Central District Consumer Bankruptcy Attorney's Association

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Sounds to me like Farrey was a good read for you.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
t_mannis
Sent: Wednesday, April 28, 2010 7:41 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Re: Motion to Avoid Lien Question
Thank you for that cite, David. I read that opinion, and its not analogous
to my case (not analogous in a good way). Unless I'm mistaken, I'm in good
shape. Farrey said:
"1. Section 522(f)(1) requires a debtor to have possessed an interest to
which a lien attached, before it attached, to avoid the fixing of a lien on
that interest."
In my case, she did. She was awarded the property in its entirety by the
State Court on August 18th. Creditor's judgment lien, which had nothing to
do with the divorce, attached by virtue of its recordation on August 19th.
One day too late - she already possessed her interest in the entirety. The
holding also says:
"This reading fully comports with 522(f)'s purpose, which is to protect the
debtor's exempt property, and its legislative history, which suggests that
Congress primarily intended 522(f)(1) as a device to thwart creditors who,
sensing an impending bankruptcy, rush to court to obtain a judgment to
defeat the debtor's exemptions."
In my case, this is exactly what the creditor did. Farrey goes on...
"2. Farrey's lien cannot be avoided under 522(f)(1). The parties agree that,
under state law, the divorce decree extinguished their joint tenancy, in
which each had an undivided one-half interest, and created new interests in
place of the old. Thus, her lien fixed not on Sander foot's pre-existing
interest, but rather on the fee simple interest that he was awarded in the
decree that simultaneously granted Farrey her lien."
To me, the key word here is simultaneous. In my case, Debtor's interest was
acquired before, not simultaneously.
Creditor even acknowledges that the State Court ordered the property to her
in its entirety prior to his lien being recorded. His argument is that as
the property award order was not recorded, that judge's order has no effect.
I read Section 541, and as long as she has legal and/or equitable title in
any interest, which would clearly have been given to her by virtue of the
divorce decree, the entire property is hers, property of the bankruptcy
estate, and no issue with regard to avoiding the lien.
Tilem" wrote:
>
> Look at USSC decision in Farrey v. Sanderfoot. That may help you work
> through the fact pattern.
>
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
> -----Original Message-----
[mailto:cdcbaa@yahoogroups. com] On Behalf
Of
> t_mannis
> Sent: Wednesday, April 28, 2010 6:38 PM
> To: cdcbaa@yahoogroups. com
> Subject: [cdcbaa] Motion to Avoid Lien Question
>
>
>
>
> Here is the situation:
>
> Creditor sues Debtor and her spouse and receives judgment against them
(both
> of them) in April 2009.
>
> Debtor initiates dissolution proceedings with spouse, which are finalized
in
> August 2009. In the dissolution order, State court awards house, which is
in
> both spouse's names, to Debtor only. Order is signed by judge August 11th,
> 2009 and entered August 18th, 2009.
>
> Creditor records his judgment lien one day after, on August 19th, 2009.
>
> Debtor files Chap 7 in January 2010, and we move to avoid lien pursuant to
> Section 522(f). Numerically, all is well, as Debtor is entitled to
$175,000
> exemption, its impaired, have good appraisal, etc. Creditor appears to be
> holding onto one last issue. His claim seems to be that the August 18th
2009
> dissolution order was never recorded; therefore, both spouses still own
the
> home, she only had a 50% interest in the home, she's not entitled to avoid
a
> lien on property that is not hers and therefore not part of the bankruptcy
> estate, and his lien survives as to spouse's half of the property.
>
> My initial take is that the judge's order is the judge's order, recorded
or
> not, and that upon that order, she owns the property in its entirety, ex
> spouse owns none, and its all part of the bankruptcy estate per 541. I
can't
> imagine ownership or any other judge's order being contingent upon
> recordation, nor is there anything to that effect in 541. For example,
> imagine an asset case where the trustee says I want it all, I'm going to
> sell it, and ex spouse says nope, sorry, I own half because
notwithstanding
> judge's order in state court, Debtor didn't record it, sorry. I'm not even
> sure where this creditor's argument goes assuming it was correct, but was
> curious as to its validity. Any question as to whether Debtor owns this
> property in its entirety and that its part of the bankruptcy estate?
>
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Message
Sounds to me like Farrey
was a good read for you.


David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.