Schwab v. Reilly , 560 U.S. 770 ( 2010 )


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  • (Slip Opinion)              OCTOBER TERM, 2009                                       1
    
                                           Syllabus
    
             NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
           being done in connection with this case, at the time the opinion is issued.
           The syllabus constitutes no part of the opinion of the Court but has been
           prepared by the Reporter of Decisions for the convenience of the reader.
           See United States v. Detroit Timber & Lumber Co., 
    200 U.S. 321
    , 337.
    
    
    SUPREME COURT OF THE UNITED STATES
    
                                           Syllabus
    
                                SCHWAB v. REILLY
    
    CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                      THE THIRD CIRCUIT
    
        No. 08–538.      Argued November 3, 2009—Decided June 17, 2010
    Respondent Reilly filed for Chapter 7 bankruptcy when her catering
      business failed. She supported her petition with, inter alia, Schedule
      B, on which debtors must list their assets, and Schedule C, on which
      they must list the property they wish to reclaim as exempt. Her
      Schedule B assets included cooking and other kitchen equipment, to
      which she assigned an estimated market value of $10,718. On
      Schedule C, she claimed two exempt interests in this “business
      equipment”: a “tool[s] of the trade” exemption for the statutory
      maximum “$1,850 in value,” 
    11 U.S. C
    . §522(d)(6); and $8,868 under
      the statutory provisions allowing miscellaneous, or “wildcard,” ex
      emptions up to $10,225 in value. The claimed exemptions’ total value
      ($10,718) equaled Reilly’s estimate of the equipment’s market value.
      Property claimed as exempt will be excluded from the bankruptcy es
      tate “[u]nless a party in interest” objects, §522(l), within a certain 30
      day period, see Fed. Rule Bkrtcy. Proc. 4003(b). Absent an objection,
      the property will be excluded from the estate even if the exemption’s
      value exceeds what the Code permits. See, e.g., §522(l); Taylor v.
      Freeland & Kronz, 
    503 U.S. 638
    , 642–643.
        Although an appraisal revealed that the equipment’s total market
      value could be as much as $17,200, petitioner Schwab, the bank
      ruptcy estate’s trustee, did not object to the claimed exemptions be
      cause the dollar value Reilly assigned to each fell within the limits of
      §§522(d)(5) and (6). Schwab moved the Bankruptcy Court for per
      mission to auction the equipment so Reilly could receive the $10,718
      she claimed exempt and the estate could distribute the remaining
      value to her creditors. Reilly countered that by equating on Schedule
      C the total value of her claimed exemptions in the equipment with
      the equipment’s estimated market value, she had put Schwab and
    2                          SCHWAB v. REILLY
    
                                     Syllabus
    
        her creditors on notice that she intended to exempt the equipment’s
        full value, even if it turned out to be more than the amounts she de
        clared and that the Code allowed. She asserted that the estate had
        forfeited its claim to any portion of that value because Schwab had
        not objected within the Rule 4003(b) period, and that she would dis
        miss her petition rather than sell her equipment.
           The Bankruptcy Court denied Schwab’s motion and Reilly’s condi
        tional motion to dismiss. The District Court denied Schwab relief, re
        jecting his argument that neither the Code nor Rule 4003(b) requires
        a trustee to object to a claimed exemption where the amount the
        debtor declares as the exemption’s value is within the limits the Code
        prescribes. Affirming, the Third Circuit agreed that Reilly’s Schedule
        C entries indicated her intent to exempt the equipment’s full value.
        Relying on Taylor, it held that Schwab’s failure to object entitled
        Reilly to exempt the full value of her equipment, even though that
        value exceeded the amounts that Reilly declared and the Code per
        mitted.
    Held: Because Reilly gave “the value of [her] claimed exemption[s]” on
     Schedule C dollar amounts within the range the Code allows for what
     it defines as the “property claimed as exempt,” Schwab was not re
     quired to object to the exemptions in order to preserve the estate’s
     right to retain any value in the equipment beyond the value of the
     exempt interest. Pp. 6–23.
        (a) Reilly’s complicated view of the trustee’s statutory obligation,
     and her reading of Schedule C, does not accord with the Code. Pp. 6–
     15.
          (1) The parties agree that this case is governed by §522(l), which
     states that a Chapter 7 debtor must “file a list of property that the
     debtor claims as exempt under subsection (b) of this section,” and
     that “[u]nless a party in interest objects, the property claimed as ex
     empt on such list is exempt.” Reilly asserts that the “property
     claimed as exempt” refers to all of the information on Schedule C, in
     cluding the estimated market value of each asset. Schwab and
     amicus United States counter that because the Code defines such
     property as an interest, not to exceed a certain dollar amount, in a
     particular asset, not as the asset itself, the value of the property
     claimed exempt should be judged on the dollar value the debtor as
     signs the interest, not on the value the debtor assigns the asset.
     Pp. 6–9.
          (2) Schwab and the United States are correct. The portion of
     §522(l) that resolves this case is not, as Reilly asserts, the provision
     stating that the “property claimed as exempt on [Schedule C] is ex
     empt” unless an interested party objects. Rather, it is the portion
     that defines the objection’s target, namely, the “list of property that
                       Cite as: 560 U. S. ____ (2010)                    3
    
                                  Syllabus
    
    the debtor claims as exempt under subsection (b).” Section 522(b)
    does not define the “property claimed as exempt” by reference to the
    estimated market value. It refers only to property defined in §522(d),
    which in turn lists 12 categories of property that a debtor may claim
    as exempt. Most of these categories and all the ones applicable here
    define “property” as the debtor’s “interest”—up to a specified dollar
    amount—in the assets described in the category, not as the assets
    themselves. Schwab had no duty to object to the property Reilly
    claimed as exempt because its stated value was within the limits the
    Code allows. Reilly’s contrary view does not withstand scrutiny be
    cause it defines the target of a trustee’s objection based on Schedule
    C’s language and dictionary definitions of “property” at odds with the
    Code’s definition. The Third Circuit failed to account for the Code’s
    definition and for provisions that permit debtors to exempt certain
    property in kind or in full regardless of value. See, e.g., §522(d)(9).
    Schwab was entitled to evaluate the claimed exemptions’ propriety
    based on three Schedule C entries: the description of the business
    equipment in which Reilly claimed the exempt interests; the Code
    provisions governing the claimed exemptions; and the amounts Reilly
    listed in the column titled “value of claimed exemption.” This conclu
    sion does not render Reilly’s market value estimate superfluous. It
    simply confines that estimate to its proper role: aiding the trustee in
    administering the estate by helping him identify assets that may
    have value beyond the amount the debtor claims as exempt, or whose
    full value may not be available for exemption. This interpretation is
    consistent with the historical treatment of bankruptcy exemptions.
    Pp. 9–15.
       (b) Taylor does not dictate a contrary conclusion. While both Tay
    lor and this case concern the consequences of a trustee’s failure to ob
    ject to a claimed exemption within Rule 4003’s time period, Taylor es
    tablishes and applies the straightforward proposition that an
    interested party must object to a claimed exemption if the amount
    the debtor lists as the “value claimed exempt” is not within statutory
    limits. In Taylor, the value listed in Schedule C (“$ unknown”) was
    not plainly within those limits, but here, the values ($8,868 and
    $1,850) are within Code limits and thus do not raise the warning flag
    present in Taylor. Departing from Taylor would not only ignore the
    presumption that parties act lawfully and with knowledge of the law;
    it would also require the Court to expand the statutory definition of
    “property claimed as exempt” and the universe of information an in
    terested party must consider in evaluating an exemption’s validity.
    Even if the Code allowed such expansions, they would be ill advised.
    Basing the definition of “property claimed exempt,” and thus an in
    terested party’s obligation to object under §522(l), on inferences that
    4                           SCHWAB v. REILLY
    
                                       Syllabus
    
        party must draw from preprinted bankruptcy schedules that evolve
        over time, rather than on the facial validity of the value the debtor
        assigns the “property claimed as exempt” as defined by the Code,
        would undermine the predictability the statute is designed to pro
        vide. Pp. 16–18.
          (c) Reilly’s argument threatens to convert the Code’s goal of giving
        debtors a fresh start into a free pass. By permitting a debtor “to
        withdraw from the estate certain interests in property, . . . up to cer
        tain values,” Rousey v. Jacoway, 
    544 U.S. 320
    , 325, Congress bal
        anced the difficult choices that exemption limits impose on debtors
        with the economic harm that exemptions visit on creditors. This
        Court should not alter that balance by requiring trustees to object to
        claimed exemptions based on form entries beyond those governing an
        exemption’s validity under the Code. In rejecting Reilly’s approach,
        the Court does not create incentives for trustees and creditors to
        sleep on their rights. The decision reached here encourages a debtor
        wishing to exempt an asset’s full market value or the asset itself to
        declare the value of the claimed exemption in a way that makes its
        scope clear. Such declarations will encourage the trustee to object
        promptly and preserve for the estate any value in the asset beyond
        relevant statutory limits. If the trustee fails to object, or his objection
        is overruled, the debtor will be entitled to exclude the asset’s full
        value. If the objection is sustained, the debtor will be required either
        to forfeit the portion of the exemption exceeding the statutory allow
        ance or to revise other exemptions or arrangements with creditors to
        permit the exemption. See Rule 1009(a). Either result will facilitate
        the expeditious and final disposition of assets, and thus enable the
        debtor and creditors to achieve a fresh start free of Reilly’s finality
        and clouded-title concerns. Pp. 19–22.
    
    534 F.3d 173
    , reversed and remanded.
    
       THOMAS, J., delivered the opinion of the Court, in which STEVENS,
    SCALIA, KENNEDY, ALITO, and SOTOMAYOR, JJ., joined. GINSBURG, J.,
    filed a dissenting opinion, in which ROBERTS, C. J., and BREYER, J.,
    joined.
                            Cite as: 560 U. S. ____ (2010)                              1
    
                                 Opinion of the Court
    
         NOTICE: This opinion is subject to formal revision before publication in the
         preliminary print of the United States Reports. Readers are requested to
         notify the Reporter of Decisions, Supreme Court of the United States, Wash­
         ington, D. C. 20543, of any typographical or other formal errors, in order
         that corrections may be made before the preliminary print goes to press.
    
    
    SUPREME COURT OF THE UNITED STATES
                                       _________________
    
                                       No. 08–538
                                       _________________
    
    
       WILLIAM G. SCHWAB, PETITIONER v. NADEJDA
    
                       REILLY 
    
     ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
    
                APPEALS FOR THE THIRD CIRCUIT
    
                                     [June 17, 2010] 
    
    
      JUSTICE THOMAS delivered the opinion of the Court.
      When a debtor files a Chapter 7 bankruptcy petition, all
    of the debtor’s assets become property of the bankruptcy
    estate, see 
    11 U.S. C
    . §541, subject to the debtor’s right to
    reclaim certain property as “exempt,” §522(l). The Bank­
    ruptcy Code specifies the types of property debtors may
    exempt, §522(b), as well as the maximum value of the
    exemptions a debtor may claim in certain assets, §522(d).
    Property a debtor claims as exempt will be excluded from
    the bankruptcy estate “[u]nless a party in interest” ob­
    jects. §522(l).
      This case presents an opportunity for us to resolve a
    disagreement among the Courts of Appeals about what
    constitutes a claim of exemption to which an interested
    party must object under §522(l). The issue is whether an
    interested party must object to a claimed exemption
    where, as here, the Code defines the property the debtor is
    authorized to exempt as an interest, the value of which
    may not exceed a certain dollar amount, in a particular
    type of asset, and the debtor’s schedule of exempt property
    accurately describes the asset and declares the “value of
    2                            SCHWAB v. REILLY
    
                                 Opinion of the Court
    
    [the] claimed exemption” in that asset to be an amount
    within the limits that the Code prescribes. Fed. Rule
    Bkrtcy. Proc. Official Form 6, Schedule C (1991) (hereinaf­
    ter Schedule C). We hold that, in cases such as this, an
    interested party need not object to an exemption claimed
    in this manner in order to preserve the estate’s ability to
    recover value in the asset beyond the dollar value the
    debtor expressly declared exempt.
                                  I
       Respondent Nadejda Reilly filed for Chapter 7 bank­
    ruptcy when her catering business failed. She supported
    her petition with various schedules and statements, two of
    which are relevant here: Schedule B, on which the Bank­
    ruptcy Rules require debtors to list their assets (most of
    which become property of the estate), and Schedule C, on
    which the Rules require debtors to list the property they
    wish to reclaim as exempt. The assets Reilly listed on
    Schedule B included an itemized list of cooking and other
    kitchen equipment that she described as “business equip­
    ment,” and to which she assigned an estimated market
    value of $10,718. App. 40a, 49a–55a.
       On Schedule C, Reilly claimed two exempt interests in
    this equipment pursuant to different sections of the Code.
    Reilly claimed a “tool[s] of the trade” exemption of $1,850
    in the equipment under §522(d)(6), which permits a debtor
    to exempt his “aggregate interest, not to exceed $1,850 in
    value, in any implements, professional books, or tools, of
    [his] trade.” See also 69 Fed. Reg. 8482 (2004) (Table).
    And she claimed a miscellaneous exemption of $8,868 in
    the equipment under §522(d)(5), which, at the time she
    filed for bankruptcy, permitted a debtor to take a “wild­
    card” exemption equal to the “debtor’s aggregate interest
    in any property, not to exceed” $10,225 “in value.”1 See
    ——————
        1 The   1994 version of 
    11 U.S. C
    . §522(d)(5) allowed debtors to exempt
                         Cite as: 560 U. S. ____ (2010)                   3
    
                             Opinion of the Court
    
    App. 58a. The total value of these claimed exemptions
    ($10,718) equaled the value Reilly separately listed on
    Schedules B and C as the equipment’s estimated market
    value, see id., at 49a, 58a.
       Subject to exceptions not relevant here, the Federal
    Rules of Bankruptcy Procedure require interested parties
    to object to a debtor’s claimed exemptions within 30 days
    after the conclusion of the creditors’ meeting held pursu­
    ant to Rule 2003(a). See Fed. Rule Bkrtcy. Proc. 4003(b).
    If an interested party fails to object within the time al­
    lowed, a claimed exemption will exclude the subject prop­
    erty from the estate even if the exemption’s value exceeds
    what the Code permits. See, e.g., §522(l); Taylor v. Free
    land & Kronz, 
    503 U.S. 638
    , 642–643 (1992).
       Petitioner William G. Schwab, the trustee of Reilly’s
    bankruptcy estate, did not object to Reilly’s claimed ex­
    emptions in her business equipment because the dollar
    value Reilly assigned each exemption fell within the limits
    that §§522(d)(5) and (6) prescribe. App. 163a. But be­
    cause an appraisal revealed that the total market value of
    Reilly’s business equipment could be as much as $17,200,2
    Schwab moved the Bankruptcy Court for permission to
    auction the equipment so Reilly could receive the $10,718
    she claimed as exempt, and the estate could distribute the
    equipment’s remaining value (approximately $6,500) to
    Reilly’s creditors. App. 141a–143a.
    ——————
    an “aggregate interest in any property, not to exceed in value $800 plus
    up to $7,500 of any unused amount of the [homestead or burial plot]
    exemption provided under [§522(d)(1)].”          In 2004, pursuant to
    §104(b)(2), the Judicial Conference of the United States published
    notice that §522(d)(5) would impose the $975 and $9,250 ($10,225 total)
    limits that governed Reilly’s April 2005 petition. See 69 Fed. Reg. 8482
    (Table). In 2007 and 2010 the limits were again increased. See 72 id.,
    at 7082 (Table); 75 id., at 8748 (Table).
      2 Schwab concedes that the appraisal occurred before Rule 4003(b)’s
    
    30-day window for objecting to the claimed exemptions had passed. See
    Brief for Petitioner 15.
    4                         SCHWAB v. REILLY
    
                              Opinion of the Court
    
      Reilly opposed Schwab’s motion. She argued that by
    equating on Schedule C the total value of the exemptions
    she claimed in the equipment with the equipment’s esti­
    mated market value, she had put Schwab and her credi­
    tors on notice that she intended to exempt the equipment’s
    full value, even if that amount turned out to be more than
    the dollar amount she declared, and more than the Code
    allowed. Id., at 165a. Citing §522(l), Reilly asserted that
    because her Schedule C notified Schwab of her intent to
    exempt the full value of her business equipment, he was
    obliged to object if he wished to preserve the estate’s right
    to retain any value in the equipment in excess of the
    $10,718 she estimated. Because Schwab did not object
    within the time prescribed by Rule 4003(b), Reilly asserted
    that the estate forfeited its claim to such value. Id., at
    165a. Reilly further informed the Bankruptcy Court that
    exempting her business equipment from the estate was so
    important to her that she would dismiss her bankruptcy
    case if doing so was the only way to avoid the equipment’s
    sale at auction.3
      The Bankruptcy Court denied both Schwab’s motion to
    auction the equipment and Reilly’s conditional motion to
    dismiss her case. See In re Reilly, 
    403 B.R. 336
     (Bkrtcy.
    Ct. MD Pa. 2006). Schwab sought relief from the District
    Court, arguing that neither the Code nor Rule 4003(b)
    requires a trustee to object to a claimed exemption where
    the amount the debtor declares as the “value of [the
    ——————
      3 Reilly’s desire to avoid the equipment’s auction is understandable
    
    because the equipment, which Reilly’s parents purchased for her
    despite their own financial difficulties, has “ ‘extraordinary sentimental
    value.’ ” Brief for Respondent 5 (quoting App. 152a–153a). But the
    sentimental value of the property cannot drive our decision in this case,
    because sentimental value is not a basis for construing the Bankruptcy
    Code. Because the Code imposes limits on exemptions, many debtors
    who seek to take advantage of the Code are, no doubt, put to the
    similarly difficult choice of parting with property of “extraordinary
    sentimental value.” Id., at 152a−153a; see infra, at 19–23.
                     Cite as: 560 U. S. ____ (2010)            5
    
                         Opinion of the Court
    
    debtor’s] claimed exemption” in certain property is an
    amount within the limits the Code prescribes. The Dis­
    trict Court rejected Schwab’s argument, and the Court of
    Appeals affirmed. See In re Reilly, 
    534 F.3d 173
     (CA3
    2008).
       The Court of Appeals agreed with the Bankruptcy Court
    that by equating on Schedule C the total value of her
    exemptions in her business equipment with the equip­
    ment’s market value, Reilly “indicate[d] the intent” to
    exempt the equipment’s full value. Id., at 174. In reach­
    ing this conclusion, the Court of Appeals relied on our
    decision in Taylor:
        “[W]e believe this case to be controlled by Taylor.
        Just as we perceive it was important to the Taylor
        Court that the debtor meant to exempt the full
        amount of the property by listing ‘unknown’ as both
        the value of the property and the value of the exemp­
        tion, it is important to us that Reilly valued the busi­
        ness equipment at $10,718 and claimed an exemption
        in the same amount. Such an identical listing put
        Schwab on notice that Reilly intended to exempt the
        property fully.
              .          .          .           .          .
        “ ‘[A]n unstated premise’ of Taylor was ‘that a debtor
        who exempts the entire reported value of an asset is
        claiming the “full amount,” whatever it turns out to
        be.’ ” 
    534 F. 3d
    , at 178−179.
    Relying on this “unstated premise,” the Court of Appeals
    held that Schwab’s failure to object to Reilly’s claimed
    exemptions entitled Reilly to the equivalent of an in-kind
    interest in her business equipment, even though the value
    of that exemption exceeded the amount that Reilly de­
    clared on Schedule C and the amount that the Code al­
    lowed her to withdraw from the bankruptcy estate. Ibid.
      As noted, the Court of Appeals’ decision adds to dis­
    6                         SCHWAB v. REILLY
    
                              Opinion of the Court
    
    agreement among the Circuits about what constitutes a
    claim of exemption to which an interested party must
    object under §522(l).4 We granted certiorari to resolve this
    conflict. See 556 U. S. ___ (2009). We conclude that the
    Court of Appeals’ approach fails to account for the text of
    the relevant Code provisions and misinterprets our deci­
    sion in Taylor. Accordingly, we reverse.
                                 II
       The starting point for our analysis is the proper inter­
    pretation of Reilly’s Schedule C. If we read the Schedule
    Reilly’s way, she claimed exemptions in her business
    equipment that could exceed statutory limits, and thus
    claimed exemptions to which Schwab should have objected
    if he wished to enforce those limits for the benefit of the
    estate. If we read Schedule C Schwab’s way, Reilly
    claimed valid exemptions to which Schwab had no duty to
    object. The Court of Appeals construed Schedule C Reil­
    ly’s way and interpreted her claimed exemptions as im­
    proper, and therefore objectionable, even though their
    declared value was facially within the applicable Code
    limits. In so doing, the Court of Appeals held that trustees
    evaluating the validity of exemptions in cases like this
    cannot take a debtor’s claim at face value, and specifically
    ——————
        4 CompareIn re Williams, 
    104 F.3d 688
    , 690 (CA4 1997) (holding
    that interested parties have no duty to object to a claimed exemption
    where the dollar amount the debtor assigns the exemption is facially
    within the range the Code allows for the type of property in issue); In re
    Wick, 
    276 F.3d 412
     (CA8 2002) (employing reasoning similar to Wil
    liams, but stopping short of articulating a clear rule), with In re Green,
    
    31 F.3d 1098
    , 1100 (CA11 1994) (“A debtor who exempts the entire
    reported value of an asset is claiming the [asset’s] ‘full amount,’ what­
    ever it turns out to be”); In re Anderson, 
    377 B.R. 865
     (Bkrtcy. App.
    Panel CA6 2007) (similar); and In re Barroso-Herrans, 
    524 F.3d 341
    ,
    344 (CA1 2008) (focusing on “how a reasonable trustee would have
    understood the filings under the circumstances”); In re Hyman, 
    967 F.2d 1316
     (CA9 1992) (applying an analogous totality-of-the­
    circumstances approach).
                         Cite as: 560 U. S. ____ (2010)                    7
    
                              Opinion of the Court
    
    cannot rely on the fact that the amount the debtor de­
    clares as the “value of [the] claimed exemption” is within
    statutory limits. Instead, the trustee’s duty to object turns
    on whether the interplay of various schedule entries sup­
    ports an inference that the debtor “intended” to exempt a
    dollar value different than the one she wrote on the form.
    
    534 F. 3d
    , at 178. This complicated view of the trustee’s
    statutory obligation, and the strained reading of Schedule
    C on which it rests, is inconsistent with the Code.5
       The parties agree that this case is governed by §522(l),
    which states that a Chapter 7 debtor must “file a list of
    property that the debtor claims as exempt under subsec­
    tion (b) of this section,” and further states that “[u]nless a
    party in interest objects, the property claimed as exempt
    on such list is exempt.” The parties further agree that the
    “list” to which §522(l) refers is the “list of property . . .
    claim[ed] as exempt” currently known as “Schedule C.”
    See Schedule C.6 The parties, like the Courts of Appeals,
    disagree about what information on Schedule C defines
    the “property claimed as exempt” for purposes of evaluat­
    ing an exemption’s propriety under §522(l). Reilly asserts
    that the “property claimed as exempt” is defined by refer­
    ence to all the information on Schedule C, including the
    estimated market value of each asset in which the debtor
    claims an exempt interest. Schwab and the United States
    as amicus curiae argue that the Code specifically defines
    the “property claimed as exempt” as an interest, the value
    of which may not exceed a certain dollar amount, in a
    particular asset, not as the asset itself. Accordingly, they
    ——————
      5 The forms, rules, treatise excerpts, and policy considerations on
    
    which the dissent relies, see post, at 4−16, must be read in light of the
    Bankruptcy Code provisions that govern this case, and must yield to
    those provisions in the event of conflict.
      6 Bankruptcy Rule 4003 specifies the time within which the debtor
    
    must file Schedule C, as well as the time within which interested
    parties must object to the exemptions claimed thereon.
    8                            SCHWAB v. REILLY
    
                                 Opinion of the Court
    
    argue that the value of the property claimed exempt, i.e.,
    the value of the debtor’s exempt interest in the asset,
    should be judged on the value the debtor assigns the
    interest, not on the value the debtor assigns the asset.
    The point of disagreement is best illustrated by the rele­
    vant portion of Reilly’s Schedule C:
                 Schedule C─Property Claimed as Exempt
    Description of     Specify Law      Value of        Current Market Value
    Property           Providing Each   Claimed         of Property Without
                       Exemption        Exemption       Deducting Exemptions
    Schedule B
    Personal
    Property
    ....               ....             ....            ....
    
    See attached       
    11 U.S. C
    .      1,850           10,718
    list of business   §522(d)(6)
    equipment.         
    11 U.S. C
    .      8,868
                       §522(d)(5)
    
    According to Reilly, Schwab was required to treat the
    estimate of market value she entered in column four as
    part of her claimed exemption in identifying the “property
    claimed as exempt” under §522(l). See Brief for Respon­
    dent 22–28. Relying on this premise, Reilly argues that
    where, as here, a debtor equates the total value of her
    claimed exemptions in a certain asset (column three) with
    her estimate of the asset’s market value (column four), she
    establishes the “property claimed as exempt” as the full
    value of the asset, whatever that turns out to be. See ibid.
    Accordingly, Reilly argues that her Schedule C clearly put
    Schwab on notice that she “intended” to claim an exemp­
    tion for the full value of her business equipment, and that
    Schwab’s failure to oppose the exemption in a timely
    manner placed the full value of the equipment outside the
    estate’s reach.
       Schwab does not dispute that columns three and four
    apprised him that Reilly equated the total value of her
    claimed exemptions in the equipment ($1,850 plus $8,868)
                     Cite as: 560 U. S. ____ (2010)           9
    
                         Opinion of the Court
    
    with the equipment’s market value ($10,718). He simply
    disagrees with Reilly that this “identical listing put [him]
    on notice that Reilly intended to exempt the property
    fully,” regardless whether its value exceeded the exemp­
    tion limits the Code prescribes. 
    534 F. 3d
    , at 178. Schwab
    and amicus United States instead contend that the Code
    defines the “property” Reilly claimed as exempt under
    §522(l) as an “interest” whose value cannot exceed a cer­
    tain dollar amount. Brief for Petitioner 20–26; Reply Brief
    for Petitioner 3–6; Brief for United States as Amicus
    Curiae 12–18. Construing Reilly’s Schedule C in light of
    this statutory definition, they contend that Reilly’s
    claimed exemption was facially unobjectionable because
    the “property claimed as exempt” (i.e., two interests in her
    business equipment worth $8,868 and $1,850, respec­
    tively) is property Reilly was clearly entitled to exclude
    from her estate under the Code provisions she referenced
    in column 2. See supra, at 8 (citing §§522(d)(5) and (6)).
    Accordingly, Schwab and the United States conclude that
    Schwab had no obligation to object to the exemption in
    order to preserve for the estate any value in Reilly’s busi­
    ness equipment beyond the total amount ($10,718) Reilly
    properly claimed as exempt.
       We agree. The portion of §522(l) that resolves this case
    is not, as Reilly asserts, the provision stating that the
    “property claimed as exempt on [Schedule C] is exempt”
    unless an interested party objects. Rather, it is the por­
    tion of §522(l) that defines the target of the objection,
    namely, the portion that says Schwab has a duty to object
    to the “list of property that the debtor claims as exempt
    under subsection (b).” (Emphasis added.) That subsec­
    tion, §522(b), does not define the “property claimed as
    exempt” by reference to the estimated market value on
    which Reilly and the Court of Appeals rely. Brief for
    Respondent 22–23; 
    534 F. 3d
    , at 178. Section 522(b)
    refers only to property defined in §522(d), which in turn
    10                        SCHWAB v. REILLY
    
                              Opinion of the Court
    
    lists 12 categories of property that a debtor may claim as
    exempt. As we have recognized, most of these categories
    (and all of the categories applicable to Reilly’s exemptions)
    define the “property” a debtor may “clai[m] as exempt” as
    the debtor’s “interest”—up to a specified dollar amount—
    in the assets described in the category, not as the assets
    themselves. §§522(d)(5)–(6); see also §§522(d)(1)–(4), (8);
    Rousey v. Jacoway, 
    544 U.S. 320
    , 325 (2005); Owen v.
    Owen, 
    500 U.S. 305
    , 310 (1991). Viewing Reilly’s form
    entries in light of this definition, we agree with Schwab
    and the United States that Schwab had no duty to object
    to the property Reilly claimed as exempt (two interests in
    her business equipment worth $1,850 and $8,868) because
    the stated value of each interest, and thus of the “prop­
    erty claimed as exempt,” was within the limits the Code
    allows.7
       Reilly’s contrary view of Schwab’s obligations under
    §522(l) does not withstand scrutiny because it defines the
    target of a trustee’s objection—the “property claimed as
    exempt”—based on language in Schedule C and dictionary
    definitions of “property,” see Brief for Respondent 24–25,
    40–41, that the definition in the Code itself overrides.8
    ——————
      7 Schwab’s statutory duty to object to the exemptions in this case
    
    turns solely on whether the value of the property claimed as exempt
    exceeds statutory limits because the parties agree that Schwab had no
    cause to object to Reilly’s attempt to claim exemptions in the equipment
    at issue, or to the applicability of the Code provisions Reilly cited in
    support of her exemptions.
      8 The dissent’s approach suffers from a similar flaw, and misstates
    
    our holding in critiquing it. See post, at 1−2 (asserting that by refusing
    to subject “challenges to the debtor’s valuation of exemptible assets” to
    the “30-day” objection period in Federal Rule of Bankruptcy Procedure
    4003(b), we “drastically reduc[e] Rule 4003’s governance”). Challenges
    to the valuation of what the dissent terms “exemptible assets” are not
    covered by Rule 4003(b) in the first place. Post, at 1. Challenges to
    “property claimed as exempt” as defined by the Code are covered by
    Rule 4003(b), but in this case that property is not objectionable, so the
    lack of an objection did not violate the Rule. Our holding is confined to
                         Cite as: 560 U. S. ____ (2010)                   11
    
                              Opinion of the Court
    
    Although we may look to dictionaries and the Bankruptcy
    Rules to determine the meaning of words the Code does
    not define, see, e.g., Rousey, supra, at 330, the Code’s
    definition of the “property claimed as exempt” in this case
    is clear. As noted above, §§522(d)(5) and (6) define the
    “property claimed as exempt” as an “interest” in Reilly’s
    business equipment, not as the equipment per se. Sections
    522(d)(5) and (6) further and plainly state that claims to
    exempt such interests are statutorily permissible, and
    thus unobjectionable, if the value of the claimed interest is
    below a particular dollar amount.9 That is the case here,
    and Schwab was entitled to rely upon these provisions in
    evaluating whether Reilly’s exemptions were objectionable
    under the Code. See Lamie v. United States Trustee, 
    540 U.S. 526
    , 534 (2004); Hartford Underwriters Ins. Co. v.
    Union Planters Bank, N. A., 
    530 U.S. 1
    , 6 (2000). The
    Court of Appeals’ contrary holding not only fails to account
    for the Code’s definition of the “property claimed as ex­
    empt.” It also fails to account for the provisions in §522(d)
    that permit debtors to exempt certain property in kind or
    in full regardless of value. See, e.g., §§522(d)(9) (profes­
    sionally prescribed health aids), (10)(C) (disability bene­
    fits), (7) (unmatured life insurance contracts). We decline
    to construe Reilly’s claimed exemptions in a manner that
    ——————
    this point. Accordingly, our holding does not “reduc[e] Rule 4003’s
    governance,” nor does it express any judgment on what constrains
    objections to the type of “market value” estimates, post, at 1, the
    dissent equates with the dollar value a debtor assigns the “property
    claimed as exempt” as defined by the Code, see, e.g., post, at 2, 6.
       9 Treating such claims as unobjectionable is consistent with our pre­
    
    cedents. See, e.g., Rousey, 544 U. S., at 325. It also accords with
    bankruptcy court decisions holding that where, as here, a debtor claims
    an exemption pursuant to provisions that (like §522(d)(6)) permit the
    debtor to exclude from the estate only an “interest” in certain property,
    the “property” that becomes exempt absent objection, §522(l), is only
    the “partial interest” claimed as exempt and not “the asset as a whole,”
    e.g., In re Soost, 
    262 B.R. 68
    , 72 (Bkrtcy. App. Panel CA8 2001).
    12                        SCHWAB v. REILLY
    
                              Opinion of the Court
    
    elides the distinction between these provisions and provi­
    sions such as §§522(d)(5) and (6), see, e.g., Duncan v.
    Walker, 
    533 U.S. 167
    , 174 (2001), particularly based upon
    an entry on Schedule C—Reilly’s estimate of her equip­
    ment’s market value—to which the Code does not refer in
    defining the “property claimed as exempt.”10
       For all of these reasons, we conclude that Schwab was
    entitled to evaluate the propriety of the claimed exemp­
    tions based on three, and only three, entries on Reilly’s
    Schedule C: the description of the business equipment in
    which Reilly claimed the exempt interests; the Code provi­
    ——————
      10 The dissent’s approach does not avoid these concerns. The dissent
    
    insists that “a debtor’s market valuation [of the equipment in which she
    claims an exempt interest] is an essential factor in determining the
    nature of the ‘interest’ [the] debtor lists as exempt” (and thus in deter­
    mining whether the claimed exemption is objectionable), because
    “without comparing [the debtor’s] market valuation of the equipment to
    the value of her claimed exemption” the trustee “could not comprehend
    whether [the debtor] claimed a monetary or an in-kind ‘interest’ in [the]
    equipment.” Post, at 9, n. 9. This argument overlooks the fact that
    there is another way the trustee could discern from the “face of the
    debtor’s filings,” post, at 7, n. 6, whether the debtor claimed as exempt
    a “monetary or an in-kind ‘interest’ in” her equipment, post, at 9, n. 9:
    The trustee could simply consult the Code provisions the debtor listed
    as governing the exemption in question. Here, those provisions,
    §§522(d)(5) and (d)(6), expressly describe the exempt interest as an
    “interest” “not to exceed” a specified dollar amount. Accordingly, it was
    entirely appropriate for Schwab to view Reilly’s schedule entries as
    exempting an interest in her business equipment in the (declared and
    unobjectionable) amounts of $1,850 and $8,868. Viewing the entries
    otherwise, i.e., as exempting the equipment in kind or in full no matter
    what its dollar value, would unnecessarily treat the exemption as
    violating the limits imposed by the Code provisions that govern it, as
    well as ignore the distinction between those provisions and the provi­
    sions that “authoriz[e] reclamation of the property in full without any
    cap on value,” post, at 7, n. 5. And it would do all of this based on
    information (identical dollar amounts in columns three and four of
    Schedule C) that Schwab and one of his amici say often result from a
    default setting in commercial bankruptcy software. See Reply Brief for
    Petitioner 15; Brief for Nat. Assn. of Bankruptcy Trustees 13, n. 15.
                         Cite as: 560 U. S. ____ (2010)                   13
    
                              Opinion of the Court
    
    sions governing the claimed exemptions; and the amounts
    Reilly listed in the column titled “value of claimed exemp­
    tion.” In reaching this conclusion, we do not render the
    market value estimate on Reilly’s Schedule C superfluous.
    We simply confine the estimate to its proper role: aiding
    the trustee in administering the estate by helping him
    identify assets that may have value beyond the dollar
    amount the debtor claims as exempt, or whose full value
    may not be available for exemption because a portion of
    the interest is, for example, encumbered by an unavoidable
    lien. See, e.g., 3 W. Norton, Bankruptcy Law and Practice
    §56:7 (3d ed. 2009); Brief for United States as Amicus Curiae
    16; Dept. of Justice, Executive Office for U. S. Trustees,
    Handbook for Chapter 7 Trustees, p. 8–1 (2005), http://
    www.justice.gov /ust/eo/private_trustee/library/chapter07/
    docs/7handbook1008/Ch7_Handbook.pdf (as visited June
    14, 2010, and available in Clerk of Court’s case file). As
    noted, most assets become property of the estate upon
    commencement of a bankruptcy case, see 
    11 U.S. C
    . §541,
    and exemptions represent the debtor’s attempt to reclaim
    those assets or, more often, certain interests in those
    assets, to the creditors’ detriment. Accordingly, it is at
    least useful for a trustee to be able to compare the value of
    the claimed exemption (which typically represents the
    debtor’s interest in a particular asset) with the asset’s
    estimated market value (which belongs to the estate sub­
    ject to any valid exemption) without having to consult
    separate schedules.11
    ——————
      11 The  dissent’s argument that the estimate plays a greater role, and
    is “vital,” post, at 8, to determining whether the value a debtor assigns
    the “property claimed as exempt” (here, an interest in certain business
    equipment) is objectionable, see post, at 8−9, lacks statutory support
    because the governing Code provisions phrase the exemption limit as a
    simple dollar amount. The dissent’s view, see post, at 7−9, might be
    plausible if the Code stated that the debtor could exempt an interest in
    her equipment “not to exceed” a certain percentage of the equipment’s
    14                        SCHWAB v. REILLY
    
                              Opinion of the Court
    
      Our interpretation of Schwab’s statutory obligations is
    not only consistent with the governing Code provisions; it
    is also consistent with the historical treatment of bank­
    ruptcy exemptions. Congress has permitted debtors to
    exempt certain property from their bankruptcy estates for
    more than two centuries. See Act of Apr. 4, 1800, ch. 19,
    §5, 2 Stat. 23.12 Throughout these periods, debtors have
    validly exempted property based on forms that required
    the debtor to list the value of a claimed exemption without
    also estimating the market value of the asset in which the
    ——————
    market value, because then it might be necessary to “compar[e] [the
    debtor’s] market valuation of the equipment to the value of her claimed
    exemption” to determine the exemption’s propriety. Post, at 9, n. 9.
    But the Code does not phrase the exemption cap in such terms. More­
    over, even accepting that the equivalent Schedule C entries the dissent
    relies upon represent a claim to exempt an asset’s full value, the
    dissent does not explain why this equivalence precludes a trustee from
    relying on the dollar amount the debtor expressly assigns both entries.
    According to the dissent, a trustee faced with such entries should
    assume not only that the debtor reclaims from the estate what she
    believes to be the full value of an asset in which the Code allows her to
    exempt an interest “not to exceed” a certain dollar amount, e.g.,
    §522(d)(6), but also that the debtor would continue to claim the asset’s
    full value as exempt even if that value exceeds her estimate to a point
    that would cause her claim to violate the Code. The schedule entries
    themselves do not compel this assumption, and the Code provisions
    they invoke undercut it. The evidence that the debtor in this case
    would have chosen that course is external to her exemption schedule.
    See, e.g., supra, at 4 (citing statements in Reilly’s motion to dismiss);
    post, at 4, n. 3, 6 (same). And in the ordinary case, particularly if the
    equivalent entries the dissent relies upon result from a software de­
    fault, see n. 10, supra, there is no reason to assume that a debtor would
    want to violate the Code or jeopardize other exemptions if her market
    value estimate turns out to be wrong.
      12 See also Act of Aug. 19, 1841, ch. 9, §3, 5 Stat. 442; Act of Mar. 2,
    
    1867, ch. 176, §11, 14 Stat. 521, amended by Act of June 22, 1874, 18
    Stat., Pt. 3, p. 182; Bankruptcy Act of July 1, 1898, ch. 541, §6, 30 Stat.
    548, 
    11 U.S. C
    . §24 (1926 ed.); Chandler Act, ch. 575, §1, 52 Stat. 847,
    
    11 U.S. C
    . §24 (1934 ed., Supp. IV); §522 (1976 ed., Supp. II); §522
    (2000 ed. and Supp. V).
                         Cite as: 560 U. S. ____ (2010)                   15
    
                              Opinion of the Court
    
    debtor claimed the exempt interest. See Brief for Respon­
    dent 46, n. 7 (citing Sup. Ct. Bkrtcy. Form 20 (1877)).13
    Indeed, it was not until 1991 that Schedule B–4 was re­
    designated as Schedule C and amended to require the
    estimate of market value on which Reilly so heavily relies.
    See Schedule C. This amendment was not occasioned by
    legislative changes that altered the Code’s definition of
    “the property claimed as exempt” in this case as an “inter­
    est,” not to exceed a certain dollar amount, in Reilly’s
    business equipment.14 Accordingly, we agree with Schwab
    and the United States that this recent amendment to the
    exemption form does not compel Reilly’s view of Schwab’s
    statutory obligations, or render the claimed exemptions in
    this case objectionable under the Code. See Reply Brief
    for Petitioner 9–11; Brief for United States as Amicus
    Curiae 16–17.15
    ——————
       13 See also General Forms in Bankruptcy, Official Form 1, Schedule
    
    B. (5) (1898); Fed. Rule Bkrtcy. Proc. Official Form 6, Schedule B–4
    (1971).
       14 The precise reason for the amendment is unclear. See Communica­
    
    tion from THE CHIEF JUSTICE of the United States Transmitting
    Amendments to the Federal Rules of Bankruptcy Procedure Prescribed
    by the Court, Pursuant to 
    28 U.S. C
    . 2075, H. R. Doc. 102–80, p. 558,
    reprinted in 11 Bankruptcy Rules Documentary History (1990–1991)
    (referencing only the fact of the amendment). It may have been to
    consolidate and reconcile the separate forms debtors were previously
    required to file in Chapter 7 and Chapter 13 cases, see, e.g., In re
    Beshirs, 
    236 B.R. 42
    , 46−47 (Bkrtcy. Ct. Kan. 1999), or simply to make
    it easier for trustees to evaluate whether certain assets were viable
    candidates for liquidation. Whatever the case, it did not result from
    statutory changes to the Code provisions that govern this dispute.
       15 Because the Code provisions we rely upon to resolve this case do
    
    not obligate trustees to object under Rule 4003(b) to a debtor’s estimate
    of the market value of an asset in which the debtor claims an exempt
    interest, our analysis does not depend on whether the schedule of
    “property claimed as exempt” (currently Schedule C) calls for such an
    estimate or not. We engage the point only because Reilly suggests that
    the 1991 schedule revisions requiring debtors to provide such an
    estimate on the schedule of “property claimed as exempt” means that
    16                        SCHWAB v. REILLY 
    
    
                              Opinion of the Court 
    
    
                                 III 
    
      The Court of Appeals erred in holding that our decision
    in Taylor dictates a contrary conclusion. See 
    534 F. 3d
    , at
    178. Taylor does not rest on what the debtor “meant” to
    exempt. 
    534 F. 3d
    , at 178. Rather, Taylor applies to the
    face of a debtor’s claimed exemption the Code provisions
    that compel reversal here.
      The debtor in Taylor, like the debtor here, filed a sched­
    ule of exemptions with the Bankruptcy Court on which the
    debtor described the property subject to the claimed ex­
    emption, identified the Code provision supporting the
    exemption, and listed the dollar value of the exemption.
    Critically, however, the debtor in Taylor did not, like the
    debtor here, state the value of the claimed exemption as a
    specific dollar amount at or below the limits the Code
    allows. Instead, the debtor in Taylor listed the value of
    the exemption itself as “$ unknown”:
               Schedule B-4. ─Property Claimed Exempt
    Type of         Location, Description,     Specify the     Value Claimed
    Property        and, So Far As Relevant    Statute         Exempt
                    to the Claim of Exemp­     Creating the
                    tion, Present Use of       Exemption
                    Property
    Proceeds from   Winn v. TWA                
    11 U.S. C
    .     $ unknown
    lawsuit         Claim for lost wages       522(b)(d)
    
    The interested parties in Taylor agreed that this entry
    
    ——————
    the estimate must be viewed as part of the exemption and is therefore
    subject to the Rule. See Brief for Respondent 40−41. The dissent
    ranges far beyond even this unavailing argument in suggesting that the
    market value estimate served as “an essential factor in determining the
    nature of the ‘interest’ a debtor lists as exempt,” post, at 9, n. 9, even
    before 1991 when that estimate did not appear on the schedule of
    “property claimed as exempt” (former Schedule B−4), but rather ap­
    peared on former “Schedule B–2,” post, at 7, n. 6, which merely listed
    the debtor’s “personal property” as of the date of the petition filing.
    Interim Fed. Rule Bkrtcy. Proc. Official Form 6, Schedules B–2, B–4
    (1979).
                         Cite as: 560 U. S. ____ (2010)                    17
    
                              Opinion of the Court
    
    rendered the debtor’s claimed exemption objectionable on
    its face because the exemption concerned an asset (lawsuit
    proceeds) that the Code did not permit the debtor to ex­
    empt beyond a specific dollar amount. See 503 U. S., at
    642. Accordingly, although this case and Taylor both
    concern the consequences of a trustee’s failure to object to
    a claimed exemption within the time specified by Rule
    4003, the question arose in Taylor on starkly different
    facts. In Taylor, the question concerned a trustee’s obliga­
    tion to object to the debtor’s entry of a “value claimed
    exempt” that was not plainly within the limits the Code
    allows. In this case, the opposite is true. The amounts
    Reilly listed in the Schedule C column titled “Value of
    Claimed Exemption” are facially within the limits the
    Code prescribes and raise no warning flags that warranted
    an objection.16 See supra, at 8.
       Taylor supports this conclusion. In holding otherwise,
    the Court of Appeals focused on what it described as Tay
    lor’s “ ‘unstated premise’ ” that “ ‘a debtor who exempts the
    entire reported value of an asset is claiming the “full
    amount,” whatever it turns out to be.’ ” 
    534 F. 3d
    , at 179.
    But Taylor does not rest on this premise. It establishes
    and applies the straightforward proposition that an inter­
    ested party must object to a claimed exemption if the
    ——————
       16 See, e.g., Barroso-Herrans, 
    524 F. 3d
    , at 345 (explaining that Sche­
    
    dule C entries listing the value of a claimed exemption as “unknown,”
    “to be determined,” or “100%” are “ ‘red flags to trustees and creditors,’
    and therefore put them on notice that if they do not object, the whole
    value of the asset—whatever it might later turn out to be—will be
    exempt” (quoting 1 Collier on Bankruptcy ¶8.06[1][c][ii] (15th ed. rev.
    2007); citation and some internal quotation marks omitted)). The
    dissent concedes that a debtor’s exemption schedule “must give notice
    sufficient to cue the trustee that an objection may be in order,” and
    rightly observes that the sufficiency of a particular cue, or “ ‘ warning
    flag,’ ” may lie “in the eye of the beholder.” Post, at 14. In this case,
    however, the Code itself breaks the tie between what might otherwise
    be two equally tenable views.
    18                      SCHWAB v. REILLY
    
                            Opinion of the Court
    
    amount the debtor lists as the “value claimed exempt” is
    not within statutory limits, a test the value ($ unknown)
    in Taylor failed, and the values ($8,868 and $1,850) in this
    case pass.
       We adhere to this test. Doing otherwise would not only
    depart from Taylor and ignore the presumption that par­
    ties act lawfully and with knowledge of the law, cf. United
    States v. Budd, 
    144 U.S. 154
    , 163 (1892); it would also
    require us to expand the statutory definition of “property
    claimed as exempt” and the universe of information an
    interested party must consider in evaluating the validity
    of a claimed exemption. Even if the Code allowed such
    expansions, they would be ill advised. As evidenced by the
    differences between Reilly’s Schedule C and the schedule
    in Taylor, preprinted bankruptcy schedules change over
    time. Basing the definition of the “property claimed as
    exempt,” and thus an interested party’s obligation to
    object under §522(l), on inferences that party must draw
    from evolving forms, rather than on the facial validity of
    the value the debtor assigns the “property claimed as
    exempt” as defined by the Code, would undermine the
    predictability the statute is designed to provide.17 For all
    of these reasons, we take Reilly’s exemptions at face value
    and find them unobjectionable under the Code, so the
    ——————
       17 Reilly insists that our conclusion should nonetheless be avoided
    
    because “procedures that burden the debtor’s exemption entitlements,
    like those that impair a debtor’s discharge generally, are to be con­
    strued narrowly.” Brief for Respondent 33 (citing Kawaauhau v.
    Geiger, 
    523 U.S. 57
    , 62 (1998)). This argument misses the mark for
    two reasons. First, the only burdens our conclusion imposes are bur­
    dens the Code itself prescribes, specifically, the burdens the Code
    places on debtors to state their claimed exemptions accurately and to
    conform such claims to statutory limits. Second, and in any event,
    Geiger and the other cases Reilly cites emphasize in the discharge
    context the importance of limiting exceptions to discharge to “those
    plainly expressed,” a principle that supports our approach here. Ibid.
    (internal quotation marks omitted).
                     Cite as: 560 U. S. ____ (2010)           19
    
                         Opinion of the Court
    
    objection deadline we enforced in Taylor is inapplicable
    here.
                                  IV
      In a final effort to defend the Court of Appeals’ judg­
    ment, Reilly asserts that her approach to §522(l) is neces­
    sary to vindicate the Code’s goal of giving debtors a fresh
    start, and to further its policy of discouraging trustees and
    creditors from sleeping on their rights. See Brief for Re­
    spondent 21, 55–68. Although none of Reilly’s policy
    arguments can overcome the Code provisions or the as­
    pects of Taylor that govern this case, our decision fully
    accords with all of the policies she identifies. We agree
    that “exemptions in bankruptcy cases are part and parcel
    of the fundamental bankruptcy concept of a ‘fresh start.’ ”
    Brief for Respondent 21 (quoting Rousey, 544 U. S., at
    325); see Marrama v. Citizens Bank of Mass., 
    549 U.S. 365
    , 367 (2007). We disagree that this policy required
    Schwab to object to a facially valid claim of exemption on
    pain of forfeiting his ability to preserve for the estate any
    value in Reilly’s business equipment beyond the value of
    the interest she declared exempt. This approach threat­
    ens to convert a fresh start into a free pass.
      As we emphasized in Rousey, “[t]o help the debtor obtain
    a fresh start, the Bankruptcy Code permits him to with
    draw from the estate certain interests in property, such as
    his car or home, up to certain values.” 544 U. S., at 325
    (emphasis added). The Code limits exemptions in this
    fashion because every asset the Code permits a debtor to
    withdraw from the estate is an asset that is not available
    to his creditors. See §522(b)(1). Congress balanced the
    difficult choices that exemption limits impose on debtors
    with the economic harm that exemptions visit on creditors,
    and it is not for us to alter this balance by requiring trus­
    tees to object to claimed exemptions based on form entries
    beyond those that govern an exemption’s validity under
    20                       SCHWAB v. REILLY
    
                              Opinion of the Court
    
    the Code. See Lamie, 540 U. S., at 534, 538; Hartford, 530
    U. S., at 6; United States v. Locke, 
    471 U.S. 84
    , 95 (1985).
      Reilly nonetheless contends that our approach creates
    perverse incentives for trustees and creditors to sleep on
    their rights. See Brief for Respondent 64, n. 10, 67–69.
    Again, we disagree. Where a debtor intends to exempt
    nothing more than an interest worth a specified dollar
    amount in an asset that is not subject to an unlimited or
    in-kind exemption under the Code, our approach will
    ensure clear and efficient resolution of competing claims to
    the asset’s value. If an interested party does not object to
    the claimed interest by the time the Rule 4003 period
    expires, title to the asset will remain with the estate pur­
    suant to §541, and the debtor will be guaranteed a pay­
    ment in the dollar amount of the exemption. If an inter­
    ested party timely objects, the court will rule on the
    objection and, if it is improper, allow the debtor to make
    appropriate adjustments.18
      Where, as here, it is important to the debtor to exempt
    the full market value of the asset or the asset itself, our
    decision will encourage the debtor to declare the value of
    her claimed exemption in a manner that makes the scope
    of the exemption clear, for example, by listing the exempt
    value as “full fair market value (FMV)” or “100% of
    
    ——————
      18 We disagree that Reilly’s approach to exemptions would more effi­
    
    ciently dispose of competing claims to the asset. On Reilly’s view, a
    trustee would be encouraged (if not obliged) to object to claims to
    exempt a specific dollar amount of interest in an asset whenever the
    value of the exempt interest equaled the debtor’s estimate of the asset’s
    market value. Where the debtor genuinely intended to claim nothing
    more than the face value of the exempt interest (which is rational if a
    debtor wishes to ensure that his aggregate exemptions remain within
    statutory limits), such an approach would engender needless objections
    and litigation, particularly if the equation that would precipitate the
    objection often results from a default software entry. See Reply Brief
    for Petitioner 15; Brief for Nat. Assn. of Bankruptcy Trustees 13, n. 15.
                         Cite as: 560 U. S. ____ (2010)                    21
    
                              Opinion of the Court
    
    FMV.”19 Such a declaration will encourage the trustee to
    object promptly to the exemption if he wishes to challenge
    it and preserve for the estate any value in the asset be­
    yond relevant statutory limits.20 If the trustee fails to
    object, or if the trustee objects and the objection is over­
    ruled, the debtor will be entitled to exclude the full value
    of the asset. If the trustee objects and the objection is
    sustained, the debtor will be required either to forfeit the
    portion of the exemption that exceeds the statutory allow­
    ance, or to revise other exemptions or arrangements with
    her creditors to permit the exemption. See Fed. Rule
    ——————
       19 The dissent’s observations about the poor fit between our admoni­
    
    tion and a form entry calling for a dollar amount, see post, at 15, simply
    reflect the tension between the Code’s definition of “property claimed
    as exempt” (i.e., an interest, not to exceed a certain dollar amount, in
    Reilly’s business equipment) and Reilly’s attempt to convert into a
    dollar value an improper claim to exempt the equipment itself, “ ‘what­
    ever [its value] turns out to be.’ ” In re Reilly, 
    534 F.3d 173
    , 178−179
    (CA3 2008). As the dissent concedes, “[s]ection 522(d) catalogs exemp­
    tions of two types.” Post, at 7, n. 5. “Most exemptions—and all of those
    Reilly invoked—place a monetary limit on the value of the property the
    debtor may reclaim,” and such exemptions are distinct from those made
    pursuant to Code provisions that “authoriz[e] reclamation of the prop­
    erty in full without any cap on value.” Ibid. Nothing about Reilly’s
    Schedule entries establishes that Schwab should have treated Reilly’s
    claim for $10,718, an unobjectionable amount under the Code provi­
    sions she expressly invoked, as an objectionable claim for thousands of
    dollars more than those provisions allow, or as a claim for an uncapped
    exemption under Code provisions she did not invoke and the dissent
    admits are “not at issue here.” Ibid.
       20 A trustee will not always file an objection. As the United States
    
    observes, Schwab did not do so in this case with respect to certain
    assets (perishable foodstuffs from Reilly’s commercial kitchen) that
    could not be readily sold. See Brief for United States as Amicus Curiae
    28, n. 7 (explaining that Schwab could have objected to Reilly’s claim of
    a wildcard exemption for an interest in the food totaling $2,036 because
    this claim, combined with her wildcard claims for an interest of $8,868
    in her business equipment and interests totaling $26 in her bank
    accounts, placed the total value of the interests she claimed exempt
    under the wildcard provision $975 above then-applicable limits).
    22                        SCHWAB v. REILLY
    
                              Opinion of the Court
    
    Bkrtcy. Proc. 1009(a). Either result will facilitate the
    expeditious and final disposition of assets, and thus enable
    the debtor (and the debtor’s creditors) to achieve a fresh
    start free of the finality and clouded-title concerns Reilly
    describes. See Brief for Respondent 57–59 (arguing that
    “[u]nder [Schwab’s] interpretation of Rule 4003(b), a
    debtor would never have the certainty of knowing whether
    or not he or she may keep her exempted property until the
    case had ended”); id., at 66.21
       For all of these reasons, the policy considerations Reilly
    cites support our approach. Where, as here, a debtor
    accurately describes an asset subject to an exempt interest
    and on Schedule C declares the “value of [the] claimed
    exemption” as a dollar amount within the range the Code
    allows, interested parties are entitled to rely upon that
    value as evidence of the claim’s validity. Accordingly, we
    hold that Schwab was not required to object to Reilly’s
    claimed exemptions in her business equipment in order to
    ——————
      21 Reilly’sclouded-title argument arises only if one accepts her flawed
    conception of the exemptions in this case. According to Reilly, “once the
    thirty-day deadline passed without objection” to her claim, she was
    “entitled to know that she would emerge from bankruptcy with her
    cooking equipment intact.” Brief for Respondent 57. There are two
    problems with this argument. First, it assumes that the property she
    claimed as exempt was the full value of the equipment. That assump­
    tion is incorrect for the reasons we explain. Second, her argument
    assumes that a claim to exempt the full value of the equipment would,
    if unopposed, entitle her to the equipment itself as opposed to a pay­
    ment equal to the equipment’s full value. That assumption is at least
    questionable. Section 541 is clear that title to the equipment passed to
    Reilly’s estate at the commencement of her case, and §§522(d)(5) and
    (6) are equally clear that her reclamation right is limited to exempting
    an interest in the equipment, not the equipment itself. Accordingly, it
    is far from obvious that the Code would “entitle” Reilly to clear title in
    the equipment even if she claimed as exempt a “full” or “100%” interest
    in it (which she did not). Of course, it is likely that a trustee who fails
    to object to such a claim would have little incentive to do anything but
    pass title in the asset to the debtor. But that does not establish the
    statutory entitlement Reilly claims.
                     Cite as: 560 U. S. ____ (2010)           23
    
                         Opinion of the Court
    
    preserve the estate’s right to retain any value in the
    equipment beyond the value of the exempt interest. In
    reaching this conclusion, we express no judgment on the
    merits of, and do not foreclose the courts from entertaining
    on remand, procedural or other measures that may allow
    Reilly to avoid auction of her business equipment.
                            *     *  *
      We reverse the judgment of the Court of Appeals for the
    Third Circuit and remand this case for further proceedings
    consistent with this opinion.
                                               It is so ordered.
                     Cite as: 560 U. S. ____ (2010)           1
    
                       GINSBURG, J., dissenting
    
    SUPREME COURT OF THE UNITED STATES
                             _________________
    
                              No. 08–538
                             _________________
    
    
      WILLIAM G. SCHWAB, PETITIONER v. NADEJDA
    
                      REILLY 
    
     ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
    
                APPEALS FOR THE THIRD CIRCUIT
    
                            [June 17, 2010] 
    
    
       JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and
    JUSTICE BREYER join, dissenting.
       In Chapter 7 bankruptcies, debtors must surrender to
    the trustee-in-bankruptcy all their assets, 
    11 U.S. C
    .
    §541, but may reclaim for themselves exempt property,
    §522. Within 30 days after the meeting of creditors, the
    trustee or a creditor may file an objection to the debtor’s
    designation of property as exempt. Fed. Rule Bkrtcy.
    Proc. 4003(b). Absent timely objection, “property claimed
    [by the debtor] as exempt . . . is exempt.” §522(l).
       The trustee in this case, petitioner William G. Schwab,
    maintains that the obligation promptly to object to exemp­
    tion claims extends only to the qualification of an asset as
    exemptible, not to the debtor’s valuation of the asset.
    Respondent Nadejda Reilly, the debtor-in-bankruptcy,
    urges that the timely objection requirement applies not
    only to the debtor’s designation of an asset as exempt; the
    requirement applies as well, she asserts, to her estimate of
    the asset’s market value. That is so, she reasons, because
    the asset’s current dollar value is critical to the determi­
    nation whether she may keep the property intact and
    outside bankruptcy, or whether the trustee, at any time
    during the course of the proceedings, may sell it.
       The Court holds that challenges to the debtor’s valua­
    tion of exemptible assets need not be made within the 30­
    2                    SCHWAB v. REILLY
    
                       GINSBURG, J., dissenting
    
    day period allowed for “objection[s] to the list of property
    claimed as exempt.” Rule 4003(b). Instead, according to
    the Court, no time limit constrains the trustee’s (or a
    creditor’s) prerogative to place at issue the debtor’s
    evaluation of the property as fully exempt.
      The Court’s decision drastically reduces Rule 4003’s
    governance, for challenges to valuation have been, until
    today, the most common type of objection leveled against
    exemption claims. See 9 Collier on Bankruptcy ¶4003.04,
    p. 4003–15 (rev. 15th ed. 2009) (hereinafter Collier) (“Nor­
    mally, objections to exemptions will focus primarily on
    issues of valuation.”). In addition to departing from the
    prevailing understanding and practice, the Court’s deci­
    sion exposes debtors to protracted uncertainty concerning
    their right to retain exempt property, thereby impeding
    the “fresh start” exemptions are designed to foster. In
    accord with the courts below, I would hold that a debtor’s
    valuation of exempt property counts and becomes conclu­
    sive absent a timely objection.
                                  I
      Nadejda Reilly is a cook who operated a one-person
    catering business. Unable to cover her debts, she filed a
    Chapter 7 bankruptcy petition appending all required
    schedules and statements. Relevant here, her filings
    included a form captioned “Schedule B - Personal Prop­
    erty,” which called for enumeration of “all personal prop­
    erty of the debtor of whatever kind.” App. 40a. On that
    all-encompassing schedule, Reilly listed “business equip­
    ment,” i.e., her kitchen equipment, with a current market
    value of $10,718. Id., at 49a.
      Reilly also filed the more particular form captioned
    “Schedule C - Property Claimed as Exempt.” Id., at 56a.
    Schedule C contained four columns, the first headed “De­
    scription of Property”; the second, “Specify Law Providing
    Each Exemption”; the third, “Value of Claimed Exemp­
                         Cite as: 560 U. S. ____ (2010)                   3
    
                           GINSBURG, J., dissenting
    
    tion”; and the fourth, “Current Market Value of Property
    Without Deducting Exemptions.” Id., at 57a. In the first
    column of Schedule C, Reilly wrote, as she did in Schedule
    B’s description-of-property column: “See attached list of
    business equipment.” Id., at 58a. On the list appended to
    Schedules B and C, Reilly set out by hand a 31-item inven­
    tory of her restaurant-plus-catering-venture equipment.
    Next to each item, e.g., “Dough Mixer,” “Gas stove,”
    “Hood,” she specified, first, the purchase price and, next,
    “Today’s Market Value,” which added up to $10,718 for the
    entire inventory. Id., at 51a–55a.1
       As the laws securing exemption of her kitchen equip­
    ment, Reilly specified in the second Schedule C column,
    §552(d)(6), the exemption covering trade tools, and
    §552(d)(5), the “wildcard” exemption. Id., at 58a.2 In the
    value-of-claimed-exemption column, she listed $1,850,
    then the maximum trade-tools exemption, and $8,868,
    drawn from her wildcard exemption, amounts adding up
    to $10,718. Ibid. And in the fourth, current-market­
    value, column, she recorded $10,718, corresponding to the
    total market value she had set out in her inventory and
    reported in Schedule B. Ibid.
       Before the 30-day clock on filing objections had begun to
    run, an appraiser told Schwab that Reilly’s equipment was
    worth at least $17,000. Brief for Petitioner 15; App. 164a.
    Nevertheless, Schwab did not object to the $10,718 market
    value Reilly attributed to her business equipment in
    
    ——————
      1 Reilly’s Schedules B and C, and the inventory she attached to the
    
    forms, are reproduced in an Appendix to this opinion.
      2 Unlike exemptions that describe the specific property debtors may
    
    preserve, e.g., 
    11 U.S. C
    . §522(d)(6) (debtor may exempt her “aggregate
    interest, not to exceed [$1,850] in value, in any implements, profes­
    sional books, or tool[s] of [her] trade”), the “wildcard” exemption per­
    mits a debtor to shield her “aggregate interest in any property” she
    chooses, up to a stated dollar limit, §522(d)(5); In re Smith, 
    640 F.2d 888
    , 891 (CA7 1981).
    4                        SCHWAB v. REILLY
    
                           GINSBURG, J., dissenting
    
    Schedule C and the attached inventory. Instead, he al­
    lowed the limitations period to lapse and then moved,
    unsuccessfully, for permission to sell the equipment at
    auction. Id., at 141a–143a.3
       From Reilly’s filings, the Bankruptcy Judge found it
    evident that Reilly had claimed the property itself, not its
    dollar value, as exempt. Id., at 168a–169a (“I know there’s
    an argument . . . that . . . the property identified as exempt
    is really the [valuation] column, [i.e., $10,718,] but that’s
    not what the forms say. The forms say property declared
    as exempt and to see attached list. So, they’re exempting
    all the property. . . . If the Trustee believes that . . . all the
    property cannot be exempt, [he] should object to it.”).
       The District Court and Court of Appeals similarly con­
    cluded that, by listing the identical amount, $10,718, as
    the property’s market value and the value of the claimed
    exemptions, Reilly had signaled her intention to safeguard
    all of her kitchen equipment from inclusion in the bank­
    ruptcy estate. In re Reilly, 
    403 B.R. 336
    , 338–339 (MD
    Pa. 2006); In re Reilly, 
    534 F.3d 173
    , 178 (CA3 2008).
    Both courts looked to §522(l) and Federal Rule of Bank­
    ruptcy Procedure 4003(b), which state, respectively:
            “The debtor shall file a list of property that the
         debtor claims as exempt . . . . Unless a party in inter­
         est objects, the property claimed as exempt on such
         list is exempt.” §522(l).
    
    ——————
      3 Schwab informed Reilly at the meeting of creditors that he planned
    
    to sell all of her business equipment. App. 137a. She promptly moved
    to dismiss her bankruptcy petition, stating that her “business equip­
    ment . . . is necessary to her livelihood and art, and was a gift to her
    from her parents.” Id., at 138a. She “d[id] not desire to continue with
    the bankruptcy,” she added, because “she wishe[d] to continue in
    restaurant and catering as her occupation.” Ibid. The Bankruptcy
    Court denied Reilly’s dismissal motion simultaneously with Schwab’s
    motion to sell Reilly’s equipment. Id., at 149a–170a.
                        Cite as: 560 U. S. ____ (2010)                 5
    
                          GINSBURG, J., dissenting
    
         “A party in interest may file an objection to the list of
         property claimed as exempt only within 30 days after
         the meeting of creditors held under §341(a) is con­
         cluded . . . . The court may, for cause, extend the time
         for filing objections if, before the time to object ex­
         pires, a party in interest files a request for an exten­
         sion.” Rule 4003(b).4
      Schwab having filed no objection within the allowable
    30 days, each of the tribunals below ruled that the entire
    inventory of Reilly’s business equipment qualified as
    exempt in full. App. 168a; 403 B. R., at 339; 
    534 F. 3d
    , at
    178. The leading treatise on bankruptcy, the Court of
    Appeals noted, id., at 180, n. 4, is in accord:
           “Normally, if the debtor lists property as exempt,
         that listing is interpreted as a claim for exemption of
         the debtor’s entire interest in the property, and the
         debtor’s valuation of that interest is treated as the
         amount of the exemption claimed. Were it other­
         wise—that is, if the listing were construed to claim as
         exempt only that portion of the property having the
         value stated—the provisions finalizing exemptions if
         no objections are filed would be rendered meaningless.
         The trustee or creditors could [anytime] claim that the
         debtor’s interest in the property was greater than the
         value claimed as exempt and [then] object to the
         debtor exempting his or her entire interest in the
         property after the deadline for objections had passed.”
         9 Collier ¶4003.02[1], pp. 4003–4 to 4003–5.
      Agreeing with the courts below, I would hold that Reilly,
    by her precise identification of the exempt property, and
    her specification of $10,718 as both the current market
    value of her kitchen equipment and the value of the
    ——————
      4 In 2008, this prescription was recodified without material change
    
    and designated Rule 4003(b)(1).
    6                    SCHWAB v. REILLY
    
                       GINSBURG, J., dissenting
    
    claimed exemptions, had made her position plain: She
    claimed as exempt the listed property itself—not the
    dollar amount, up to $10,718, that sale of the property by
    Schwab might yield. Because neither Schwab nor any
    creditor lodged a timely objection, the listed property
    became exempt, reclaimed as property of the debtor, and
    therefore outside the bankruptcy estate the trustee is
    charged to administer.
                                  II 
    
                                  A
    
       Pursuant to §522(l), Reilly filed a list of property she
    claimed as exempt from the estate-in-bankruptcy. Her
    filing left no doubt that her exemption claim encompassed
    her entire inventory of kitchen equipment. Schwab, in
    fact, was fully aware of the nature of the claim Reilly
    asserted. At the meeting of creditors, Reilly reiterated
    that she sought to keep the equipment in her possession;
    she would rather discontinue the bankruptcy proceeding,
    she made plain, than lose her equipment. See supra, at 4,
    n. 3. Bankruptcy Rule 4003(b) requires the trustee, if he
    contests the debtor’s exemption claim in whole or part, to
    file an objection within 30 days after the meeting of credi­
    tors. Absent a timely objection, “the property claimed as
    exempt . . . is exempt.” §522(l); Rule 4003. That prescrip­
    tion should be dispositive of this case.
       The Court holds, however, that Schwab was not obliged
    to file a timely objection to the exemption Reilly claimed,
    and indeed could auction off her cooking equipment any­
    time prior to her discharge. In so holding, the Court de­
    crees that no objection need be made to a debtor’s valua­
    tion of her property.
       To support the conclusion that Rule 4003’s timely objec­
    tion requirement does not encompass the debtor’s estima­
    tion of her property’s market value, the Court homes in on
    the language of exemption prescriptions that are subject to
                          Cite as: 560 U. S. ____ (2010)                     7
    
                            GINSBURG, J., dissenting
    
    a monetary cap.5 Those prescriptions, the Court points
    out, “define the ‘property’ a debtor may ‘clai[m] as exempt’
    as the debtor’s ‘interest’—up to a specified dollar
    amount—in the assets described in the category, not as
    the assets themselves.” Ante, at 10. So long as a debtor
    values her claimed exemption at a dollar amount below
    the statutory cap, the Court reasons, the claim is on-its­
    face permissible no matter the market value she ascribes
    to the asset. To evaluate the propriety of Reilly’s declared
    “interest” in her kitchen equipment, the Court concludes,
    Schwab was obliged promptly to inspect “three, and only
    three, entries on Reilly’s Schedule C: the description of the
    business equipment . . . ; the Code provisions governing
    the claimed exemptions; and the amounts Reilly listed in
    the column titled ‘value of claimed exemption.’ ” Ante, at
    12–13.6
    ——————
      5 Section 522(d) catalogs exemptions of two types. Most exemptions—
    
    and all of those Reilly invoked—place a monetary limit on the value of
    the property the debtor may reclaim. See, e.g., §522(d)(2) (“motor
    vehicle”); §522(d)(3) (“household furnishings, household goods, wearing
    apparel, appliances, books, animals, crops, or musical instruments”);
    §522(d)(4) (“jewelry”). For certain exemptions not at issue here, the
    Bankruptcy Code authorizes reclamation of the property in full without
    any cap on value. See, e.g., §522(d)(7) (“unmatured life insurance
    contract”); §522(d)(9) (“[p]rofessionally prescribed health aids”);
    §522(d)(11)(A) (“award under a crime victim’s reparation law”).
      6 In support of its view that market value is not relevant to determin­
    
    ing the “property claimed as exempt” for purposes of Rule 4003(b)’s
    timely objection mandate, the Court observes that Schedule C did not
    require the debtor to list this information until 1991. Ante, at 14–15.
    Prior to 1991, however, debtors recorded market value on a different
    schedule. See Interim Fed. Rule Bkrtcy. Proc. Official Form 6, Sched­
    ule B–2 (1979) (requiring debtor to list the “[m]arket value of [her]
    interest [in personal property] without deduction for . . . exemptions
    claimed”). Trustees assessing the “property claimed as exempt,”
    therefore, have always been able, from the face of the debtor’s filings, to
    compare the value of the claimed exemption to the property’s declared
    market value. See Brief for National Association of Consumer Bank­
    ruptcy Attorneys et al. as Amici Curiae 34.
    8                        SCHWAB v. REILLY
    
                            GINSBURG, J., dissenting
    
                                  B
       The Court’s account, however, shuts from sight the vital
    part played by the fourth entry on Schedule C—current
    market value—when a capped exemption is claimed. A
    debtor who estimates a market value below the cap, and
    lists an identical amount as the value of her claimed ex­
    emption, thereby signals that her aim is to keep the listed
    property in her possession, outside the estate-in­
    bankruptcy. In contrast, a debtor who estimates a market
    value above the cap, and above the value of her claimed
    exemption, thereby recognizes that she cannot shelter the
    property itself and that the trustee may seek to sell it for
    whatever it is worth.7 Schedule C’s final column, in other
    words, alerts the trustee whether the debtor is claiming a
    right to retain the listed property itself as her own, a right
    secured to her if the trustee files no timely objection.8
       Because an asset’s market value is key to determining
    ——————
       7 By authorizing exemption of assets that a debtor would want to
    
    keep in kind, such as her jewelry and car, but limiting the exemptible
    value of this property, Congress struck a balance between debtors’
    and creditors’ interests: Debtors can reclaim items helpful to their
    fresh start after bankruptcy, but only if those items are of modest
    value. Assets of larger worth, however, are subject to liquidation so
    that creditors may obtain a portion of the item’s value. Cf. In re Price,
    
    370 F.3d 362
    , 378 (CA3 2004) (“[B]ankruptcy law is bilateral, replete
    with protections and policy considerations favoring both debtors and
    creditors.”).
       8 The significance of market value is what differentiates capped ex­
    
    emptions from uncapped ones that permit debtors to exempt certain
    property in kind regardless of its worth. See supra, at 7, n. 5. For
    uncapped exemptions, the nature of the property the debtor has re­
    claimed is clear: If the exemption is valid, the debtor gets the asset in
    full every time. For capped exemptions, however, market value is a
    crucial component in determining whether the debtor gets the item
    itself or a sum of money representing a share of the item’s liquidation
    value. Reading Bankruptcy Rule 4003(b) to require objections to
    valuation thus does not, as the Court contends, “elid[e] the distinction”
    between capped and uncapped exemptions, ante, at 12 (emphasis
    added), but instead accounts for that distinction.
                          Cite as: 560 U. S. ____ (2010)                       9
    
                             GINSBURG, J., dissenting
    
    the character of the interest the debtor is asserting in that
    asset, Rule 4003(b) is properly read to require objections to
    valuation within 30 days, just as the Rule requires timely
    objections to the debtor’s description of the property, the
    asserted legal basis for the exemption, and the claimed
    value of the exemption. See 4 Collier ¶522.05[1], p. 522–
    28 (rev. 15th ed. 2005) (“[T]o evaluate the propriety of the
    debtor’s claim of exemption,” trustees need the informa­
    tion in all four columns of Schedule C; “[market] value” is
    “essential” to judging whether the claim is proper because
    “[e]xemption provisions often are limited according to . . .
    [the property’s] value.”). 9
                                C
      Requiring objections to market valuation notably facili­
    tates the debtor’s fresh start, and thus best fulfills the
    prime purpose of the exemption prescriptions. See, e.g.,
    Burlingham v. Crouse, 
    228 U.S. 459
    , 473 (1913) (Bank­
    ruptcy provisions “must be construed” in light of policy “to
    give the bankrupt a fresh start.”). See also Rousey v.
    
    ——————
      9 Suggesting   that this interpretation of Rule 4003(b) “lacks statutory
    support,” ante, at 13, n. 11, the Court repeatedly emphasizes that the
    Bankruptcy Code defines the “property claimed as exempt,” to which a
    trustee must object, as “the debtor’s ‘interest’—up to a specified dollar
    amount—in the assets described in [capped exemption] categor[ies],”
    ante, at 10; see, e.g., ante, at 11; ibid., n. 9; ante, at 21, n. 19. But the
    commonly understood definition of a property “interest” is “[a] legal
    share in something; all or part of a legal or equitable claim to or right
    in property. . . . Collectively, the word includes any aggregation of
    [such] rights.” Black’s Law Dictionary 828 (8th ed. 2004). Schwab,
    therefore, could not comprehend whether Reilly claimed a monetary or
    an in-kind “interest” in her kitchen equipment without comparing her
    market valuation of the equipment to the value of her claimed exemp­
    tion. See supra, at 8–9. In line with the statutory text, a debtor’s
    market valuation is an essential factor in determining the nature of the
    “interest” a debtor lists as exempt. Bankruptcy “forms, rules, treatise
    excerpts, and policy considerations,” ante, at 7, n. 5, corroborate, rather
    than conflict with, this reading of the Code.
    10                        SCHWAB v. REILLY
    
                            GINSBURG, J., dissenting
    
    Jacoway, 
    544 U.S. 320
    , 325 (2005); United States v. Secu
    rity Industrial Bank, 
    459 U.S. 70
    , 72, n. 1 (1982); ante, at
    19. The 30-day deadline for objections, this Court has
    recognized, “prompt[s] parties to act and . . . produce[s]
    finality.” Taylor v. Freeland & Kronz, 
    503 U.S. 638
    , 644
    (1992). As “there can be no possibility of further objection
    to the exemptions” after this period elapses, the principal
    bankruptcy treatise observes, “if the debtor is not yet in
    possession of the property claimed as exempt, it should be
    turned over to [her] at this time to effectuate fully the
    fresh start purpose of the exemptions.”             9 Collier
    ¶4003.03[3], p. 4003–13.
       With the benefit of closure, and the certainty it brings,
    the debtor may, at the end of the 30 days, plan for her
    future secure in the knowledge that the possessions she
    has exempted in their entirety are hers to keep. See 
    534 F. 3d
    , at 180. If she has reclaimed her car from the estate,
    for example, she may accept a job not within walking
    distance. See Brief for National Association of Consumer
    Bankruptcy Attorneys et al. as Amici Curiae 2–3 (herein­
    after NACBA Brief). Or if she has exempted her kitchen
    equipment, she may launch a new catering venture. See
    App. 138a (Reilly “wishe[d] to continue in restaurant and
    catering as her occupation” postbankruptcy.).
       By permitting trustees to challenge a debtor’s valuation
    of exempted property anytime before discharge, the Court
    casts a cloud of uncertainty over the debtor’s use of assets
    reclaimed in full. If the trustee gains a different opinion of
    an item’s value months, even years, after the debtor has
    filed her bankruptcy petition,10 he may seek to repossess
    the asset, auction it off, and hand the debtor a check for
    
    ——————
      10 Schwab   states that “[c]ases in which there are assets to administer
    . . . can take ‘one to four years’ to complete.” Brief for Petitioner 32
    (quoting Dept. of Justice, U. S. Trustee Program, Preliminary Report on
    Chapter 7 Asset Cases 1994 to 2000, p. 7 (June 2001)).
                          Cite as: 560 U. S. ____ (2010)                     11
    
                             GINSBURG, J., dissenting
    
    the dollar amount of her claimed exemption.11 With this
    threat looming until discharge, “[h]ow can debtors rea­
    sonably be expected to restructure their affairs”? NACBA
    Brief 25. See In re Polis, 
    217 F.3d 899
    , 903 (CA7 2000)
    (Posner, J.) (“If the assets sought to be exempted by the
    debtor were not valued at a date early in the bankruptcy
    proceeding, neither the debtor nor the creditors would
    know who had the right to them.”).
                                  III
      The Court and Schwab raise three concerns about read­
    ing Rule 4003 to require timely objection to the debtor’s
    estimate of an exempt asset’s market value: Would trus­
    tees face an untoward administrative burden? Would
    trustees lack fair notice of the need to object? And would
    debtors be tempted to undervalue their property in an
    effort to avoid the monetary cap on exemptions? In my
    judgment, all three questions should be answered no.
                                 A
      The Court suggests that requiring timely objections to a
    debtor’s valuation of exempt property would saddle trus­
    tees with an unmanageable load. See ante, at 18 (declin­
    ing to “expand . . . the universe of information an inter­
    ested party must consider in evaluating the validity of a
    claimed exemption”). See also Brief for Petitioner 32–33;
    Brief for United States as Amicus Curiae 24.12 But trus­
    ——————
       11 Money generated by liquidation of an asset will often be of less
    
    utility to a debtor, who will have to pay more to replace the item. See
    H. R. Rep. No. 95–595, p. 127 (1977) (noting that “household goods have
    little resale value” but “replacement costs of the goods are generally
    high”).
       12 This concern is questionable in light of the prevailing practice, for,
    
    as earlier noted, valuation objections are the most common Rule
    4003(b) challenge. See supra, at 2. By lopping off valuation disagree­
    ments from the timely objection requirement, see, e.g., ante, at 10–11,
    n. 8, the Court so severely shrinks the Rule’s realm that this question
    12                        SCHWAB v. REILLY
    
                            GINSBURG, J., dissenting
    
    tees, sooner or later, must attempt to ascertain the market
    value of exempted assets. They must do so to determine
    whether sale of the items would likely produce surplus
    proceeds for the estate above the value of the claimed
    exemption, see §704(a)(1); the only question, then, is when
    this market valuation must occur—(1) within 30 days or
    (2) at any time before discharge? Removing valuation
    from Rule 4003’s governance thus does little to reduce the
    labors trustees must undertake.
       The 30-day objection period, I note, does not impose on
    trustees any additional duty, but rather guides the exer­
    cise of existing responsibilities; under Rule 4003(b), a
    trustee must rank evaluation of the debtor’s exemptions as
    a priority item in his superintendence of the estate.13 And
    if the trustee entertains any doubt about the accuracy of a
    debtor’s estimation of market value, the procedure for
    interposing objections is hardly arduous. The trustee need
    only file with the court a simple declaration stating that
    an item’s value exceeds the amount listed by the debtor.14
    ——————
    arises: Why are trustees granted a full 30 days to lodge objections?
    Under the Court’s reading of the Rule, trustees need only compare a
    debtor’s Schedule C to the text of the exemption prescriptions to assess
    an exemption claim’s facial validity, with no further investigation
    necessary. That comparison should take no more than minutes, surely
    not a month.
       13 Trustees, it bears noting, historically had valuation duties far more
    
    onerous than they have today. Rule 4003’s predecessor required
    trustees in the first instance, rather than debtors, to estimate the
    market value of property claimed as exempt. See Rule 403(b) (1975).
    Trustees had to provide this valuation to the court within 15 days of
    their appointment. See ibid.
       14 The leading bankruptcy treatise supplies an illustrative valuation
    
    objection:
       “[Name of Trustee], the duly qualified and acting trustee of the estate
    of the debtor, would show the court the following:
       “1. The debtor is not entitled under [the automobile exemption] to an
    interest of more than $3,225 in an automobile. The automobile claimed
    by debtor as exempt . . . has a value substantially greater than $3,225.
                            Cite as: 560 U. S. ____ (2010)                13
    
                              GINSBURG, J., dissenting
    
        If the trustee needs more than 30 days to assess market
    value, moreover, the time period is eminently extendable.
    Rule 4003(b) prescribes that a trustee may, for cause, ask
    the court for an extension of the objection period. Alterna­
    tively, the trustee can postpone the conclusion of the
    meeting of creditors, from which the 30-day clock runs,
    simply by adjourning the meeting to a future date. Rule
    2003(e). A trustee also may examine the debtor under
    oath at the creditors’ meeting, Rule 2003(b)(1); if he gath­
    ers information impugning her exemption claims, he may
    ask the bankruptcy court to hold a hearing to determine
    valuation issues, Rule 4003(c). See Taylor, 503 U. S., at
    644 (“If [the trustee] did not know the value of [a claimed
    exemption], he could have sought a hearing on the issue
    . . . or . . . asked the Bankruptcy Court for an extension of
    time to object.”). See also NACBA Brief 19, 21–23 (listing
    ways trustees may enlarge the limitations period for
    objections). Trustees, in sum, have ample mechanisms at
    their disposal to gain the time and information they need
    to lodge objections to valuation.
                                   B
      On affording trustees fair notice of the need to object,
    the Court emphasizes that a debtor must list her claimed
    exemptions “in a manner that makes the scope of the
    exemption clear.” Ante, at 20. If a debtor wishes to ex­
    empt property in its entirety, for example, the Court coun­
    sels her to write “full fair market value (FMV)” or “100% of
    FMV” in Schedule C’s value-of-claimed-exemption column.
    ——————
        .               .                 .                  .        .
      “WHEREFORE Trustee prays that the court determine that debtor is
    not entitled to . . . the exemptio[n] claimed by him, that the [property
    claimed as exempt] which [is] disallowed be turned over to the trustee
    herein as property of the estate, and that he have such other and
    further relief as is just.” 13A Collier §CS17.14, p. CS 17–22 (rev. 15th
    ed. 2009). See also Rules 9013–9014.
    14                   SCHWAB v. REILLY
    
                        GINSBURG, J., dissenting
    
    Ante, at 20–21 (internal quotation marks omitted). See
    also Tr. of Oral Arg. 6–7, 26–29; In re Hyman, 
    967 F.2d 1316
    , 1319–1320, n. 6 (CA9 1992) (Trustees must be able
    to assess the validity of an exemption from the face of a
    debtor’s schedules.). Our decision in Taylor v. Freeland &
    Kronz, the Court notes, is instructive. In Taylor, the
    debtor recorded the term “$ unknown” as the value of a
    claimed exemption, which, the Court observes, raised a
    “warning fla[g]” because the value “was not plainly within
    the limits the Code allows.” Ante, at 17.
       True, a debtor’s schedules must give notice sufficient to
    cue the trustee that an objection may be in order. But a
    “warning flag” is in the eye of the beholder: If a debtor
    lists identical amounts as the market value of exempted
    property and the value of her claimed exemption, she has,
    on the face of her schedules, reclaimed the entire asset just
    as surely as if she had recorded “100% of FMV” in Sched­
    ule C’s value-of-claimed-exemption column. See Brief for
    Respondent 36. See also 9 Collier ¶4003.03[3], p. 4003–14
    (“Only when a debtor’s schedules specifically value the
    debtor’s interest in the property at an amount higher than
    the amount claimed as exempt can it be argued that a part
    of the debtor’s interest in property has not been ex­
    empted.” (emphasis added)).
       In this case, by specifying $10,718 as both the current
    market value of her kitchen equipment and the value of
    her claimed exemptions, Reilly gave notice that she had
    reclaimed the listed property in full. See supra, at 2–6.
    To borrow the Court’s terminology, Reilly waved a “warn­
    ing flag” that should have prompted Schwab to object if he
    believed the equipment could not be reclaimed in its en­
    tirety because its value exceeded the statutory cap. 
    534 F. 3d
    , at 179. See 4 Collier ¶522.05[2][b], p. 522–33 (“Nor­
    mally, if a debtor lists an asset as having a particular
    value in the schedules and then exempts that value, the
    schedules should be read as a claim of exemption for the
                          Cite as: 560 U. S. ____ (2010)                     15
    
                             GINSBURG, J., dissenting
    
    entire asset, to which the trustee should object if the
    trustee believes the asset has been undervalued.”).
      Training its attention on trustees’ needs, moreover, the
    Court overlooks the debtor’s plight. As just noted, the
    Court counsels debtors wishing to exempt an asset in full
    to write “100% of FMV” or “full FMV” in the value-of­
    claimed-exemption column. But a debtor following the
    instructions that accompany Schedule C would consider
    such a response nonsensical, for those instructions direct
    her to “state the dollar value of the claimed exemption in
    the space provided.” Fed. Rule Bkrtcy. Proc. Official Form
    6, Schedule C, Instruction 5 (1991) (emphasis added).
    Chapter 7 debtors are often unrepresented. How are they
    to know they must ignore Schedule C’s instructions and
    employ the “warning flag” described today by the Court, if
    they wish to trigger the trustee’s obligation to object to
    their market valuation in a timely fashion? See In re
    Anderson, 
    377 B.R. 865
    , 875 (Bkrtcy. App. Panel CA6
    2007).15
                                  C
      Schwab finally urges that requiring timely objections to
    a debtor’s market-value estimations “would give debtors a
    perverse incentive to game the system by undervaluing
    their assets.” Brief for Petitioner 35; see Brief for United
    States as Amicus Curiae 27. The Court rejected an argu­
    ment along these lines in Taylor, and should follow suit
    here. Multiple measures, Taylor explained, discourage
    undervaluation of property claimed as exempt. 503 U. S.,
    ——————
      15 Trustees,  in contrast, are repeat players in bankruptcy court; if this
    Court required timely objections to market valuation, trustees would,
    no doubt, modify their practices in response.               See 1 Collier
    ¶8.06[1][c][ii], p. 8–75 (rev. 15th ed. 2009) (“Since Taylor [v. Freeland &
    Kronz, 
    503 U.S. 638
     (1992)], trustees rarely fail to closely scrutinize
    vague exemption claims.”). Moreover, because valuation objections are
    already the norm, see supra, at 2, and 11, n. 12, few trustees would
    have to adjust their behavior.
    16                   SCHWAB v. REILLY
    
                        GINSBURG, J., dissenting
    
    at 644. Among those measures: The debtor files her
    exemption claim under penalty of perjury. See Rule
    1008. She risks judicial sanction for signing documents
    not well grounded in fact. Rule 9011. And proof of fraud
    subjects her to criminal prosecution, 
    18 U.S. C
    . §152;
    extends the limitations period for filing objections to
    Schedule C, Rule 4003(b); and authorizes denial of dis­
    charge, 
    11 U.S. C
    . §727(a)(4)(B). See also NACBA Brief
    29–33 (detailing additional checks against inadequate or
    inaccurate filings).
      Furthermore, the objection procedure is itself a safe­
    guard against debtor undervaluation. If a trustee sus­
    pects that the market value of property claimed as exempt
    may exceed a debtor’s estimate, he should do just what
    Rule 4003(b) prescribes: “[F]ile an objection . . . within 30
    days after the meeting of creditors.”
                          *    *    *
      For the reasons stated, I would affirm the Third Cir­
    cuit’s judgment.
       Cite as: 560 U. S. ____ (2010) 
        17
    
    Appendix to opiniondissenting , J. 
    
        GINSBURG, J., of GINSBURG
    
              APPENDIX
    
    18         SCHWAB v. REILLY
    
         Appendix to opiniondissenting , J.
             GINSBURG, J., of GINSBURG
      Cite as: 560 U. S. ____ (2010)     19
    
    Appendix to opiniondissenting , J.
        GINSBURG, J., of GINSBURG
    20         SCHWAB v. REILLY
    
         Appendix to opiniondissenting , J.
             GINSBURG, J., of GINSBURG
      Cite as: 560 U. S. ____ (2010)     21
    
    Appendix to opiniondissenting , J.
        GINSBURG, J., of GINSBURG
    22         SCHWAB v. REILLY
    
         Appendix to opiniondissenting , J.
             GINSBURG, J., of GINSBURG
    

Document Info

DocketNumber: 08-538

Citation Numbers: 560 U.S. 770, 130 S. Ct. 2652, 177 L. Ed. 2d 234, 2010 U.S. LEXIS 4974

Filed Date: 6/17/2010

Precedential Status: Precedential

Modified Date: 2/21/2018

Authorities (26)

United States v. Budd , 144 U.S. 154 ( 1892 )

United States v. Detroit Timber & Lumber Co. , 200 U.S. 321 ( 1906 )

Burlingham v. Crouse , 228 U.S. 459 ( 1913 )

United States v. Security Industrial Bank , 459 U.S. 70 ( 1982 )

United States v. Locke , 471 U.S. 84 ( 1985 )

Owen v. Owen , 500 U.S. 305 ( 1991 )

Taylor v. Freeland & Kronz , 503 U.S. 638 ( 1992 )

Kawaauhau v. Geiger , 523 U.S. 57 ( 1998 )

Lamie v. United States Trustee , 540 U.S. 526 ( 2004 )

Rousey v. Jacoway , 544 U.S. 320 ( 2005 )

Marrama v. Citizens Bank of Mass. , 549 U.S. 365 ( 2007 )

In Re Barroso-Herrans , 524 F.3d 341 ( 2008 )

in-the-matter-of-philip-a-smith-jr-jeffery-stephen-pierce-and-mary , 640 F.2d 888 ( 1981 )

In Re Irwin Hyman Janice Hyman, Debtors. Irwin Hyman Janice ... , 967 F.2d 1316 ( 1992 )

Bankr. L. Rep. P 76,098 in Re Lois Imogene Green, A/K/A ... , 31 F.3d 1098 ( 1994 )

37 Collier bankr.cas.2d 548, Bankr. L. Rep. P 77,257 in Re ... , 104 F.3d 688 ( 1997 )

In Re: Mary L. Polis, Debtor-Appellant Mary L. Polis, ... , 217 F.3d 899 ( 2000 )

In Re: Susan E. Wick, Debtor. John R. Stoebner, Trustee-... , 276 F.3d 412 ( 2002 )

in-re-michael-b-price-christine-r-price-debtors-michael-b-price , 370 F.3d 362 ( 2004 )

Hartford Underwriters Ins. Co. v. Union Planters Bank, NA , 530 U.S. 1 ( 2000 )

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