Guns to Get Own Exemption?

From the Bankruptcy Roundtable Digest


CLLA: update: CRS Report Examines Legislation Exempting Firearms in

Posted by: "David P. Goch" dgoch@wc-b.com



A May 2nd Congressional Research Service report examines HR 1181, the "Protecting Gun Owners in Bankruptcy Act of 2011," and its goal of exempting firearms under the Bankruptcy Code. H.R. 1181, has 23
co-sponsors and has been referred to the House Committee on the Judiciary.

According to the report, the Supreme Court's decisions on the Second Amendment and the right to "keep and bear arms" has raised the question as to whether firearms are protected from the reach of creditors under
federal or state laws.

While a number of states have provisions shielding firearms from creditors' claims, there is no such provision in the Bankruptcy Code. According to the report, there is a great variety in the protection states provide for firearms with most states providing no explicit protection. Of the states that provide explicit protection, the
conditions for providing protection vary. Some states limit the exemption by both the number and value of the firearms; other states specify the type of firearms that can be exempted. In most states that
allow an exemption for firearms, the exemption is not dependent on the way in which the firearm is used; however Ohio, Oklahoma, and Wisconsin, exempt guns for personal use only, and Louisiana requires that the firearm be used for business purposes. Both Montana and Nevada exempt "all arms ... required by law to be kept by any person" in addition to the one gun, selected by the debtor, the report states.

Section 2 of the bill amends Code Section 522(d) adding an exemption for the debtor's aggregate interest, up to a value of $3,000, "in a single, shotgun, or pistol or any combination thereof." The exemption would not
reduce the amount allowed for any other type of exemption under Section 522. Further, the bill also amends Code Section 522(f)(4)(A) to include firearms in the definition of "household goods." This provision would
apply to any number or combination of rifles, shotguns, and pistols as long as the aggregate value was no more than $3,000.