Bankruptcy and a Book of Mormon

Note that this isn’t the Book of Mormon the debtor got to keep

I was walking through the mailroom at work today and, out of the corner of my eye, I noticed the word “Mormon” in newspaper headline. Mormonism doesn’t come up much in the news around here, so I took a second look. On the front page—in fact, above the fold—of the Chicago Daily Law Bulletin, a legal newspaper here, was the headline “Debtor can keep rare Book of Mormon.”[fn1]

Now, I’m not a bankruptcy person,[fn2] but the story is too good to pass up, so here goes:

Anna Robinson is an employee at a library in Anna, IL, a (really) small town in the southwest corner of the state. She is also a lifelong Mormon. In 2003, her employer charged her with clearing old and damaged books from the library storeroom.

While she was cleaning it out, she discovered a first edition Book of Mormon. The library let her keep it, and, although it was missing the title page and had some other damage, she had it authenticated, and it was appraised at a value of at least $10,000.[fn3]

Robinson naturally doesn’t use the Book of Mormon. Rather, she keeps it in a Ziploc bag,[fn4] and occasionally pulls it out to show to her kids and to other church members.

At some point, Robinson filed for Chapter 7 bankruptcy. Chapter 7 provides for the sale of most of the debtor’s property, with the proceeds going to pay creditors. As a policy matter, though, we don’t want all of a debtor’s property to be sold—even bankrupt debtors need clothes to wear, a place to live, and some other assets; otherwise, the state would ultimately end up supporting her.

As a result, some property is treated as exempt; debtors get to keep that property, and creditors don’t get their hands on it. And, although the bankruptcy law is a federal law, it provides that debtors can choose between federal and state exemptions.

Illinois law provides that exempt property includes, among a handful of other things:

The necessary wearing apparel, bible, school books, and family pictures of the debtor and the debtor’s dependents.

Interestingly enough, the bankruptcy trustee didn’t argue that the word “bible” would exclude the Book of Mormon; apparently, “bible” in this context means “a religious text.” The trustee did argue that the statute only exempted one bible, though, and Robinson conceded that she had fifteen other copies of the Book of Mormon (including on her iPhone and iPad). The purpose of the exemption for bibles, the trustee argued, was to allow a debtor to keep a bible for devotional purposes. Any of her other fifteen copies would work just as well, the trustee argued.

Actually, the trustee argued that any of her other fifteen copies would work better. She conceded that she didn’t use the first edition Book of Mormon for devotional purposes. It was fragile, and she rarely took it out of its Ziploc home. It should be sold, the trustee argued, so that the proceeds could go to her creditors.

The bankruptcy court agreed, but, on appeal, the district court did not. Neither did the Seventh Circuit. The Seventh Circuit said that the language of the exemption statute was clear: debtors could exclude a bible from their bankruptcy estate. Even if it was meant to preserve debtors’ ability to read devotionally, that’s not what the statute said. And the statute did not place a maximum value on an exempt bible.

And, as a result, Robinson will be able to keep her first edition copy of the Book of Mormon.

—

[fn1] Technically, the story appeared about two weeks ago, but I just saw it today.—

[fn2] (though I did do well in my bankruptcy class back when I was in law school!)

[fn3] A little bit from my world here: if she got a book worth $10,000 from her employer, it would be income to her, and she would need to pay taxes on that $10,000. Did she? No idea; it doesn’t seem to have been of any interest to the bankruptcy court; even if it had been, as long as she filed her tax return for 2003 in a timely fashion, the statute of limitations would have run.

[fn4] For all of our antique books people out there, does that make you cringe? or are Ziploc bags a standard storage device?