Robert D Dougan and Diane L Dougan

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILMINGTON DIVISION
IN RE:
ROBERT D. DOUGAN and
DIANE L. DOUGAN,
DEBTORS. 	CASE NO. 07-03524-8-JRL
CHAPTER 13
____________________________________________________________________________
ORDER
This matter is before the court on the debtors’ motion for confirmation of a Chapter 13 plan.
The court conducted a hearing on this matter on February 18, 2009 in Wilmington, North Carolina.
BACKGROUND
The debtors filed for relief under Chapter 13 of the Bankruptcy Code on September 24, 2007.
Cheryl Hutchens was a judgment creditor pursuant to an order entered by the North Carolina
Superior Court of Stokes County, on November 4, 2003. The judgment has since been assigned to
Chicago Title Insurance Company and Lawyers Title Insurance Company jointly.
On July 25, 2007, the Superior Court of Stokes County, entered an order finding the debtors
waived their right to designate exemptions. 	The debtors, having received notice, failed 	to file
motions to designate exemptions or request a hearing within twenty days. Such inaction is deemed
SO ORDERED.
SIGNED this 23 day of February, 2009.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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a waiver pursuant to N.C.G.S. § 1C-1603(e)(2). On the same day, a writ of execution was issued.
When executions are issued, they shall be returnable to the issuing court within 90 days. N.C.G.S.
§ 1-310. The debtors’ bankruptcy petition was filed in the middle of the 90 day period. Chicago Title
and Lawyers Title object to confirmation based on the plan’s inclusion of a residential exemption.
DISCUSSION
Household Finance Co. v. Ellis, the instructive case under North Carolina law, rejected the
idea of a permanent waiver. 107 N.C. App. 262, 419 S.E.2d 592 (1992). The court in Ellis reasoned
that requiring a debtor to waive his rights forever “contradicts the spirit of the entire statutory
section on exemptions. . . .” Id. at 595. Noting Ellis, this court, in In re Pinner, found that a waiver
of rights to claim exemptions in state court did not preclude debtors from claiming property as
exempt in bankruptcy proceedings. 146 B.R. 659, 661 (Bankr. E.D.N.C. 1992). In Pinner, two state
court orders had found the debtors waived their right to exemptions. 	There was no indication,
however, that the creditor made an attempt to execute on the Pinner property. This court held that
the previously waived exemptions had no effect. Id. We also recognized that the North Carolina
Supreme Court has taken a flexible approach to exemptions, allowing debtors to take full advantage
of their rights. Id. at 660.
Chicago Title and Lawyers Title argue that here the issued writ, having not expired before
the debtors’ petition, distinguishes the present case from Pinner. Relying on 11 U.S.C. §108(c), the
creditors assert that the writ is frozen in time. 11 U.S.C. §108(c) states:
[I]f applicable nonbankruptcy law. . .fixes a period for commencing or continuing a civil
action in a court other than a bankruptcy court on a claim against the debtor. . .and such
period has not expired before the date of the filing of the petition, then such period does not
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expire until the later of - (1) the end of such period, including any suspension of such period
occurring on or after the commencement of the case; or (2) 30 days after notice of the
termination or expiration of the stay....
Chicago Title and Lawyers Title assert that they are entitled to payment based on disallowance of
the residential exemption considering the admitted waiver and unexpired writ. This court disagrees.
A more recent case, In re Skinner, heard by Judge Stocks in the Middle District of North
Carolina dealt with this precise scenario. Skinner, No. 01-11020C-7G, 2001 WL 1699660 (Bankr.
M.D.N.C., 2001). The facts of Skinner are identical to the present case. In Skinner, a previous state
court judgment found the debtor’s right to exemption waived. Id. at *1. A writ of execution was
issued against the debtor, and the debtor filed his petition while the writ was still outstanding. Id.
The court found that upon the filed petition, the execution was no longer enforceable and effectively
terminated. Id. at *3. This conclusion was reached through the intersection of two Bankruptcy Code
provisions: specifically, § 544 which vests the ownership of property in the bankruptcy estate, and
§ 362. Discussing the latter section, the court stated that: “Under §362(a)(2) and (6) the sheriff was
immediately enjoined from acting to enforce the execution against the Debtor or any property of the
bankruptcy estate, including the property described in Debtor’s claim for exemptions in this case.”
Id. This court agrees, finding that in bankruptcy proceedings exemptions begin anew.
Based on the foregoing, the objection to confirmation is OVERRULED. 	The trustee’s
motion for confirmation of the Chapter 13 plan is ALLOWED.
END OF DOCUMENT
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