TWISTS AND TURNS
ON THE ROAD TO AVOIDING JUDICIAL LIENS
By Dean A. Langdon
DelCotto Law Group PLLC
www.dlgfirm.com
C
onsumer bankruptcy attorneys
often encounter debtor clients
with multiple judgments against
them, which normally means there are
also multiple judicial liens. Fortunately,
the Bankruptcy Code offers a method
to avoid such liens if certain conditions
are met. 11 U.S.C. § 522(f).1 In order
to avoid a judicial lien, it must impair an
exemption to which the debtor would
have been entitled in the absence of
the lien; the statute sets out the formula
to be followed for determining whether
a lien impairs an exemption. Assuming
your client owns real property which
may be exempted, and you are aware
of the existing judicial liens, the process
can be straightforward and routine.
You gather information about the liens,
claim the exemption, do the math,
and prepare your motion to avoid the
liens. Of course, check your local rules
and forms for particular requirements,
and be mindful of properly serving
1 There are exceptions for
judicial liens securing domestic
support obligations (§ 522(f)(1)
(A)).
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CONSUMER BANKRUPTCY JOURNAL
the creditors whose liens are being
avoided. For example, my district has
a local rule which requires a motion
to identify each lien by filing date,
county and book/page number where
recorded, and identify the property
which is encumbered. E.D. Ky. LBR
4003-2. The local form used in our
sister district, the Western District of
Kentucky, requires that a copy of the
lien be attached, and that information
such as the assessed value, purchase
price/date, and fair market value
be set forth in the motion. W.D. Ky.
Bankruptcy Form I.
Reopening the case to avoid liens.
Many
consumer
debtor
attorneys are contacted by a prior client
one, two or even five years after their
bankruptcy is closed, claiming they
cannot obtain or refinance a mortgage
because of judicial liens which weren’t
avoided in their bankruptcy. While
you can contact counsel for judgment
lien holders and try to persuade them
to release their liens, they have little
Spring 2016
motivation to do so. Another avenue
for resolving unreleased judicial liens is
to reopen the bankruptcy and file the
motion to avoid the judicial liens under
11 U.S.C. § 522(f). But what if your
judge denies the motion to reopen?
That was the situation for
Joseph and Leanne Yonish, who filed
their chapter 7 case in the Northern
District of Ohio on October 31, 2011
and obtained a discharge on March
22, 2012.2 Their attorney admittedly
failed to seek avoidance of two judicial
liens, and moved to reopen the case
in July 2014. The bankruptcy judge
denied the motion to reopen, ruling that
the two-year delay was too long and
prejudicial to creditors, although none
2
In re Yonish, Case No. 158006, 2016 WL 832587 (B.A.P.
6th Cir. Mar. 3, 2016). The BAP
limited the precedential effect of
the case to the case and parties
before it, so it has no binding effect
on other courts. However, the
reasoning is useful if you are facing
such a situation.
National Association of Consumer Bankruptcy Attorneys