Chapter 7; 11 USC §§ 704(a)(1), 726, & 727; The bankruptcy “estate”; §§ 521(a)(1)(B)(i) & 541(a)(1); Tyler v. DH Capital Mgmt., Inc.; “Bad-faith” failure to disclose a cause of action; Lucius v. McLemore; Law v. Siegel; Waiver of the trustee’s objection to the “timeliness” of the amendments; Fed.R.Bankr.P. 1009(a) & 4003(b)(1); Taylor v. Freeland & Kronz

[This appeal was from the ED-MI.] Where the debtors in this bankruptcy appeal did not disclose their interest in a cause of action until years after the close of the bankruptcy case, the Supreme Court’s decision in Siegel limited the bankruptcy court’s power to disallow their claimed exemptions on the basis of fraud and bad faith, and the trustee’s objection to the amendments’ timeliness was waived. The bankruptcy trustee reopened the case after learning of the cause of action, and the debtors then amended their schedules to include “wildcard” exemptions. The bankruptcy court denied the trustee’s objection to the exemptions, reasoning that Siegel prohibits “a bankruptcy court from using its equitable powers to deny an exemption as a sanction for debtor misconduct[] . . . .” The court concluded that Siegel effectively overruled Lucius, which had “held that bankruptcy courts may use their equitable powers to sanction a debtor’s misconduct by disallowing exemptions in property concealed from the trustee . . . .” The court rejected the trustee’s argument that “Siegel applies only to bankruptcy cases that have never been closed,” and held that “under Siegel, bankruptcy courts do not have authority to use their equitable powers to disallow exemptions or amendments to exemptions due to bad faith or misconduct.” Further, the trustee waived his Rule 1009(a) timeliness argument by failing to raise the issue in his objection, and the court found that “the trustee’s contention that his Rule 1009 objection became available and relevant only after Siegel is unpersuasive.” Affirmed.