Summary of a Recent
Judicial Development in
Bankruptcy

Objection to Debtor’s Claim for
“Tools of the Trade” Exemption Rejected

Patrick Roberts
National AgLaw Center Graduate Assistant

Summary of Decision

In In re Hogrefe, No. 04-04069S, 2005 WL 1320141 (Bankr. N.D. Iowa May 26, 2005) (unreported decision), the United States Bankruptcy Court for the Northern District of Iowa rejected a trustee’s objection to a debtor’s claim to exempt a fifth-wheel trailer as a tool of the trade in the debtor’s farming activities.

Discussion

Sherman and Chantelle Hogrefe filed for joint bankruptcy protection under Chapter 7. See id. at *1. After filing, Mr. Hogrefe amended his Schedule C to claim a trailer valued at $1,500 as an exempt tool of the trade. See id. The bankruptcy trustee objected, alleging that Sherman was neither engaged in farming nor intended to farm in the future and, therefore, not entitled to claim the trailer under the “tools of the trade” exemption. See id.

The court explained that “[t]o be a farmer for the purpose of exempting tools of the trade, an individual does not need to be farming the day of the levy.” Id (citations omitted). It also explained that when determining “whether a debtor is engaged in farming in a dispute over the exemption of farm tools, the court normally examines a debtor’s past farming activities and the sincerity of the debtor’s intent to continue farming.” Id (citations omitted).

The court explained that the trustee, as the objector, has the burden of establishing that the debtor was not entitled to the exemption and held that the trustee failed to meet its burden of proof. See id. The court stated that the trustee failed to show Sherman was not farming or lacked the intent to continue farming at the time of filing for bankruptcy. See id. In so holding, the noted that as of 2005 the debtor was not currently farming and had no desire to farm. See id.

The case was decided on May 26, 2005; this summary was posted Apr. 17, 2006.