496 B.R. 860
Bankr. N.D. Ohio2013Background
- Debtor Ronald B. Depascale filed a Chapter 7 petition on April 9, 2013; residence valued at $144,900; encumbered by a HSBC mortgage ($143,869.42) plus Unifund and Landmark liens.
- Ohio Homestead Exemption is governed by O.R.C. § 2329.66, as amended by H.B. 479, with updated amounts and timing.
- Debtor seeks to avoid two judicial liens under 11 U.S.C. § 522(f)(1)(A) by arguing the Homestead Exemption in effect at petition governs; he asserts exemption of $132,900 as of petition date.
- Landmark asserts the applicable exemption is $23,000, arguing H.B. 479’s Section 3 applies only to liens accruing after the act and to preexisting liens the exemption remains at the pre-amendment amount.
- Hearing held; parties stipulated that if Debtor has $132,900 exemption, both liens are avoidable; otherwise an evidentiary hearing on residence value would be needed.
- Court grants motion, determining exemption is $132,900 and both Landmarks and Unifund liens are avoidable under § 522(f).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable exemption amount for lien avoidance | Depascale: use $132,900 (HB 479 increased amount as of petition) | Landmark: use $23,000 (pre-amendment amount for preexisting liens) | Exemption amount is $132,900 (as of petition date) |
| Retroactivity of HB 479 to preexisting liens | Exemption applies on petition date despite preexisting liens | HB 479 Section 3 may be retroactive limited; would impair preexisting liens | HB 479 Section 3 does not defeat application of increased exemption to preexisting liens in bankruptcy petition |
| Whether federal impairment standard controls | Impairment defined by 11 U.S.C. § 522(f)(2)(A) uses federal standard | Ohio statute could alter impairment | Federal impairment standard governs; § 522(f)(2) controls |
Key Cases Cited
- In re Zahn, 605 F.2d 323 (7th Cir. 1979) (exemption amount determined at petition date; precludes state subordination)
- Holland v. Star Bank, N.A. (In re Holland), 151 F.3d 547 (6th Cir. 1998) (federal definition of impairment governs; state law not controlling)