508 B.R. 43
Bankr. S.D. Ohio2014Background
- Debtor and wife hold Real Property via survivorship deed; Debtor files Chapter 7 in 2012.
- First mortgage on the Real Property exists; wife signed but notary acknowledged.
- Chase holds a recorded judgment lien against the Real Property, filed 2008.
- Farm Credit Services holds a separate judgment lien against the same property, filed 2009.
- Debtor claims a $21,625 exemption and owns a 1/2 interest in the property; strict §522(f) impairment analysis sought.
- Court must determine the extent to which Chase’s lien impairs Debtor’s exemption under §522(f).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor owns a one-half interest for §522(f) purposes. | Debtor owns half the property as survivorship tenant. | Chase contends Debtor owns 100% or half, depending on interpretation. | Debtor owns an undivided one-half interest. |
| Whether §522(f)(2)(A) requires inclusion of all liens against the property. | Strict application includes full mortgage balance. | Some courts cap by ownership percentage; but statute is plain. | The court applies §522(f)(2)(A) to include all liens. |
| Whether the full mortgage balance should be used due to defective execution by Debtor's wife. | Full mortgage balance should be included. | Irrelevant after above ruling. | Argument moot. |
| Whether Farm Credit’s lien priority affects Chase’s lien impairment. | No priority impact when equity is inadequate. | Farm Credit should be addressed first. | moot; insufficient equity to attach either lien. |
Key Cases Cited
- Brinley v. LPP Mortgage, Ltd. (In re Brinley), 403 F.3d 415 (6th Cir. 2005) (strict §522(f)(2)(A) requires inclusion of all liens; Brinley adopted mechanical application)
- In re Kolich, 328 F.3d 406 (8th Cir. 2003) (approval of strict application to include all liens under §522(f)(2)(A))
- In re Northern, 294 B.R. 821 (Bankr. E.D. Tenn. 2003) (supporting strict application of impairment analysis)