Schwab v. Reilly

(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., 

.


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,” 

(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, 

, 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
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                              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, 

, 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.

, 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: 

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                             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 

, 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 

 (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 

(d)(5) allowed debtors to exempt
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                         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 

 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, 

, 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 

(Table). In 2007 and 2010 the limits were again increased. See 72 

 (Table); 75 

 (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. 

 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, 

 (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.” 

 at 152a−153a; see infra, at 19–23.
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                     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, 

 (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. 

. 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. 

  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 

 (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, 

 (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, 

 (CA8 2002) (employing reasoning similar to Wil
liams, but stopping short of articulating a clear rule), with In re Green,

 (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, 

 (Bkrtcy. App.
Panel CA6 2007) (similar); and In re Barroso-Herrans, 

 (CA1 2008) (focusing on “how a reasonable trustee would have
understood the filings under the circumstances”); In re Hyman, 

 (CA9 1992) (applying an analogous totality-of-the­
circumstances approach).
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                          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.

. 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)
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                     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. 

. 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; 

. 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, 

 (2005); Owen v.
Owen, 

 (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: 

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                          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., 

, 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, 

 (2004); Hartford Underwriters Ins. Co. v.
Union Planters Bank, N. A., 

 (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, 

. 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, 

 (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, 

 (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: 

 (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 

,
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, 

.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, 

; Act of Mar. 2,

1867, ch. 176, §11, 

, amended by Act of June 22, 1874, 18
Stat., Pt. 3, p. 182; Bankruptcy Act of July 1, 1898, ch. 541, §6, 

, 

 (1926 ed.); Chandler Act, ch. 575, §1, 

,

 (1934 ed., Supp. IV); §522 (1976 ed., Supp. II); §522
(2000 ed. and Supp. V).
                     Cite as: 

 (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, 

, 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 

. Taylor does not rest on what the debtor “meant” to
exempt. 

. 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: 

 (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 

. 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.’ ” 

.
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, 

 (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, 

 (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, 

 (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. 

(internal quotation marks omitted).
                 Cite as: 

 (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, 

); see Marrama v. Citizens Bank of Mass., 

 (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.” 

(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, 

; Hartford, 

; United States v. Locke, 

 (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: 

 (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, 

, 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.” 

 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.” 

   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: 

 (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: 

 (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, 

, 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: 

 (2010)                   3

                       GINSBURG, J., dissenting

tion”; and the fourth, “Current Market Value of Property
Without Deducting Exemptions.” 

 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.” 

 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. 

 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., 

(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, 

 (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. 

 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. 

 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, 

, 338–339 (MD
Pa. 2006); In re Reilly, 

 (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: 

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                      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; 

; 

. The leading treatise on bankruptcy, the Court of
Appeals noted, 

, 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: 

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                        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,

, 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: 

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                         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, 

 (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, 

 (2005); United States v. Secu
rity Industrial Bank, 

 (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, 

(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 

. 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: 

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                         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, 

 (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: 

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                          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, 

 (“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, 

, 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. 

. 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: 

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                         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, 

 (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, 

 (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, 

;
extends the limitations period for filing objections to
Schedule C, Rule 4003(b); and authorizes denial of dis­
charge, 

(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: 

 (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: 

 (2010)     19

Appendix to opiniondissenting , J.
    GINSBURG, J., of GINSBURG
20         SCHWAB v. REILLY

     Appendix to opiniondissenting , J.
         GINSBURG, J., of GINSBURG
  Cite as: 

 (2010)     21

Appendix to opiniondissenting , J.
    GINSBURG, J., of GINSBURG
22         SCHWAB v. REILLY

     Appendix to opiniondissenting , J.
         GINSBURG, J., of GINSBURG