Roderick E. Carlson and Jeanette S. Carlson - Page 27




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          cally title 11 exempt property of a debtor in bankruptcy, includ-           
          ing property exempt from the claims of creditors under applicable           
          State law, in determining whether that debtor is insolvent for              
          purposes of the Federal bankruptcy laws.  See S. Rept. 96-1035 at           
          24 (1980), 1980-2 C.B. 620, 632.12  However, Congress decided to,           
          and did, adopt a different definition of the term “insolvent” in            
          section 108(d)(3) for purposes of section 108.  Unlike the                  
          definition of the term “insolvent” in section 101(26) of the 1978           
          Bankruptcy Act, 11 U.S.C. sec. 101(26) (Supp. II, 1978), which              
          Congress adopted for purposes of the Federal bankruptcy laws, the           
          definition of that term which Congress adopted for purposes of              
          section 108 does not specifically exclude assets of a debtor that           
          are exempt from the claims of creditors under applicable State              
          law or any other title 11 exempt property in determining whether            
          the debtor is insolvent.  We conclude that the decision of                  

               12The Senate report accompanying the 1980 Bankruptcy Tax Act           
          states in pertinent part:                                                   
                    Under bankruptcy law, the commencement of a liqui-                
               dation or reorganization case involving an individual                  
               debtor creates an “estate” which consists of property                  
               formerly belonging to the debtor.  The bankruptcy                      
               estate generally is administered by a trustee for the                  
               benefit of creditors, and it may derive its own income                 
               and incur expenditures.  At the same time, the individ-                
               ual is given a “fresh start”–-that is, wages earned by                 
               the individual after commencement of the case and                      
               after-acquired property do not become part of the                      
               bankruptcy estate, but belong to the individual, and                   
               certain property may be set aside as exempt.                           
          S. Rept. 96-1035 at 24 (1980), 1980-2 C.B. 620, 632.                        





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