In Chapter 7 Bankruptcy, Can I Keep My Guns?


Previously we talked about whether a person can keep firearms if they file a chapter 7 bankruptcy.   The answer was then, and for now still is, that there is no exemption (allowance) for firearms in a chapter 7 bankruptcy in Wyoming. If a bankruptcy debtor owns an AR-15, a .22 rifle and a Glock 19, he can keep them in a chapter 7 only if he pays the bankruptcy trustee cash equivalent to their fair market value to “buy back” his guns.

New legislation sponsored by State Senator Drew Perkins (R-Casper), however, would change that. Under Senate File 10, a person filing for chapter 7 bankruptcy could list up to three firearms (and 1,000 rounds of ammunition for each) as exempt personal property that creditors cannot take away.

If Senate File 10 passes, it will take effect on July 1, 2016.

There is no dollar limit under proposed SF10, so for a person contemplating bankruptcy who owns high-value firearms, it may be worth waiting to see if the law changes and then file chapter 7 bankruptcy after July 1, 2016.

The bill has generated some controversy. One former banker complained in the Wyoming Tribune Eagle that the bill “promot[es] violence against creditors.

Exemption laws are designed to ensure that debtors are left with basic necessities and do not become wards of the state. Creditors are not allowed to take away a debtor’s clothing or food, for example. Firearms would fit that rationale to the extent that they are used for hunting or for home defense.

SF10 appears to be modeled after Utah’s exemption statute, which allows “one handgun, one shotgun and one shoulder arm” along with 1,000 rounds of ammo for each. Utah Code §78B-5-505. The rate of gun violence against bankers in Utah does not, however, appear to be above the national average.

Several other states also allow debtors to keep firearms, although Utah remains unique with allowing up to 3,000 rounds of ammo.  Some courts have allowed firearms to be included in the definition of “household goods”.  These jurisdictions include Alaska  (In re Shell, 295 B.R. 129 (Bankr. D. Alaska 2003)),California  (In re Dunnaway, 466 B.R. 515 (Bankr. E.D. Cal. 2012)), Georgia  (In re Raines, 161 B.R. 548 (Bankr. N.D. Ga. 1993)), Idaho  (In re Mason, 254 B.R. 764 (Bankr. D. Idaho 2000)), Kentucky  (In Re Heath 318 B.R. 115 (Bankr. W.D. Ky. 2004), Missouri  (In re Gentry, 519 B.R. 531 Bankr. W.D. Mo. 2014)),  Nebraska  (In re Karaus, 276 B.R. 227 (Bankr. D. Neb. 2002))In Tennessee, however, firearms are not “household goods” and may be seized by creditors  (In re Cottingham, 1996 Bankr. LEXIS 594 (Bankr. W.D. Tenn. Apr. 25, 1996)).

Other states expressly allow a debtor to keep firearms, often limiting the number or total dollar value. These states include Iowa Louisiana (Lousiana Stat. § 13:3881, up to $2,500 value), Montana (Montana Code Ann.§ 25-13-609) and Texas (Tex. Prop. Code section 42.0002(a)(7)).

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