## Facts

- Three Chapter 7 debtors filed voluntary petitions after October 1, 1979, making the Bankruptcy Code applicable.
- Each debtor held a potential statutory damages claim against a creditor for alleged disclosure violations under the Truth in Lending Act and/or an Illinois consumer-credit statute.
- The parties agreed the causes of action became property of the bankruptcy estate under 11 U.S.C. § 541.
- Each debtor sought to exempt the causes of action under 11 U.S.C. § 522(d)(1) and § 522(d)(5), within the applicable monetary caps.
- The bankruptcy court denied the exemptions on the ground that the rights of action were not “property” exemptible under § 522(d)(5), and the district court affirmed.

## Issues

1. Whether a debtor’s statutory cause of action (including a Truth in Lending Act claim) is “property” that may be exempted under the “any property” exemption in 11 U.S.C. § 522(d)(5), subject to the statute’s value limits.

## Decision

- The Seventh Circuit reversed the district court.
- The court held that the debtors’ statutory causes of action were “property” and could be claimed as exempt under § 522(d)(5), up to the statutory dollar limit.
- The court rejected the trustee’s argument that “any property” should be limited to tangible items or to categories specifically listed elsewhere in § 522(d).

## Legal Principles

- Choses in action and other legal claims are “property” interests of economic value and are included in the bankruptcy estate under 11 U.S.C. § 541.
- The exemption scheme operates in two steps: broad inclusion of the debtor’s interests in the estate under § 541, followed by withdrawal of permitted interests through exemptions under § 522.
- The phrase “any property” in 11 U.S.C. § 522(d)(5) is expansive and includes intangible interests such as statutory causes of action, unless the statute expressly limits the exemption’s scope.
- Courts should not add limitations to § 522(d)(5) that are not present in the statutory text; the exemption is constrained by its monetary cap, not by asset type.

## Conclusion

The court held that statutory consumer-protection causes of action, including Truth in Lending Act claims, are intangible property interests that may be exempted under § 522(d)(5)’s “any property” language, provided the exemption does not exceed the applicable value limitation.


In re Smith, 640 F.2d 888 (7th Cir. 1981)