them as tenants-by-the-entireties. Each debtor is entitled to claim only his or her own one-half interest in the property as his or her homestead exemption.

IN RE REAVIS, Case No. 95-10101 (Bankr. W.D.N.C., Aug. 1, 1995)(J. Hodges) - The Court held that a Chapter 7 debtor properly claimed an exemption in money earned within sixty days prior to the filing of her bankruptcy petition pursuant to N.C.G.S. 1-362. The Chapter 7 trustee had objected to this exemption arguing that N.C.G.S. 1-362 was applicable only to execution proceedings and was unavailable to a Chapter 7 debtor. The Court held that exemption laws are to be liberally construed in favor of the exemption, and there was nothing in the legislative history of this provision to indicate that it was not available to bankruptcy debtors.

IN RE SNOW, Case No. 94-50065 (Bankr. W.D.N.C., Feb. 22, 1995)(J. Whitley) - The Chapter 7 debtors listed a truck and corporate stock on Schedule C as exempt property, neither the trustee nor any creditor filed an objection to the claim of exemption within 30 days after the conclusion of the 341 Meeting. Three months after the 341 Meeting, the trustee filed a motion to show cause, for turnover and/or valuation regarding the stock and the truck. The Court denied the trustee's motion and held that the objection was not timely filed relying on Taylor v. Freeland & Kronz, 112 S.Ct. 1644 (1992). In the Talyor case, the Supreme Court held that time limits imposed by 11 U.S.C. 522(1) and Federal Rule of Bankruptcy Procedure 4003(b) could not be expanded.

IN RE BRYANT, Case No. 94-10476 (Bankr. W.D.N.C., Feb. 2, 1995)(J. Hodges) - A domiciliary and resident of North Carolina can claim a homestead exemption pursuant to N.C.G.S. 1C-1601(a)(1) in a residence located in Tennessee. The homestead exemption is conditioned upon continued ownership of the property and continued occupancy as a residence by the debtor or the debtor's family.

IN RE WINKLER, 164 B.R. 728 (Bankr. W.D.N.C. 1994) - If a restriction on transferability of the debtor's interest in an ERISA pension plan is enforceable at the date of the petition, it is excluded from the estate by 11 U.S.C. 541(c)(2), even though the restriction is terminated or becomes unenforceable after bankruptcy.

IN RE EICHOLTZ, Case No. 93-10397 (Bankr. W.D.N.C., July 7, 1994)(J. Hodges) - A real estate commission associated with the sale of real property pursuant to a Chapter 13 plan is an administrative expense, and it should not be paid from the debtor's exemption.

SIGMON V. SATTERFIELD (IN RE MAHAFFEY), Case No. 93-40009, Adv. Proc. No. 93-4130 (Bankr. W.D.N.C., Jan. 20, 1994)(J. Hodges) - Under 11 U.S.C. 548, a Chapter 7 trustee may recover property that has been reconveyed to the debtor post-petition, and such property is not subject to the debtor's exemptions.

IN RE SPURLING, Case No. 93-30261 (Bankr. W.D.N.C., Aug. 10, 1993)(J. Hodges) - A Chapter 13 trustee can challenge the debtors' exemption election of proceeds from a former ERISA qualified plan which were received post-petition and after the 30-day period for filing objections to exemptions as provided in F.R.B.P. 3003, but the debtors may amend their exemption election and may use the balance of the funds after exemptions because the only remaining claims in the base case were non-dischargeable tax claims.

IN RE PRICE, Case No. 93-30052 (Bankr. W.D.N.C., May 14, 1993)(J. Hodges) - Sears' lien on the Chapter 13 debtors' property was not obtained in violation of the North Carolina Retail Installment Sales Act, and was therefore not avoidable, because Sears had taken a security interest in the items purchased on the debtors' charge account and each purchase was secured only by the items then purchased (while the provisions of the Act in question limit their application to those situations where the seller takes a security interest in goods previously sold to the buyer to secure subsequent sales).

IN RE LOVELACE, Case No. 90-40549 (Bankr. W.D.N.C. 1991)(J. Wooten) - Modification of an obligation secured by a purchase-money security interest which involved no additional purchase by the debtor, no additional collateral taken by the creditor, and no additional funds advanced to the debtor did not cause the security interest to lose its purchase-money character and subject it to avoidance under 11 U.S.C. 522(f)(2).

IN RE WOODS, Case No. A-B-88-10006 (Bankr. W.D.N.C., July 1990) - The court granted the Chapter 13 Trustee's motion to modify plan under 11 U.S.C. 1325(a)(4) to allow the Trustee to provide for distribution of the debtor's retirement benefits, which were received post-petition, to his creditors. The court held that the debtor was entitled to claim his exemption under 11 U.S.C. 522(f) and N.C.G.S. 1C-1601(a)(2), but that the remaining funds would have to go the Trustee, and the pro-rata distribution to unsecured creditors would be re-evaluated in light of the after-acquired asset.

IN RE BROOKS, Case No. SH-B-82-00289 (Bankr. W.D.N.C., April 1990)(J. Wooten) - The court denied the Chapter 13 debtor's motion to avoid the lien of a window and siding company that was obtained during the pendency of the debtor's Chapter 13 case and in violation of the debtor's Confirmation Order. The window and siding company had conducted a credit check that failed to disclose the bankruptcy action, and the court believed that the company would not have financed the improvements to the debtor's residence had they known of the bankruptcy. Therefore, the court held that there was no willful violation of the confirmation obder.

WACHOVIA BANK & TRUST CO., N.A. V. OPPERMAN (IN RE OPPERMAN), Case No. A-B-89-10469 (Bankr. W.D.N.C., Nov. 17, 1989)(J. Hodges) - The Bankruptcy Court held that a debtor who has no equity in property which exceeds the amount of her exemption under N.C.G.S. 1C-1601(a)(1), and moves to avoid a judicial lien which has attached to that property, is entitled to avoid such lien in its entirety under 11 U.S.C. 522(f)(1). The Bankruptcy Court held that to the extent that N.C.G.S. 1C-1601(a)(1) interferes with the operation of 11 U.S.C. 522(f), that exemption should not be given effect. This decision was reversed by the District Court in Case No. A-C-89-234 (W.D.N.C., Aug. 6, 1990)(J. Jones)

IN RE WILLIAMS, 109 B.R. 179 (Bankr. W.D.N.C., Nov.15, 1989)(J. Hodges) - The court rejected the Chapter 13 debtors' motion to avoid an IRS tax lien on their motor vehicles under 11 U.S.C. 545(2) and I.R.C. 6323(b)(2). The court noted that N.C.G.S. 20-58 provides that in order to be properly perfected, a federal tax lien does not have to be noted on the certificate of title of an automobile. The court also noted that 11 U.S.C. 522(h) allows debtors to invoke the trustee's avoiding powers to the extent the debtors can exempt the property involved. Under 11 U.S.C. 522(c)(2)(B), a properly perfected tax lien has priority over the debtors' exemption. Since the debtors could not exempt property to the extent it is encumbered by a tax lien, they can't use the trustee's avoiding power to avoid the lien. And while a Chapter 13 Trustee has certain avoiding powers as a hypothetical purchaser at the commencement of a case, he is not granted hypothetical possession at that time. A trustee as a bona fide purchaser without possession has insufficient status to avoid and IRS tax lien.

IN RE NELSON, Case No. C-B-87-00973 (Bankr. W.D.N.C., March 3, 1988)(J. Hodges) - The court determined that a creditor had a secured claim in the debtors' residential property to the extent such property had equity above the aggregate of all mortgages and the debtors' claimed exemption under 11 U.S.C. 522(f). The court concluded that a computer was a tool of the trade under N.C.Gen.Stat. 1C-1601(a)(5). The female debtor's claimed exemption for her interest in a profit sharing plan was proper, and the plan was property of the estate under 11 U.S.C. 541(a) and 11 U.S.C. 541(c)(2), but the fund did not have to be turned over to the trustee. Finally, the court concluded that because the debtors had substantial income above what was listed on the petition and had listed questionable expenses, under 11 U.S.C. 1322(a)(1) and 11 U.S.C. 1322(a)(2), their plan could not be confirmed as proposed.

IN RE JOYE, Case No. SH-B-82-00462 (Bankr. W.D.N.C., Jan. 1986)(J. Wooten) - The trustee objected to the debtor's claim of exemption in a life insurance policy that the debtor purchased just prior to filing bankruptcy. The Court held that a debtor's mere election to use State law exemptions that have been drafted by the State legislature and provided for by the provisions of 11 U.S.C. 522(b) cannot, in and of itself, be fraud which may result in their disallowance. Rather, recourse must be made to State law to consider whether the debtor's actions in conversion of property justify forfeiture of his exemptions. The Court then observed that neither N.C.G.S. 1C-1601 nor Article X, Section 5 of the Constitution of North Carolina establish any qualification of the amount of or time when such insurance could be purchased, nor do they deal with the motivations behind the purchases. Therefore, the Court held that the debtor was entitled to claim this exemption. Note: The Court pointed out that were the issue one of the debtor's discharge, a different result may have been reached in light of the Fourth Circuit Court of Appeals decision in Ford v. Poston, 773 F.2d 52 (4th Cir. 1985).

IN RE DeWEESE, 47 B.R. 251 (Bankr. W.D.N.C. 1985)(J. Wooten) - The Court held that the Chapter 7 debtor's interest in a 401K qualified plan was property of the estate under 11 U.S.C. 541(a), which includes even that property which might be exemptible under 11 U.S.C. 522. The Court further concluded that, notwithstanding the ERISA anti-alienation clause, the plan was not a spendthrift trust which would bring it within the exceptions of 11 U.S.C. 541(c)(2). The Court found that although North Carolina law recognizes support, discretionary and protective trusts having the characteristics required by N.C.G.S. 36A-115(b) as spendthrift trusts, the ERISA plan in question failed to satisfy these statutory requirements. The Court noted that a trustee can acquire no greater rights in property than the debtor possesses, and it stated that the full extent of the debtor's interest was a right to share in a future distribution. Therefore, the Court stated that the trustee may wish to abandon this interest because of its nominal present value. In order to satisfy the concern that the Court's determination might affect the tax consequences of the plan, the Court held that the irreconcilable conflict between ERISA and 11 U.S.C. 541 should be determined in favor of the latter, since it was the later in time. Accordingly, where the two provisions conflict, the ERISA anti-alienation clause is implicitly repealed when involved in a bankruptcy context. The Court further held that although these interests would become estate property when a beneficiary filed bankruptcy, such a determination would in no way impair the tax-free status of the underlying ERISA plan or affect its beneficiaries with reference to the same.