In Warfield v. Nance, No. 24-2745 (9th Cir. Oct. 14, 2025), the 9th Circuit Court of Appeals held that claim preclusion did not bar the debtor from amending the schedule of exemptions to claim a federal homestead exemption because the claim of federal bankruptcy exemptions could not have been raised or tried simultaneously with a claim of state and federal non-bankruptcy exemptions.
In May 2022, debtor Johnie Lee Nance (“Debtor”) filed a Chapter 7 case in the U.S. Bankruptcy Court in the District of Arizona (“Bankruptcy Court”). On his initial petition, Debtor chose both state and federal non-bankruptcy exemptions, claiming as exempt both his real property and a RV under Arizona’s homestead exemption. The Chapter 7 Trustee (“Trustee”) objected. In response, Debtor amended his Schedule C, claiming the same assets were exempt under Washington’s homestead exemption. The Trustee objected again, and the bankruptcy court sustained the objection. Later, Debtor filed a second amended Schedule C, electing federal exemptions and listing the same assets were exempt under the federal homestead exemption. The Bankruptcy Court held that the doctrine of claim preclusion did not bar Debtor from amending his exemptions to claim the federal homestead exemption.
Trustee appealed to the District Court for the District of Arizona (“District Court”), which reversed the Bankruptcy Court. The District Court concluded that the bankruptcy court was barred by claim preclusion from allowing Debtor to assert federal exemptions after previously denying his state exemptions.
The Ninth Circuit reversed the District Court’s ruling, stating that the claim preclusion does not bar the debtor from amending exemptions in this case.
Under Section 522(b)(1) of the Bankruptcy Code and the official Schedule C form, a debtor must choose either “state and federal non-bankruptcy exemptions” or “federal exemptions,” not both. Therefore, the federal exemption claim could not have been conveniently tried together with the earlier state exemptions; thus, the “identity of claims” element was not met to constitute claim preclusion. The Ninth Circuit aligned with the Eighth Circuit’s reasoning in In re Ladd, 450 F.3d 751 (8th Cir. 2006), emphasizing that when procedural rules prohibit simultaneous pleading, later amendments are not precluded. The Ninth Circuit also relied on the “Fresh Start Policy” in its reasoning, finding that Congress and the Bankruptcy Code intended debtors make full use of available exemptions whenever possible.
This decision once again reaffirms the principle that when a previously claimed state law exemption is denied, the debtor is not prohibited from amending their Schedule C under Fed. R. Bankr. P. 1009(a) “at any time before the case is closed” to assert a federal exemption. As long as the debtor acts in good faith and is not engaging in forum shopping for exemptions, courts will not prohibit or restrict the debtor from amending their Schedule C to select the exemptions most favorable to them.