Opinion
Case No. 99-20471, Chapter 7
November 19, 1999
ORDER ON OBJECTION TO EXEMPTIONS
In this chapter 7 case, the trustee objected to several of the exemptions claimed by the debtors. On October 26, 1999 the court held a hearing.
The debtors claim an exemption from the estate in cash on hand, certain personal property including a plate collection and three paintings, firearms and sporting equipment, and a certificate of deposit as proceeds of a retirement plan. Having considered the testimony and other evidence, the pleadings of record, arguments of the parties and applicable law, the court is prepared to rule.
In a Wyoming bankruptcy case, a debtor may claim exemptions pursuant to 11 U.S.C. § 522(b)(2)(A) under the "[s]tate or local law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located for the 180 days immediately preceding the date of the filing of the petition."
Cash on Hand
The debtors claim exempt cash on hand scheduled as $20 pursuant to Wyoming Statute § 1-15-511 (Lexis 1999). That section provides an exemption of up to 75% of a debtor's aggregate disposable earnings from a continuing garnishment. Generally, Wyoming courts have held the exemption applicable in bankruptcy cases also.
However, that does not end the inquiry. The statute provides that the exemption is applicable to the "aggregate disposable earnings of a judgment debtor which are subject to continuing garnishment . . ." A continuing garnishment is defined as "any procedure for withholding the earnings of a judgment debtor" and garnishment is a "procedure through which the property or earnings of an individual in the possession or control of a garnishee." Wyo. Stat. § 1-15-501(a)(i) (vi) (Lexis 1999).
Earnings subject to garnishment are "earnings owed by the garnishee to the judgment debtor at the time of service of the writ." Wyo. Stat. § 1-15-503(a) (Lexis 1999). The statutory language makes clear that the exemption is applicable to wages due the debtor but not yet paid on the applicable date, which in a bankruptcy case is the date of filing. Once the wages have been reduced to cash and paid to the judgment debtor, the exemption is not applicable.
Nor is the Wyoming statute akin to the Social Security Act's anti-assignment provision. Under the provision referring to moneys paid or payable, Social Security payments have been held to maintain their exempt status always. Tom v. First American Credit Union, 151 F.3d 1289, 1290 10th Cir. 1998). There being no similar language in the Wyoming garnishment statute, the cash on hand is not exempt under § 1-15-511.
Personal Property
The debtors claim an exemption in a plate collection and three paintings, a 16 gauge and a 12 gauge shotgun, 2 tennis rackets, and 4 fishing poles all pursuant to Wyoming Statute § 1-20-106(a)(iii). That section provides an exemption for "household articles of any kind or character as the debtor may select, not exceeding in all the value of two thousand dollars." Each debtor is entitled to a separate exemption.
Precedent in this state has been established by the Honorable Charles E. Matheson in the case of In re Perkins, case no 96-20773, slip opinion (Bankr.D.Wyo. February 10, 1997). Judge Matheson, citing the case of In re Lindell-Heasler, 154 B.R. 748 (D.Wyo. 1992), held that household articles should be construed broadly, but is restricted to items used by the debtor in the home. He allowed the exemption in prints and paintings used in the home up to the value of the exemption and denied a similarly claimed exemption in sporting goods, fishing and hunting equipment, skis, camping equipment and a gun case.
The reasoning is sound. In this case, the evidence indicates that the paintings and plate collection are not expensive artwork purchased for investment purposes. Those articles qualify as household goods and are exempt.
The exemption claimed in the sporting equipment and guns is denied. They are not items used in the home and as such, are not household articles within the meaning of the statute.
Certificate of Deposit
Finally, the trustee objects to the claim of an exemption under Wyoming Statute § 1-20-110(a)(i) in an EBY-Brown Company Profit Sharing Retirement Plan. The evidence shows that Mrs. Zimmerman was an employee of EBY-Brown Companies and participated in their retirement program. Her employment terminated in July 1995 when she withdrew the retirement funds, paid a tax or withdrawal penalty to the Internal Revenue Service, and transferred $10,000 of the money into an Individual Retirement Account at Security First Bank.
In August 1998, Mrs. Zimmerman cashed in the IRA and purchased a certificate of deposit in the amount of $9,000. On the date the bankruptcy petition was filed, April 26, 1999, she had $5,000 remaining in the CD. The other funds had been withdrawn and spent for emergencies prior to the filing of this case.
The debtors claim the exemption pursuant to Wyoming Statute § 1-20-110(a)(i) (Lexis 1999) which states:
Any person's interest in a retirement plan, pension or annuity, whether by way of a gratuity or otherwise, granted, paid or payable (A) by any private corporation or employer to an employee or a retired employee under a plan or contract which provides that the pension or annuity shall not be assignable . . . [is exempt].
The trustee argues that once an otherwise exemptible retirement plan is converted to cash, the funds are no longer exempt. The debtors contend that the terms of the statute allowing an exemption in funds "paid" covers a full cash-out of a participant's interest in the plan. The court need not resolve this issue.
The EBY-Company plan was provided to the court at its request. The plan precludes an employee from revoking or discontinuing participation in the plan. However, no provision of the plan provides that the plan is not assignable.
The debtors argue that the absence of a provision authorizing assignment is sufficient to satisfy the statute. The court disagrees. The exemption statute requires an anti-assignment provision. The requisite language is not in the EBY-Brown plan.
The court concludes the funds derived from the cash out of Mrs. Zimmerman's profit sharing plan were not exempt on the date of the bankruptcy petition. The money is no longer a retirement fund pursuant to any exemption in § 1-20-110, and therefore, the exemption must be overruled.
Spill Over Exemption
The debtors also argue that the spillover provision of 11 U.S.C. § 522(d)(5) entitles them to exempt all of the claimed items not otherwise exempt under Wyoming law. The debtors are mistaken.
The Federal exemptions provided by the Bankruptcy Code under § 522(d) are not applicable in Wyoming because Wyoming has opted out of the Federal exemptions by the authority granted in § 522(b)(1). Wyo. Stat. § 1-20-109 (Lexis 1999). Except for Federal exemptions not set forth in § 522(d), a Wyoming debtor must claim exemptions pursuant to Wyoming law.
Abandonment
The debtors also argue that some of the items claimed exempt are of nominal value and should be abandoned whether or not the exemption is valid. Whether or not the trustee abandons cash or any other item because it is of little value is not a question related to exemptions, and the argument is irrelevant.
In accordance with the foregoing findings and conclusions, it is
ORDERED that the trustee's objection to the debtors' claims of exemption in the cash on hand, sporting goods, guns and camping equipment is sustained and the exemptions are disallowed; and
FURTHER ORDERED that the trustee's objection to the debtors' claim of exemption in the plate collection and three paintings is overruled, and the exemptions are allowed up to the value of all household goods of $4,000; and
FURTHER ORDERED that the trustee's objection to the debtors' claim of exemption in the certificate of deposit derived from a cash out of the EBY-Brown Company Profit Sharing Retirement Plan is sustained, and the exemption is disallowed.