The Constitutionality of Bankruptcy-Specific State Exemption Statutes

Jeffrey T. Ferriell, Captial University Law School

Abstract

Several States have adopted bankruptcy-specific exemption schemes that permit debtors to keep different assets in bankruptcy than they would be permitted to keep in a state collection proceeding. These bankruptcy-specific state exemption statutes have been challenged as unconstitutional with mixed results. This article explains the relationship between the Bankruptcy Code and state exemption statutes, describes the existing bankruptcy-specific state exemption provisions, and analyzes their constitutionality. It concludes that these statutes are constitutionally impermissible because they obstruct the "fresh start" purpose of the Bankruptcy Code.