Bibles are Often Exempt in Bankruptcy

When an individual files for Chapter 7 bankruptcy protection, the federal law requires an accounting of all property and assets. In most Chapter 7 cases, the bankruptcy debtor is allowed to keep all of this property through the application of legal exemptions. Common legal exemptions will protect equity in a car or house; clothing; household items; and some jewelry, including a wedding set.

Another common bankruptcy protection pertains to exempting a family bible from creditor collection. In the recent Illinois bankruptcy case of Robinson v. Hagan, a Chapter 7 bankruptcy trustee sought to take and sell a rare Mormon bible to pay the debtor’s creditors.

The debtor, Anna Robinson, worked at a local library and she saved a rare First Edition Mormon Bible from destruction. Robinson is a member of The Church of Jesus Christ of Latter-Day Saints, so the bible has great significance to her. Ultimately, the library gave her the bible and proof of ownership.

The bible was published in 1830 and is valued at over $10,000. Robinson keeps it sealed in a Ziploc bag due to its fragile condition. While she does not use the bible regularly, she has removed it from the Ziploc bag to show it to her family and fellow church members.

When Robinson filed for bankruptcy protection, her attorney listed the bible as “old Mormon bible,” and stated that “debtor has been told that there is a 100% exemption for bibles but valuable bibles may or may not be covered under such exemption.” The Chapter 7 bankruptcy trustee took this as an invitation to challenge the debtor’s exemption and claimed that Illinois exemption did not apply to a “valuable bible.”

The bankruptcy court agreed with the trustee, but the District Court for the Southern District of Illinois reversed. The District Court noted that the word “necessary” in the statute modified only the first listed item (“wearing apparel”) and not other items claimed exempt (“bible, school books, and family pictures”). Consequently, there was no need to examine whether the bible was “necessary” or to consider its value (although the Court did ask an interesting rhetorical question: What is a necessary bible?). The state legislature intended bibles to be exempt, no matter the monetary value.

There are several lessons to be learned from this case. The most important lesson is to not poke a Chapter 7 trustee with a stick. Another valuable lesson is to discuss the value of your property and the applicable legal exemptions with your attorney prior to filing your case. Your attorney is aware of cases interpreting legal exemptions and can help you identify property that may be at-risk.