Schwab v. Reilly

Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES Syllabus SCHWAB v. REILLY CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 08–538. Argued November 3, 2009—Decided June 17, 2010 Respondent Reilly filed for Chapter 7 bankruptcy when her catering business failed. She supported her petition with, inter alia, Schedule B, on which debtors must list their assets, and Schedule C, on which they must list the property they wish to reclaim as exempt. Her Schedule B assets included cooking and other kitchen equipment, to which she assigned an estimated market value of $10,718. On Schedule C, she claimed two exempt interests in this “business equipment”: a “tool[s] of the trade” exemption for the statutory maximum “$1,850 in value,” 11 U. S. C. §522(d)(6); and $8,868 under the statutory provisions allowing miscellaneous, or “wildcard,” ex emptions up to $10,225 in value. The claimed exemptions’ total value ($10,718) equaled Reilly’s estimate of the equipment’s market value.

Property claimed as exempt will be excluded from the bankruptcy es tate “[u]nless a party in interest” objects, §522(l), within a certain 30 day period, see Fed. Rule Bkrtcy. Proc. 4003(b). Absent an objection, the property will be excluded from the estate even if the exemption’s value exceeds what the Code permits. See, e.g., §522(l); Taylor v. Freeland & Kronz, 503 U. S. 638, 642–643.

Although an appraisal revealed that the equipment’s total market value could be as much as $17,200, petitioner Schwab, the bank ruptcy estate’s trustee, did not object to the claimed exemptions be cause the dollar value Reilly assigned to each fell within the limits of §§522(d)(5) and (6). Schwab moved the Bankruptcy Court for per mission to auction the equipment so Reilly could receive the $10,718 she claimed exempt and the estate could distribute the remaining value to her creditors. Reilly countered that by equating on Schedule C the total value of her claimed exemptions in the equipment with the equipment’s estimated market value, she had put Schwab and 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 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 party must draw from preprinted bankruptcy schedules that evolve over time, rather than on the facial validity of the value the debtor assigns the “property claimed as exempt” as defined by the Code, would undermine the predictability the statute is designed to pro vide. Pp. 16–18. (c) Reilly’s argument threatens to convert the Code’s goal of giving debtors a fresh start into a free pass. By permitting a debtor “to withdraw from the estate certain interests in property, . . . up to cer tain values,” Rousey v. Jacoway, 544 U. S. 320, 325, Congress bal anced the difficult choices that exemption limits impose on debtors with the economic harm that exemptions visit on creditors. This Court should not alter that balance by requiring trustees to object to claimed exemptions based on form entries beyond those governing an exemption’s validity under the Code. In rejecting Reilly’s approach, the Court does not create incentives for trustees and creditors to sleep on their rights. The decision reached here encourages a debtor wishing to exempt an asset’s full market value or the asset itself to declare the value of the claimed exemption in a way that makes its scope clear. Such declarations will encourage the trustee to object promptly and preserve for the estate any value in the asset beyond relevant statutory limits. If the trustee fails to object, or his objection is overruled, the debtor will be entitled to exclude the asset’s full value. If the objection is sustained, the debtor will be required either to forfeit the portion of the exemption exceeding the statutory allow ance or to revise other exemptions or arrangements with creditors to permit the exemption. See Rule 1009(a). Either result will facilitate the expeditious and final disposition of assets, and thus enable the debtor and creditors to achieve a fresh start free of Reilly’s finality and clouded-title concerns. Pp. 19–22. 534 F. 3d 173, reversed and remanded.

THOMAS, J., delivered the opinion of the Court, in which STEVENS, SCALIA, KENNEDY, ALITO, and SOTOMAYOR, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which ROBERTS, C. J., and BREYER, J., joined.

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash­ ington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES _________________ No. 08–538 _________________

WILLIAM G. SCHWAB, PETITIONER v. NADEJDA REILLY ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT [June 17, 2010]

JUSTICE THOMAS delivered the opinion of the Court.

When a debtor files a Chapter 7 bankruptcy petition, all of the debtor’s assets become property of the bankruptcy estate, see 11 U. S. C. §541, subject to the debtor’s right to reclaim certain property as “exempt,” §522(l). The Bank­ ruptcy Code specifies the types of property debtors may exempt, §522(b), as well as the maximum value of the exemptions a debtor may claim in certain assets, §522(d).

Property a debtor claims as exempt will be excluded from the bankruptcy estate “[u]nless a party in interest” ob­ jects. §522(l).

This case presents an opportunity for us to resolve a disagreement among the Courts of Appeals about what constitutes a claim of exemption to which an interested party must object under §522(l). The issue is whether an interested party must object to a claimed exemption where, as here, the Code defines the property the debtor is authorized to exempt as an interest, the value of which may not exceed a certain dollar amount, in a particular type of asset, and the debtor’s schedule of exempt property accurately describes the asset and declares the “value of [the] claimed exemption” in that asset to be an amount within the limits that the Code prescribes. Fed. Rule Bkrtcy. Proc. Official Form 6, Schedule C (1991) (hereinaf­ ter Schedule C). We hold that, in cases such as this, an interested party need not object to an exemption claimed in this manner in order to preserve the estate’s ability to recover value in the asset beyond the dollar value the debtor expressly declared exempt.

I Respondent Nadejda Reilly filed for Chapter 7 bank­ ruptcy when her catering business failed. She supported her petition with various schedules and statements, two of which are relevant here: Schedule B, on which the Bank­ ruptcy Rules require debtors to list their assets (most of which become property of the estate), and Schedule C, on which the Rules require debtors to list the property they wish to reclaim as exempt. The assets Reilly listed on Schedule B included an itemized list of cooking and other kitchen equipment that she described as “business equip­ ment,” and to which she assigned an estimated market value of $10,718. App. 40a, 49a–55a.

On Schedule C, Reilly claimed two exempt interests in this equipment pursuant to different sections of the Code. Reilly claimed a “tool[s] of the trade” exemption of $1,850 in the equipment under §522(d)(6), which permits a debtor to exempt his “aggregate interest, not to exceed $1,850 in value, in any implements, professional books, or tools, of [his] trade.” See also 69 Fed. Reg. 8482 (2004) (Table).

And she claimed a miscellaneous exemption of $8,868 in the equipment under §522(d)(5), which, at the time she filed for bankruptcy, permitted a debtor to take a “wild­ card” exemption equal to the “debtor’s aggregate interest in any property, not to exceed” $10,225 “in value.”1 See App. 58a. The total value of these claimed exemptions ($10,718) equaled the value Reilly separately listed on Schedules B and C as the equipment’s estimated market value, see id., at 49a, 58a.

Subject to exceptions not relevant here, the Federal Rules of Bankruptcy Procedure require interested parties to object to a debtor’s claimed exemptions within 30 days after the conclusion of the creditors’ meeting held pursu­ ant to Rule 2003(a). See Fed. Rule Bkrtcy. Proc. 4003(b).

If an interested party fails to object within the time al­ lowed, a claimed exemption will exclude the subject prop­ erty from the estate even if the exemption’s value exceeds what the Code permits. See, e.g., §522(l); Taylor v. Free land & Kronz, 503 U. S. 638, 642–643 (1992).

Petitioner William G. Schwab, the trustee of Reilly’s bankruptcy estate, did not object to Reilly’s claimed ex­ emptions in her business equipment because the dollar value Reilly assigned each exemption fell within the limits that §§522(d)(5) and (6) prescribe. App. 163a. But be­ cause an appraisal revealed that the total market value of Reilly’s business equipment could be as much as $17,200,2 Schwab moved the Bankruptcy Court for permission to auction the equipment so Reilly could receive the $10,718 she claimed as exempt, and the estate could distribute the equipment’s remaining value (approximately $6,500) to Reilly’s creditors. App. 141a–143a.

Reilly opposed Schwab’s motion. She argued that by equating on Schedule C the total value of the exemptions she claimed in the equipment with the equipment’s esti­ mated market value, she had put Schwab and her credi­ tors on notice that she intended to exempt the equipment’s full value, even if that amount turned out to be more than the dollar amount she declared, and more than the Code allowed. Id., at 165a. Citing §522(l), Reilly asserted that because her Schedule C notified Schwab of her intent to exempt the full value of her business equipment, he was obliged to object if he wished to preserve the estate’s right to retain any value in the equipment in excess of the $10,718 she estimated. Because Schwab did not object within the time prescribed by Rule 4003(b), Reilly asserted that the estate forfeited its claim to such value. Id., at 165a. Reilly further informed the Bankruptcy Court that exempting her business equipment from the estate was so important to her that she would dismiss her bankruptcy case if doing so was the only way to avoid the equipment’s sale at auction.3 The Bankruptcy Court denied both Schwab’s motion to auction the equipment and Reilly’s conditional motion to dismiss her case. See In re Reilly, 403 B. R. 336 (Bkrtcy.

Ct. MD Pa. 2006). Schwab sought relief from the District Court, arguing that neither the Code nor Rule 4003(b) requires a trustee to object to a claimed exemption where the amount the debtor declares as the “value of [the debtor’s] claimed exemption” in certain property is an amount within the limits the Code prescribes. The Dis­ trict Court rejected Schwab’s argument, and the Court of Appeals affirmed. See In re Reilly, 534 F. 3d 173 (CA3 2008).

The Court of Appeals agreed with the Bankruptcy Court that by equating on Schedule C the total value of her exemptions in her business equipment with the equip­ ment’s market value, Reilly “indicate[d] the intent” to exempt the equipment’s full value. Id., at 174. In reach­ ing this conclusion, the Court of Appeals relied on our decision in Taylor: “[W]e believe this case to be controlled by Taylor.

Just as we perceive it was important to the Taylor Court that the debtor meant to exempt the full amount of the property by listing ‘unknown’ as both the value of the property and the value of the exemp­ tion, it is important to us that Reilly valued the busi­ ness equipment at $10,718 and claimed an exemption in the same amount. Such an identical listing put Schwab on notice that Reilly intended to exempt the property fully. . . . . . “ ‘[A]n unstated premise’ of Taylor was ‘that a debtor who exempts the entire reported value of an asset is claiming the “full amount,” whatever it turns out to be.’ ” 534 F. 3d, at 178−179.

Relying on this “unstated premise,” the Court of Appeals held that Schwab’s failure to object to Reilly’s claimed exemptions entitled Reilly to the equivalent of an in-kind interest in her business equipment, even though the value of that exemption exceeded the amount that Reilly de­ clared on Schedule C and the amount that the Code al­ lowed her to withdraw from the bankruptcy estate. Ibid.

As noted, the Court of Appeals’ decision adds to dis­ agreement among the Circuits about what constitutes a claim of exemption to which an interested party must object under §522(l).4 We granted certiorari to resolve this conflict. See 556 U. S. ___ (2009). We conclude that the Court of Appeals’ approach fails to account for the text of the relevant Code provisions and misinterprets our deci­ sion in Taylor. Accordingly, we reverse.

II The starting point for our analysis is the proper inter­ pretation of Reilly’s Schedule C. If we read the Schedule Reilly’s way, she claimed exemptions in her business equipment that could exceed statutory limits, and thus claimed exemptions to which Schwab should have objected if he wished to enforce those limits for the benefit of the estate. If we read Schedule C Schwab’s way, Reilly claimed valid exemptions to which Schwab had no duty to object. The Court of Appeals construed Schedule C Reil­ ly’s way and interpreted her claimed exemptions as im­ proper, and therefore objectionable, even though their declared value was facially within the applicable Code limits. In so doing, the Court of Appeals held that trustees evaluating the validity of exemptions in cases like this cannot take a debtor’s claim at face value, and specifically cannot rely on the fact that the amount the debtor de­ clares as the “value of [the] claimed exemption” is within statutory limits. Instead, the trustee’s duty to object turns on whether the interplay of various schedule entries sup­ ports an inference that the debtor “intended” to exempt a dollar value different than the one she wrote on the form. 534 F. 3d, at 178. This complicated view of the trustee’s statutory obligation, and the strained reading of Schedule C on which it rests, is inconsistent with the Code.5 The parties agree that this case is governed by §522(l), which states that a Chapter 7 debtor must “file a list of property that the debtor claims as exempt under subsec­ tion (b) of this section,” and further states that “[u]nless a party in interest objects, the property claimed as exempt on such list is exempt.” The parties further agree that the “list” to which §522(l) refers is the “list of property . . . claim[ed] as exempt” currently known as “Schedule C.”

See Schedule C.6 The parties, like the Courts of Appeals, disagree about what information on Schedule C defines the “property claimed as exempt” for purposes of evaluat­ ing an exemption’s propriety under §522(l). Reilly asserts that the “property claimed as exempt” is defined by refer­ ence to all the information on Schedule C, including the estimated market value of each asset in which the debtor claims an exempt interest. Schwab and the United States as amicus curiae argue that the Code specifically defines the “property claimed as exempt” as an interest, the value of which may not exceed a certain dollar amount, in a particular asset, not as the asset itself. Accordingly, they 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) with the equipment’s market value ($10,718). He simply disagrees with Reilly that this “identical listing put [him] on notice that Reilly intended to exempt the property fully,” regardless whether its value exceeded the exemp­ tion limits the Code prescribes. 534 F. 3d, at 178. Schwab and amicus United States instead contend that the Code defines the “property” Reilly claimed as exempt under §522(l) as an “interest” whose value cannot exceed a cer­ tain dollar amount. Brief for Petitioner 20–26; Reply Brief for Petitioner 3–6; Brief for United States as Amicus Curiae 12–18. Construing Reilly’s Schedule C in light of this statutory definition, they contend that Reilly’s claimed exemption was facially unobjectionable because the “property claimed as exempt” (i.e., two interests in her business equipment worth $8,868 and $1,850, respec­ tively) is property Reilly was clearly entitled to exclude from her estate under the Code provisions she referenced in column 2. See supra, at 8 (citing §§522(d)(5) and (6)).

Accordingly, Schwab and the United States conclude that Schwab had no obligation to object to the exemption in order to preserve for the estate any value in Reilly’s busi­ ness equipment beyond the total amount ($10,718) Reilly properly claimed as exempt.

We agree. The portion of §522(l) that resolves this case is not, as Reilly asserts, the provision stating that the “property claimed as exempt on [Schedule C] is exempt” unless an interested party objects. Rather, it is the por­ tion of §522(l) that defines the target of the objection, namely, the portion that says Schwab has a duty to object to the “list of property that the debtor claims as exempt under subsection (b).” (Emphasis added.) That subsec­ tion, §522(b), does not define the “property claimed as exempt” by reference to the estimated market value on which Reilly and the Court of Appeals rely. Brief for Respondent 22–23; 534 F. 3d, at 178. Section 522(b) refers only to property defined in §522(d), which in turn lists 12 categories of property that a debtor may claim as exempt. As we have recognized, most of these categories (and all of the categories applicable to Reilly’s exemptions) define the “property” a debtor may “clai[m] as exempt” as the debtor’s “interest”—up to a specified dollar amount— in the assets described in the category, not as the assets themselves. §§522(d)(5)–(6); see also §§522(d)(1)–(4), (8); Rousey v. Jacoway, 544 U. S. 320, 325 (2005); Owen v. Owen, 500 U. S. 305, 310 (1991). Viewing Reilly’s form entries in light of this definition, we agree with Schwab and the United States that Schwab had no duty to object to the property Reilly claimed as exempt (two interests in her business equipment worth $1,850 and $8,868) because the stated value of each interest, and thus of the “prop­ erty claimed as exempt,” was within the limits the Code allows.7 Reilly’s contrary view of Schwab’s obligations under §522(l) does not withstand scrutiny because it defines the target of a trustee’s objection—the “property claimed as exempt”—based on language in Schedule C and dictionary definitions of “property,” see Brief for Respondent 24–25, 40–41, that the definition in the Code itself overrides.8

Although we may look to dictionaries and the Bankruptcy Rules to determine the meaning of words the Code does not define, see, e.g., Rousey, supra, at 330, the Code’s definition of the “property claimed as exempt” in this case is clear. As noted above, §§522(d)(5) and (6) define the “property claimed as exempt” as an “interest” in Reilly’s business equipment, not as the equipment per se. Sections 522(d)(5) and (6) further and plainly state that claims to exempt such interests are statutorily permissible, and thus unobjectionable, if the value of the claimed interest is below a particular dollar amount.9 That is the case here, and Schwab was entitled to rely upon these provisions in evaluating whether Reilly’s exemptions were objectionable under the Code. See Lamie v. United States Trustee, 540 U. S. 526, 534 (2004); Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U. S. 1, 6 (2000). The Court of Appeals’ contrary holding not only fails to account for the Code’s definition of the “property claimed as ex­ empt.” It also fails to account for the provisions in §522(d) that permit debtors to exempt certain property in kind or in full regardless of value. See, e.g., §§522(d)(9) (profes­ sionally prescribed health aids), (10)(C) (disability bene­ fits), (7) (unmatured life insurance contracts). We decline to construe Reilly’s claimed exemptions in a manner that elides the distinction between these provisions and provi­ sions such as §§522(d)(5) and (6), see, e.g., Duncan v. Walker, 533 U. S. 167, 174 (2001), particularly based upon an entry on Schedule C—Reilly’s estimate of her equip­ ment’s market value—to which the Code does not refer in defining the “property claimed as exempt.”10 For all of these reasons, we conclude that Schwab was entitled to evaluate the propriety of the claimed exemp­ tions based on three, and only three, entries on Reilly’s Schedule C: the description of the business equipment in which Reilly claimed the exempt interests; the Code provi­ sions governing the claimed exemptions; and the amounts Reilly listed in the column titled “value of claimed exemp­ tion.” In reaching this conclusion, we do not render the market value estimate on Reilly’s Schedule C superfluous.

We simply confine the estimate to its proper role: aiding the trustee in administering the estate by helping him identify assets that may have value beyond the dollar amount the debtor claims as exempt, or whose full value may not be available for exemption because a portion of the interest is, for example, encumbered by an unavoidable lien. See, e.g., 3 W. Norton, Bankruptcy Law and Practice §56:7 (3d ed. 2009); Brief for United States as Amicus Curiae 16; Dept. of Justice, Executive Office for U. S. Trustees, Handbook for Chapter 7 Trustees, p. 8–1 (2005), http:// www.justice.gov /ust/eo/private_trustee/library/chapter07/ docs/7handbook1008/Ch7_Handbook.pdf (as visited June 14, 2010, and available in Clerk of Court’s case file). As noted, most assets become property of the estate upon commencement of a bankruptcy case, see 11 U. S. C. §541, and exemptions represent the debtor’s attempt to reclaim those assets or, more often, certain interests in those assets, to the creditors’ detriment. Accordingly, it is at least useful for a trustee to be able to compare the value of the claimed exemption (which typically represents the debtor’s interest in a particular asset) with the asset’s estimated market value (which belongs to the estate sub­ ject to any valid exemption) without having to consult separate schedules.11

Our interpretation of Schwab’s statutory obligations is not only consistent with the governing Code provisions; it is also consistent with the historical treatment of bank­ ruptcy exemptions. Congress has permitted debtors to exempt certain property from their bankruptcy estates for more than two centuries. See Act of Apr. 4, 1800, ch. 19, §5, 2 Stat. 23.12 Throughout these periods, debtors have validly exempted property based on forms that required the debtor to list the value of a claimed exemption without also estimating the market value of the asset in which the 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

III The Court of Appeals erred in holding that our decision in Taylor dictates a contrary conclusion. See 534 F. 3d, at 178. Taylor does not rest on what the debtor “meant” to exempt. 534 F. 3d, at 178. Rather, Taylor applies to the face of a debtor’s claimed exemption the Code provisions that compel reversal here.

The debtor in Taylor, like the debtor here, filed a sched­ ule of exemptions with the Bankruptcy Court on which the debtor described the property subject to the claimed ex­ emption, identified the Code provision supporting the exemption, and listed the dollar value of the exemption.

Critically, however, the debtor in Taylor did not, like the debtor here, state the value of the claimed exemption as a specific dollar amount at or below the limits the Code allows. Instead, the debtor in Taylor listed the value of the exemption itself as “$ unknown”: Schedule B-4. ─Property Claimed Exempt Type of Location, Description, Specify the Value Claimed Property and, So Far As Relevant Statute Exempt to the Claim of Exemp­ Creating the tion, Present Use of Exemption Property Proceeds from Winn v. TWA 11 U. S. C. $ unknown lawsuit Claim for lost wages 522(b)(d) The interested parties in Taylor agreed that this entry rendered the debtor’s claimed exemption objectionable on its face because the exemption concerned an asset (lawsuit proceeds) that the Code did not permit the debtor to ex­ empt beyond a specific dollar amount. See 503 U. S., at 642. Accordingly, although this case and Taylor both concern the consequences of a trustee’s failure to object to a claimed exemption within the time specified by Rule 4003, the question arose in Taylor on starkly different facts. In Taylor, the question concerned a trustee’s obliga­ tion to object to the debtor’s entry of a “value claimed exempt” that was not plainly within the limits the Code allows. In this case, the opposite is true. The amounts Reilly listed in the Schedule C column titled “Value of Claimed Exemption” are facially within the limits the Code prescribes and raise no warning flags that warranted an objection.16 See supra, at 8.

Taylor supports this conclusion. In holding otherwise, the Court of Appeals focused on what it described as Tay lor’s “ ‘unstated premise’ ” that “ ‘a debtor who exempts the entire reported value of an asset is claiming the “full amount,” whatever it turns out to be.’ ” 534 F. 3d, at 179.

But Taylor does not rest on this premise. It establishes and applies the straightforward proposition that an inter­ ested party must object to a claimed exemption if the amount the debtor lists as the “value claimed exempt” is not within statutory limits, a test the value ($ unknown) in Taylor failed, and the values ($8,868 and $1,850) in this case pass.

We adhere to this test. Doing otherwise would not only depart from Taylor and ignore the presumption that par­ ties act lawfully and with knowledge of the law, cf. United States v. Budd, 144 U. S. 154, 163 (1892); it would also require us to expand the statutory definition of “property claimed as exempt” and the universe of information an interested party must consider in evaluating the validity of a claimed exemption. Even if the Code allowed such expansions, they would be ill advised. As evidenced by the differences between Reilly’s Schedule C and the schedule in Taylor, preprinted bankruptcy schedules change over time. Basing the definition of the “property claimed as exempt,” and thus an interested party’s obligation to object under §522(l), on inferences that party must draw from evolving forms, rather than on the facial validity of the value the debtor assigns the “property claimed as exempt” as defined by the Code, would undermine the predictability the statute is designed to provide.17 For all of these reasons, we take Reilly’s exemptions at face value and find them unobjectionable under the Code, so the objection deadline we enforced in Taylor is inapplicable here.

IV In a final effort to defend the Court of Appeals’ judg­ ment, Reilly asserts that her approach to §522(l) is neces­ sary to vindicate the Code’s goal of giving debtors a fresh start, and to further its policy of discouraging trustees and creditors from sleeping on their rights. See Brief for Re­ spondent 21, 55–68. Although none of Reilly’s policy arguments can overcome the Code provisions or the as­ pects of Taylor that govern this case, our decision fully accords with all of the policies she identifies. We agree that “exemptions in bankruptcy cases are part and parcel of the fundamental bankruptcy concept of a ‘fresh start.’ ” Brief for Respondent 21 (quoting Rousey, 544 U. S., at 325); see Marrama v. Citizens Bank of Mass., 549 U. S. 365, 367 (2007). We disagree that this policy required Schwab to object to a facially valid claim of exemption on pain of forfeiting his ability to preserve for the estate any value in Reilly’s business equipment beyond the value of the interest she declared exempt. This approach threat­ ens to convert a fresh start into a free pass.

As we emphasized in Rousey, “[t]o help the debtor obtain a fresh start, the Bankruptcy Code permits him to with draw from the estate certain interests in property, such as his car or home, up to certain values.” 544 U. S., at 325 (emphasis added). The Code limits exemptions in this fashion because every asset the Code permits a debtor to withdraw from the estate is an asset that is not available to his creditors. See §522(b)(1). Congress balanced the difficult choices that exemption limits impose on debtors with the economic harm that exemptions visit on creditors, and it is not for us to alter this balance by requiring trus­ tees to object to claimed exemptions based on form entries beyond those that govern an exemption’s validity under the Code. See Lamie, 540 U. S., at 534, 538; Hartford, 530 U. S., at 6; United States v. Locke, 471 U. S. 84, 95 (1985).

Reilly nonetheless contends that our approach creates perverse incentives for trustees and creditors to sleep on their rights. See Brief for Respondent 64, n. 10, 67–69.

Again, we disagree. Where a debtor intends to exempt nothing more than an interest worth a specified dollar amount in an asset that is not subject to an unlimited or in-kind exemption under the Code, our approach will ensure clear and efficient resolution of competing claims to the asset’s value. If an interested party does not object to the claimed interest by the time the Rule 4003 period expires, title to the asset will remain with the estate pur­ suant to §541, and the debtor will be guaranteed a pay­ ment in the dollar amount of the exemption. If an inter­ ested party timely objects, the court will rule on the objection and, if it is improper, allow the debtor to make appropriate adjustments.18 Where, as here, it is important to the debtor to exempt the full market value of the asset or the asset itself, our decision will encourage the debtor to declare the value of her claimed exemption in a manner that makes the scope of the exemption clear, for example, by listing the exempt value as “full fair market value (FMV)” or “100% of 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 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 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.

SUPREME COURT OF THE UNITED STATES _________________ No. 08–538 _________________

WILLIAM G. SCHWAB, PETITIONER v. NADEJDA REILLY ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT [June 17, 2010]

JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and JUSTICE BREYER join, dissenting.

In Chapter 7 bankruptcies, debtors must surrender to the trustee-in-bankruptcy all their assets, 11 U. S. C.

§541, but may reclaim for themselves exempt property, §522. Within 30 days after the meeting of creditors, the trustee or a creditor may file an objection to the debtor’s designation of property as exempt. Fed. Rule Bkrtcy.

Proc. 4003(b). Absent timely objection, “property claimed [by the debtor] as exempt . . . is exempt.” §522(l).

The trustee in this case, petitioner William G. Schwab, maintains that the obligation promptly to object to exemp­ tion claims extends only to the qualification of an asset as exemptible, not to the debtor’s valuation of the asset.

Respondent Nadejda Reilly, the debtor-in-bankruptcy, urges that the timely objection requirement applies not only to the debtor’s designation of an asset as exempt; the requirement applies as well, she asserts, to her estimate of the asset’s market value. That is so, she reasons, because the asset’s current dollar value is critical to the determi­ nation whether she may keep the property intact and outside bankruptcy, or whether the trustee, at any time during the course of the proceedings, may sell it.

The Court holds that challenges to the debtor’s valua­ tion of exemptible assets need not be made within the 30­ 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 tion”; and the fourth, “Current Market Value of Property Without Deducting Exemptions.” Id., at 57a. In the first column of Schedule C, Reilly wrote, as she did in Schedule B’s description-of-property column: “See attached list of business equipment.” Id., at 58a. On the list appended to Schedules B and C, Reilly set out by hand a 31-item inven­ tory of her restaurant-plus-catering-venture equipment.

Next to each item, e.g., “Dough Mixer,” “Gas stove,” “Hood,” she specified, first, the purchase price and, next, “Today’s Market Value,” which added up to $10,718 for the entire inventory. Id., at 51a–55a.1 As the laws securing exemption of her kitchen equip­ ment, Reilly specified in the second Schedule C column, §552(d)(6), the exemption covering trade tools, and §552(d)(5), the “wildcard” exemption. Id., at 58a.2 In the value-of-claimed-exemption column, she listed $1,850, then the maximum trade-tools exemption, and $8,868, drawn from her wildcard exemption, amounts adding up to $10,718. Ibid. And in the fourth, current-market­ value, column, she recorded $10,718, corresponding to the total market value she had set out in her inventory and reported in Schedule B. Ibid.

Before the 30-day clock on filing objections had begun to run, an appraiser told Schwab that Reilly’s equipment was worth at least $17,000. Brief for Petitioner 15; App. 164a.

Nevertheless, Schwab did not object to the $10,718 market value Reilly attributed to her business equipment in Schedule C and the attached inventory. Instead, he al­ lowed the limitations period to lapse and then moved, unsuccessfully, for permission to sell the equipment at auction. Id., at 141a–143a.3 From Reilly’s filings, the Bankruptcy Judge found it evident that Reilly had claimed the property itself, not its dollar value, as exempt. Id., at 168a–169a (“I know there’s an argument . . . that . . . the property identified as exempt is really the [valuation] column, [i.e., $10,718,] but that’s not what the forms say. The forms say property declared as exempt and to see attached list. So, they’re exempting all the property. . . . If the Trustee believes that . . . all the property cannot be exempt, [he] should object to it.”).

The District Court and Court of Appeals similarly con­ cluded that, by listing the identical amount, $10,718, as the property’s market value and the value of the claimed exemptions, Reilly had signaled her intention to safeguard all of her kitchen equipment from inclusion in the bank­ ruptcy estate. In re Reilly, 403 B. R. 336, 338–339 (MD Pa. 2006); In re Reilly, 534 F. 3d 173, 178 (CA3 2008).

Both courts looked to §522(l) and Federal Rule of Bank­ ruptcy Procedure 4003(b), which state, respectively: “The debtor shall file a list of property that the debtor claims as exempt . . . . Unless a party in inter­ est objects, the property claimed as exempt on such list is exempt.” §522(l).

“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 days, each of the tribunals below ruled that the entire inventory of Reilly’s business equipment qualified as exempt in full. App. 168a; 403 B. R., at 339; 534 F. 3d, at 178. The leading treatise on bankruptcy, the Court of Appeals noted, id., at 180, n. 4, is in accord: “Normally, if the debtor lists property as exempt, that listing is interpreted as a claim for exemption of the debtor’s entire interest in the property, and the debtor’s valuation of that interest is treated as the amount of the exemption claimed. Were it other­ wise—that is, if the listing were construed to claim as exempt only that portion of the property having the value stated—the provisions finalizing exemptions if no objections are filed would be rendered meaningless.

The trustee or creditors could [anytime] claim that the debtor’s interest in the property was greater than the value claimed as exempt and [then] object to the debtor exempting his or her entire interest in the property after the deadline for objections had passed.”

9 Collier ¶4003.02[1], pp. 4003–4 to 4003–5.

Agreeing with the courts below, I would hold that Reilly, by her precise identification of the exempt property, and her specification of $10,718 as both the current market value of her kitchen equipment and the value of the 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 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

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 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– (rev. 15th ed. 2005) (“[T]o evaluate the propriety of the debtor’s claim of exemption,” trustees need the informa­ tion in all four columns of Schedule C; “[market] value” is “essential” to judging whether the claim is proper because “[e]xemption provisions often are limited according to . . . [the property’s] value.”). 9 C Requiring objections to market valuation notably facili­ tates the debtor’s fresh start, and thus best fulfills the prime purpose of the exemption prescriptions. See, e.g., Burlingham v. Crouse, 228 U. S. 459, 473 (1913) (Bank­ ruptcy provisions “must be construed” in light of policy “to give the bankrupt a fresh start.”). See also Rousey v.

Jacoway, 544 U. S. 320, 325 (2005); United States v. Secu rity Industrial Bank, 459 U. S. 70, 72, n. 1 (1982); ante, at 19. The 30-day deadline for objections, this Court has recognized, “prompt[s] parties to act and . . . produce[s] finality.” Taylor v. Freeland & Kronz, 503 U. S. 638, 644 (1992). As “there can be no possibility of further objection to the exemptions” after this period elapses, the principal bankruptcy treatise observes, “if the debtor is not yet in possession of the property claimed as exempt, it should be turned over to [her] at this time to effectuate fully the fresh start purpose of the exemptions.” 9 Collier ¶4003.03[3], p. 4003–13.

With the benefit of closure, and the certainty it brings, the debtor may, at the end of the 30 days, plan for her future secure in the knowledge that the possessions she has exempted in their entirety are hers to keep. See 534 F. 3d, at 180. If she has reclaimed her car from the estate, for example, she may accept a job not within walking distance. See Brief for National Association of Consumer Bankruptcy Attorneys et al. as Amici Curiae 2–3 (herein­ after NACBA Brief). Or if she has exempted her kitchen equipment, she may launch a new catering venture. See App. 138a (Reilly “wishe[d] to continue in restaurant and catering as her occupation” postbankruptcy.).

By permitting trustees to challenge a debtor’s valuation of exempted property anytime before discharge, the Court casts a cloud of uncertainty over the debtor’s use of assets reclaimed in full. If the trustee gains a different opinion of an item’s value months, even years, after the debtor has filed her bankruptcy petition,10 he may seek to repossess the asset, auction it off, and hand the debtor a check for the dollar amount of her claimed exemption.11 With this threat looming until discharge, “[h]ow can debtors rea­ sonably be expected to restructure their affairs”? NACBA Brief 25. See In re Polis, 217 F. 3d 899, 903 (CA7 2000) (Posner, J.) (“If the assets sought to be exempted by the debtor were not valued at a date early in the bankruptcy proceeding, neither the debtor nor the creditors would know who had the right to them.”).

III The Court and Schwab raise three concerns about read­ ing Rule 4003 to require timely objection to the debtor’s estimate of an exempt asset’s market value: Would trus­ tees face an untoward administrative burden? Would trustees lack fair notice of the need to object? And would debtors be tempted to undervalue their property in an effort to avoid the monetary cap on exemptions? In my judgment, all three questions should be answered no.

A The Court suggests that requiring timely objections to a debtor’s valuation of exempt property would saddle trus­ tees with an unmanageable load. See ante, at 18 (declin­ ing to “expand . . . the universe of information an inter­ ested party must consider in evaluating the validity of a claimed exemption”). See also Brief for Petitioner 32–33; Brief for United States as Amicus Curiae 24.12 But trus­ 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

If the trustee needs more than 30 days to assess market value, moreover, the time period is eminently extendable.

Rule 4003(b) prescribes that a trustee may, for cause, ask the court for an extension of the objection period. Alterna­ tively, the trustee can postpone the conclusion of the meeting of creditors, from which the 30-day clock runs, simply by adjourning the meeting to a future date. Rule 2003(e). A trustee also may examine the debtor under oath at the creditors’ meeting, Rule 2003(b)(1); if he gath­ ers information impugning her exemption claims, he may ask the bankruptcy court to hold a hearing to determine valuation issues, Rule 4003(c). See Taylor, 503 U. S., at 644 (“If [the trustee] did not know the value of [a claimed exemption], he could have sought a hearing on the issue . . . or . . . asked the Bankruptcy Court for an extension of time to object.”). See also NACBA Brief 19, 21–23 (listing ways trustees may enlarge the limitations period for objections). Trustees, in sum, have ample mechanisms at their disposal to gain the time and information they need to lodge objections to valuation.

B On affording trustees fair notice of the need to object, the Court emphasizes that a debtor must list her claimed exemptions “in a manner that makes the scope of the exemption clear.” Ante, at 20. If a debtor wishes to ex­ empt property in its entirety, for example, the Court coun­ sels her to write “full fair market value (FMV)” or “100% of FMV” in Schedule C’s value-of-claimed-exemption column. —————— . . . . .

“WHEREFORE Trustee prays that the court determine that debtor is not entitled to . . . the exemptio[n] claimed by him, that the [property claimed as exempt] which [is] disallowed be turned over to the trustee herein as property of the estate, and that he have such other and further relief as is just.” 13A Collier §CS17.14, p. CS 17–22 (rev. 15th ed. 2009). See also Rules 9013–9014.

Ante, at 20–21 (internal quotation marks omitted). See also Tr. of Oral Arg. 6–7, 26–29; In re Hyman, 967 F. 2d 1316, 1319–1320, n. 6 (CA9 1992) (Trustees must be able to assess the validity of an exemption from the face of a debtor’s schedules.). Our decision in Taylor v. Freeland & Kronz, the Court notes, is instructive. In Taylor, the debtor recorded the term “$ unknown” as the value of a claimed exemption, which, the Court observes, raised a “warning fla[g]” because the value “was not plainly within the limits the Code allows.” Ante, at 17.

True, a debtor’s schedules must give notice sufficient to cue the trustee that an objection may be in order. But a “warning flag” is in the eye of the beholder: If a debtor lists identical amounts as the market value of exempted property and the value of her claimed exemption, she has, on the face of her schedules, reclaimed the entire asset just as surely as if she had recorded “100% of FMV” in Sched­ ule C’s value-of-claimed-exemption column. See Brief for Respondent 36. See also 9 Collier ¶4003.03[3], p. 4003–14 (“Only when a debtor’s schedules specifically value the debtor’s interest in the property at an amount higher than the amount claimed as exempt can it be argued that a part of the debtor’s interest in property has not been ex­ empted.” (emphasis added)).

In this case, by specifying $10,718 as both the current market value of her kitchen equipment and the value of her claimed exemptions, Reilly gave notice that she had reclaimed the listed property in full. See supra, at 2–6.

To borrow the Court’s terminology, Reilly waved a “warn­ ing flag” that should have prompted Schwab to object if he believed the equipment could not be reclaimed in its en­ tirety because its value exceeded the statutory cap. 534 F. 3d, at 179. See 4 Collier ¶522.05[2][b], p. 522–33 (“Nor­ mally, if a debtor lists an asset as having a particular value in the schedules and then exempts that value, the schedules should be read as a claim of exemption for the entire asset, to which the trustee should object if the trustee believes the asset has been undervalued.”).

Training its attention on trustees’ needs, moreover, the Court overlooks the debtor’s plight. As just noted, the Court counsels debtors wishing to exempt an asset in full to write “100% of FMV” or “full FMV” in the value-of­ claimed-exemption column. But a debtor following the instructions that accompany Schedule C would consider such a response nonsensical, for those instructions direct her to “state the dollar value of the claimed exemption in the space provided.” Fed. Rule Bkrtcy. Proc. Official Form 6, Schedule C, Instruction 5 (1991) (emphasis added).

Chapter 7 debtors are often unrepresented. How are they to know they must ignore Schedule C’s instructions and employ the “warning flag” described today by the Court, if they wish to trigger the trustee’s obligation to object to their market valuation in a timely fashion? See In re Anderson, 377 B. R. 865, 875 (Bkrtcy. App. Panel CA6 2007).15 C Schwab finally urges that requiring timely objections to a debtor’s market-value estimations “would give debtors a perverse incentive to game the system by undervaluing their assets.” Brief for Petitioner 35; see Brief for United States as Amicus Curiae 27. The Court rejected an argu­ ment along these lines in Taylor, and should follow suit here. Multiple measures, Taylor explained, discourage undervaluation of property claimed as exempt. 503 U. S., at 644. Among those measures: The debtor files her exemption claim under penalty of perjury. See Rule 1008. She risks judicial sanction for signing documents not well grounded in fact. Rule 9011. And proof of fraud subjects her to criminal prosecution, 18 U. S. C. §152; extends the limitations period for filing objections to Schedule C, Rule 4003(b); and authorizes denial of dis­ charge, 11 U. S. C. §727(a)(4)(B). See also NACBA Brief 29–33 (detailing additional checks against inadequate or inaccurate filings).

Furthermore, the objection procedure is itself a safe­ guard against debtor undervaluation. If a trustee sus­ pects that the market value of property claimed as exempt may exceed a debtor’s estimate, he should do just what Rule 4003(b) prescribes: “[F]ile an objection . . . within 30 days after the meeting of creditors.” * * * For the reasons stated, I would affirm the Third Cir­ cuit’s judgment.

Appendix to opiniondissenting , J.

GINSBURG, J., of GINSBURG APPENDIX 18 SCHWAB v. REILLY Appendix to opiniondissenting , J.

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

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

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

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

GINSBURG, J., of GINSBURG