                    REVISED DECEMBER 13, 2001
              IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                   __________________________

                          No. 00-20898
                   __________________________


The Matter of: MICHAEL ZIBMAN; JAMIE BAILEY ZIBMAN, Debtors


MICHAEL ZIBMAN; JAMIE BAILEY ZIBMAN
                                                         Appellees

                              versus


RODNEY D. TOW, Trustee

                                                         Appellant

       ___________________________________________________

          Appeal from the United States District Court
               For the Southern District of Texas

       ___________________________________________________
                        September 28, 2001
Before JOLLY, WIENER, and SMITH, Circuit Judges.

WIENER, Circuit Judge

     Appellant Rodney Tow, Trustee, appeals the order of the United

States District Court affirming the final order of the United

States Bankruptcy Court for the Southern District of Texas.    The

Bankruptcy court’s order denied the Trustee’s objection to the

claim of exemption for proceeds from the pre-petition sale of the

homestead filed by Appellees, Debtors Michael and Jamie Zibman,

holding, inter alia, that because the Zibmans’ bankruptcy petition

                                1
was filed during the    six months in which proceeds from the sale of

a homestead enjoy protection from creditors under Texas law, the

proceeds remained permanently exempt from the bankruptcy estate.

Because the facts and the law applicable on the date that a

petition for bankruptcy is filed determine the exemptions available

to a debtor, and because the 6-month time limit is an integral

feature of Texas’s statutory exemption for proceeds from the sale

of a homestead, we reverse the district court’s order, render

judgment for the Trustee, and remand this matter to the bankruptcy

court for continued proceedings consistent herewith.

                        I. Facts and Proceedings

      The facts in this case are simple and basically uncontested.

The Zibmans owned two jewelry stores in Texas, one in San Antonio,

and   one   in   Houston.   In   1998,   they   began   having   financial

difficulty, and in October 1998, they closed the San Antonio store.

Michael moved to Massachusetts to work in the jewelry business,

while Jamie remained in Texas to manage their Houston store.           On

November 27, 1998, the Zibmans sold their Houston home and placed

the proceeds from the sale ($120,665.23) in a general, unsegregated

account that already held approximately $8,500.1        In January 1999,

the Zibmans closed the Houston store, and on February 5, 1999,

Jamie moved to Massachusetts to join Michael.       Four days later, on


      1
       Between the date of the house sale and the Zibmans’ filing
for bankruptcy, the Zibmans wrote checks from this account, and
deposited other funds into it.

                                    2
February 9, 1999, the Zibmans filed for bankruptcy protection under

Chapter 7, claiming as exempt the full amount of the proceeds from

the sale of their Houston homestead.   On the same day, the Zibmans

moved into a townhome in Massachusetts under a 6-month lease.   The

Zibmans both testified that they had no intention of reinvesting

the proceeds in a Texas homestead within six months following the

date of the sale or in the foreseeable future, and they did not, in

fact, purchase another Texas homestead within the 6-month period.

     In May 1999, just over six months after the Zibmans had sold

their home, the Trustee objected to the Zibmans’ claimed exemption

of the sale proceeds on the alternative grounds that (1) under

Texas law, the proceeds from a homestead sale that have not been

reinvested in another Texas homestead within six months after the

sale cease to be exempt from creditors’ claims; and (2) the Zibmans

had waived the exemption of the proceeds by abandonment and by

commingling the proceeds with other funds.    The bankruptcy court

and, on appeal, the district court, relied on the “snapshot” rule2

to allow the exemption as permanent, that is, no longer subject to

automatic expiration upon failure to reinvest within six months.

The court also held that the debtors had not waived the exemption

as of the date the petition was filed either through abandonment or

by commingling the sale proceeds with other funds.     The Trustee


     2
       See White v. Stump, 266 U.S. 310, 312 (1924) (explaining
that the “state laws existing when the [bankruptcy] petition is
filed [are] the measure of the right to exemptions”).

                                3
timely appealed the district court’s order affirming the bankruptcy

court.



                                   II. Analysis

A. Jurisdiction and Standard of Review

      District courts’ jurisdiction to hear appeals in bankruptcy

cases encompasses final judgments, orders, and decrees, as well as

certain interlocutory orders and decrees.3              Courts of appeals, in

turn,     have    jurisdiction     to   hear   bankruptcy   appeals,    but   the

appellate courts’ jurisdiction is limited to “all final decisions,

judgments, orders, and decrees” of district courts or a bankruptcy

appellate panel.4       An order that grants or denies an exemption is

deemed a final order for the purpose of 28 U.S.C. § 158(d).5

Determination whether an exemption from the bankruptcy estate

exists is a question of law, which we review de novo.6



B. Exemption of Proceeds from the Sale of a Homestead under Texas

Law

      The       bankruptcy   and   district    courts   determined     that   the

Zibmans’ filing of a bankruptcy petition during the 6-month period



      3
          28 U.S.C. § 158(a).
      4
          28 U.S.C. § 158(d)
      5
          In re England, 975 F.2d 1168, 1172 (5th Cir. 1992).
      6
          Id.

                                          4
in which proceeds from the sale of a homestead enjoy protection

from creditors under Texas law froze the exemption as it existed on

the date of filing.    These courts reasoned that, on that one day,

the exemption was in existence, and subsequent events — here, the

expiration of the balance of the 6-month period without reinvesting

the proceeds — could not retouch the snapshot.               The Trustee

contends that this determination was error because the 6-month

limit of the exemption for proceeds is an integral feature of the

Texas law “applicable on the date of the filing of the [bankruptcy]

petition.”7     Therefore,   reasoned    the   Trustee,   this   essential

element of the exemption must continue in effect even during the

pendency of a bankruptcy case.       We agree with the Trustee.8

     Under the Bankruptcy Code, the commencement of a bankruptcy

case creates an estate comprising all legal and equitable interests

in property (including potentially exempt property) of the debtor

as of that date.9     The debtor may have certain property exempted

from the bankruptcy estate by electing to take advantage of either

the federal exemption provisions in the Bankruptcy Code or those



     7
         11 U.S.C. § 522(b)(2)(A).
     8
       Because we conclude that, barring tolling, the exemption
for the proceeds expires after six months, regardless of the
intervening petition filing, we do not reach the Trustee’s
additional points of error relating to waiver of the exemption by
abandonment of the proceeds or by commingling of the proceeds
with other funds.
     9
       11 U.S.C. § 541; Owen v. Owen, 500 U.S. 305, 308 (1991);
In re Reed, 184 B.R. 733, 737 (Bankr. W.D. Tex. 1995).

                                     5
provided under state law.10       As to the state-law alternative, the

Bankruptcy Code provides the exemption for

             any property that is exempt under...State or
             local law that is applicable on the date of
             the filing of the petition at the place in
             which the debtor’s domicile has been located
             for the 180 days immediately preceding the
             date of the filing of the petition, or for a
             longer portion of such 180-day period than in
             any other place....11

As   the    Supreme   Court   noted   in   Owen   v.   Owen,12   “[n]othing   in

subsection (b) [of § 522] (or elsewhere in the Code) limits a

State’s power to restrict the scope of its exemptions; indeed, it

could theoretically accord no exemptions at all.”13              Any exemptions

claimed, however, are determined by the facts and the law as they

exist on the date of filing the bankruptcy petition.14              This focus



      10
       11 U.S.C. § 522(b) (“[A]n individual debtor               may exempt
from property of the estate the property listed in               either
paragraph (1) [the list of federal exemptions] or,               in the
alternative, paragraph (2) [the provision allowing               the
application of state law].”).
      11
           11 U.S.C. § 522(b)(2)(A).
      12
           500 U.S. 305 (1991).
      13
           Id. at 308.
      14
       See White v. Stump, 266 U.S. 310, 312 (1924) (“[The
Bankruptcy Code] makes the state laws existing when the petition
is filed the measure of the right to exemptions.”); In re
Sandoval, 103 F.3d 20, 23 (5th Cir. 1997) (holding that “facts as
they existed on the date of the original bankruptcy petition,”
not on the date of conversion from Chapter 13 to Chapter 7
bankruptcy, applied); In re John Taylor Co., 935 F.2d 75, 78 (5th
Cir. 1991) (“Taylor’s homestead exemption must...be determined by
reference to the law existing in 1979 — the time of the filing of
the petitions.”).

                                       6
on the status as of the date of filing is commonly referred to as

the “snapshot” approach to determining the extent of the bankruptcy

estate and the scope of the exemptions.

      When the Zibmans filed their bankruptcy petition on February

9, 1999, they exercised the § 522 option and elected to claim

exemptions offered by Texas state law.          Now as in February of 1999,

Texas law provides a homestead exemption, as follows:

             41.001. Interests in Land Exempt from Seizure

             (a)   A homestead...[is] exempt from seizure
             for the claims of creditors except for
             encumbrances properly fixed on homestead
             property.

             ....

             (c) The homestead claimant’s proceeds of a
             sale of a homestead are not subject to seizure
             for a creditor’s claim for six months after
             the date of sale.15

As noted above, the Zibmans sold their Texas homestead in late

November 1998, and filed for bankruptcy just over three months

later, in early February 1999.             When, by May 1999, the 6-month

statutory protection period had expired without the Zibmans’ having

reinvested their homestead sale proceeds in a new Texas homestead,

the   Trustee    objected   to   the   exemption   of   the   proceeds.    In

rejecting the Trustee’s objection, the bankruptcy court stated

that, “[o]n the petition date, these funds were exempt.                   Post

petition acts or failures to act does [sic] not effect [sic] the


      15
           Tex. Prop. Code § 41.001.

                                       7
exempt status.”

      In reaching its conclusion, the bankruptcy court cited In re

Harlan,16 a 1983 Bankruptcy Court case that also involved the filing

of   a bankruptcy    petition     during   the    6-month   period   in   which

proceeds from the sale of a homestead continued to enjoy protection

under the Texas statute.       The Harlan court in turn relied on White

v. Stump17 to arrive at its holding that “the debtors’ homestead

proceeds      were    exempt      on   the       date   that    they      filed

their...petition...because their petition was filed within six

months of the date of the sale of their homestead[,]” and that

“because the substantive rights of the parties were fixed on the

date of the filing of the petition the proceeds must, therefore, be

allowed as exempt, regardless of what use the debtors might make of

the proceeds after the date of the filing of their petition.”18              As

the following analysis will show, White v. Stump introduced the

“snapshot” theory, but both courts misapplied the holding of White

to this fact pattern.          A later Supreme Court case, Myers v.

Matley,19 illustrates the appropriate refinement of White when the

state law in question includes a condition on its application.

      In Myers v. Matley, the Supreme Court refined White’s snapshot



      16
           32 B.R. 91 (Bankr. W.D. Tex. 1983).
      17
           266 U.S. 310 (1924).
      18
           Harlan, 32 B.R. at 93.
      19
           318 U.S. 622 (1943).

                                       8
principle, analyzing a slightly more complex Nevada state law

situation.    As in White, the state law provided that either member

of a married couple could file a declaration to create a homestead

exemption, and, as in White, the debtors attempted to file the

declaration after a petition in bankruptcy was filed against the

debtor.    The Myers Court did not blindly apply White with a broad

brush and deny the debtors’ attempt to file the declaration,

however.    Instead, it reviewed Nevada law and discovered that “the

settled law of the State entitles the debtor to his homestead

exemption if the selection and recording occurs at any time before

actual sale under execution.”           The Court linked to this the

observation that “under the theory of the present [Bankruptcy] Act,

... [t]he trustee is vested not only with the title of the bankrupt

but clothed with the right of an execution creditor with a levy on

the property which passes into the trustee’s custody.”20     From this

the Myers Court concluded that, taking all facets of Nevada law

into account, the post-petition declaration should be allowed,

because state law allowed such declarations after levy, up until

the execution sale:

            In conformity to the principle announced in
            White v. Stump, that the bankrupt’s right to a
            homestead exemption becomes fixed at the date
            of the filing ... and cannot thereafter be
            enlarged or altered by anything the bankrupt
            may do, it remains true that, under the law of
            Nevada, the right to make and record the


     20
          Myers, 318 U.S. at 627.

                                    9
            necessary declaration of homestead existed in
            the bankrupt at the date of filing the
            petition, as it would have existed in case a
            levy had been made upon the property.21

Myers thus confirms the basic holding from White v. Stump that the

law and facts existing on the date of filing the bankruptcy

petition determine the existence of available exemptions, but flags

the important reminder that it is the entire state law applicable

on the filing date that is determinative.        Courts cannot apply a

juridical airbrush to excise offending images necessarily pictured

in the petition-date snapshot.

     The bankruptcy and district courts did not apply the entire

Texas law that is applicable in the instant case.          Instead, their

denial of the Trustee’s objection to the exemption in the instant

case, “freezing” the exemption for the proceeds simply because it

was in effect at the date the petition was filed, effectively read

the 6-month limitation out of the statute, and transformed an

explicitly    limited   exemption   into   a   permanent    one.    This

transgresses the teaching of Myers that the entire state law

applicable on the date of filing must be considered.

     In a case virtually identical to this one, the Ninth Circuit

rejected the debtor’s similar attempt to enlarge the homestead

exemption, saying that, “[a]cceptance of the debtor’s position

would frustrate the objective of the California homestead exemption



     21
          Id. at 628 (emphasis added).

                                    10
and the bankruptcy act itself, which limits exemptions to that

provided by state or federal law.”22 As observed by the Owen Court,

a state may choose not to provide exemptions at all, or it may

provide exemptions limited as it sees fit.           When a debtor elects to

avail himself of the exemptions the state provides, he agrees to

take the fat with the lean; he has signed on to the rights (like

the   post-petition    right    to    file    in   Myers)   but    also    to   the

limitations (like the temporal element of the reinvestment feature

of California’s homestead exemption in Golden) integral in those

exemptions     as   well.      In    Texas,   the    6-month      limitation    is

inextricably intertwined with the exemption the state has chosen to

provide for proceeds from the sale of the homestead.                As an Oregon

bankruptcy court so aptly observed, “This court finds nothing in

the Bankruptcy Code that requires or allows it to fragment the

state law in this manner to grant a benefit to the debtors they

would not have received if they had not filed bankruptcy.”23

      Our decision today conforms with the objective of the Texas’s

exemption for proceeds from the sale of a homestead.                      In In re

England,24 we focused on this exemption, reviewing in particular the

legislative intent in providing the exemption.              We expressly noted



      22
           In re Golden, 789 F.2d 698, 700 (9th Cir. 1986) (emphasis
added).
      23
           In re Earnest, 42 B.R. 395, 399 (Bankr. D. Ore. 1984).
      24
           975 F.2d 1168 (5th Cir. 1992).

                                       11
in England that Texas law originally provided only for an exemption

of the homestead (that is, the real property itself), and that the

objectives of the exemption were to provide “a secure asylum of

which the family cannot be deprived by creditors,”25 and to “support

the   public     policy      of   preventing     homelessness      among    Texas

residents.”26        Historically, the absence of an exemption of the

proceeds from the voluntary sale or exchange of the homestead

resulted in many persons being left homeless when they sold their

homestead with the intention of investing the proceeds in another

homestead.27     In response to this problem, the Texas Legislature

passed the proceeds exemption statute.                 As we announced in no

uncertain terms in England, “[t]he object of the proceeds exemption

statute was solely to allow the claimant to invest the proceeds in

another     homestead,      not   to   protect   the   proceeds,    in     and   of

themselves.”28

      When the Zibmans failed to invest the proceeds from the sale

of their Houston homestead in another Texas homestead within the

allotted     time,    the   exemption    on   these    proceeds   evanesced      by

operation of law.       Allowing the intervening bankruptcy petition to


      25
       Id. at 1174 (quoting Herman Iken and Co. v. Olenick, 42
Tex. 195, 198 (1875)).
      26
           Id. at 1174.
      27
           Id.
      28
       Id. at 1174-75 (first emphasis in original; second
emphasis added).

                                         12
improve the Zibmans’ pre-petition exemption by expurgating the 6-

month clock and thereby freezing the exemption permanently would

not only require a fragmented reading of state law, but would

contravene the purpose of the exemption, transforming it into a

protection of the proceeds, in and of themselves.          This we refuse

to do.



                             III. Conclusion

     The Texas statute that provides an exemption for proceeds from

the sale of a homestead contains a temporal element that explicitly

limits the exemption to six months.          When the Zibmans failed to

reinvest    the   proceeds   in   another   Texas   homestead   within   the

statutory   time   period,   those   proceeds   lost   their    exemption,29

freeing the Trustee to reach the proceeds as part of the bankruptcy


     29
       The Zibmans contend that the Trustee is estopped from
reaching the proceeds at the end of the 6-month period because he
advised the Zibmans at the creditors’ meeting not to deplete the
proceeds until he could “figure out what to do.” This argument
might have merit on other facts, but has none here. There is no
record evidence that, but for the Trustee’s advice, the Zibmans
would have used to proceeds to invest in another homestead. On
the contrary, the record demonstrates that, by the time the
creditors’ meeting took place, Michael had already moved to
Massachusetts, Jamie had joined him, they had filed the
bankruptcy petition, and both had stated that they had no
intention of investing the proceeds in a Texas homestead within
the 6-month time frame. In fact, Michael Zibman stated at the
same meeting that, prior to the meeting, they (the Zibmans) had
been “advised not to touch [the proceeds,] not to do anything
with [them],” whereupon the Trustee stated, “Well, I am going to
let you and your attorney talk about that.” These flaccid facts
are indeed the classic reed too slender upon which to lean a
claim for estoppel.

                                     13
estate.30   For the foregoing reasons, we reverse the district

court’s affirmance of the bankruptcy court’s judgment, render

judgment for the Trustee, and remand this matter to the bankruptcy

court for continued proceedings consistent herewith.

REVERSED, RENDERED, and REMANDED.




     30
       Although the Zibmans allude in their argument to the
possibility that the six months could be tolled during the
bankruptcy proceeding, they did not seek such tolling in the
bankruptcy court before the balance that remained on the 6-month
period at filing eventually ran out. We therefore do not address
that issue except to note that a Texas Court of Appeals has
allowed the six months to be tolled during periods of dispute.
See Jones v. Maroney, 619 S.W.2d 296 (Tex. Civ. App.-- Houston
[1st Dist] 1981).

                               14
