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Scott D. McFee, Ch. 13, BK08-82078 (May 14, 2009)

The court granted the debtor’s motion to avoid a lien under § 522(f)(1)(A). The debtor’s former spouse held a judgment for the property settlement due to her. The debtor later purchased a residence and filed a Chapter 13 petition. The debtor then moved to avoid the property settlement judgment lien, asserting that it impaired his homestead exemption. The creditor argued that a judgment lien cannot be avoided under § 522(f)(1)(A) unless the debtor held an interest in the property at the time the judgment lien came into existence, relying on Farrey v. Sanderfoot, 500 U.S. 291 (1991). The court distinguished this case from Farrey, noting that under Nebraska law, there are two steps when a judgment exists prior to the acquisition of a property interest: first, title vests in the judgment debtor, and second – and immediately thereafter – the judgment lien fixes. The facts in Farrey were different, in that the lien and the property interest arose simultaneously there because they resulted from the same transaction and the property interest did not exist before the lien fixed. Here, the debtor acquired his property interest first and the property settlement judgment lien immediately attached, and therefore could be avoided.

Date: 
Thursday, May 14, 2009
Judge: 
Judge Thomas L. Saladino