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In re Hardy

United States Bankruptcy Appellate Panel of the Eighth Circuit

December 23, 2013

In re: Pepper Minthia Hardy, Debtor
v.
Richard Fink, Trustee - Appellee Pepper Minthia Hardy, Debtor - Appellant

Submitted: November 19, 2013

Appeal from United States Bankruptcy Court for the Western District of Missouri - Kansas City

Before SALADINO, NAIL, and SHODEEN, Bankruptcy Judges.

NAIL, Bankruptcy Judge.

Debtor Pepper Minthia Hardy ("Debtor") appeals the May 16, 2013 order of the bankruptcy court[1] sustaining Chapter 13 Trustee Richard Fink's ("Trustee") objection to Debtor's claimed exemptions. We affirm.[2]

BACKGROUND

Debtor filed a petition for relief under chapter 13 of the bankruptcy code. On her schedule C ("Property Claimed as Exempt"), Debtor claimed exempt, as a "public assistance benefit" under Mo. Rev . Stat. § 513.430.1(10)(a), [3] the portion of her 2012 federal income tax refund that was attributable to a "Child Tax Credit" allowed under 26 U.S.C. § 24. Trustee timely objected to Debtor's claim of exemptions.

The bankruptcy court entered a memorandum opinion and a text order sustaining Trustee's objection, concluding: "The fact the Additional [Child Tax Credit] is available as a refund for taxpayers whose income places them out of range for most public assistance benefits available to Missourians is a sufficient basis to conclude that the Additional [Child Tax Credit] is not an exempt 'public assistance benefit.'"[4] Debtor timely filed a notice of appeal.

STANDARD OF REVIEW

We review the bankruptcy court's findings of fact for clear error and its legal conclusions de novo. Islamov v. Ungar (In re Ungar), 633 F.3d 675, 678-79 (8th Cir. 2011). More germane to this appeal, we review de novo the bankruptcy court's interpretation of a statute. See Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786, 796 (8th Cir. 2005).

DISCUSSION

The filing of a petition for relief under the bankruptcy code creates a bankruptcy estate comprising, inter alia, all the debtor's legal and equitable interests in property on the petition date. 11 U.S.C. § 541(a)(1). The bankruptcy estate includes contingent interests in future payments, such as tax refunds. Law v. Stover (In re Law), 336 B.R. 780, 782 (B.A.P. 8th Cir. 2006). More specifically, the bankruptcy estate includes the refundable portion of the child tax credit allowed under 26 U.S.C. § 24. Id. at 783.

A debtor may, however, claim certain property exempt. 11 U.S.C. § 522(b)(1). That property is then excluded from the bankruptcy estate and is not available to satisfy claims against the debtor. Benn v. Cole (In re Benn), 491 F.3d 811, 813 (8th Cir. 2007).

Under Missouri law, [5] a debtor may claim exempt "[a] Social Security benefit, unemployment compensation[, ] or a public assistance benefit." Mo. Rev. Stat. ยง 513.430.1(10)(a). Debtor does not argue the portion of her 2012 federal income tax refund that is attributable to the child tax credit is either a "Social Security benefit" or "unemployment compensation." The issue presented is thus whether that portion of her refund is a ...


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