Chapter 13: Court Determines Amount of Avoided Secured Liens

In Chapter 13 bankruptcy the debtor can wipe away part or all of some judicial liens. Judicial liens are liens placed on property by judgment creditors as opposed to purchase money liens which are placed on property by the vendor who sold you the property. A Chapter 13 debtor can wipe out judicial liens to the extent that the liens impair a property exemption to which the debtor is entitled under Florida law. That part of judicial liens not wiped off the property remains a reduced secured claim against the property.. A recent bankruptcy decision explored the property way to determine the amount of the remaining lien.

In this case, a debtor owned a truck fee and clear. A judgment creditor levied upon the otherwise unencumbered vehicle. The creditor’s lien was approximately $8,000. The truck value at time of filing was approximately $10,000, and the court found the debtor could apply to the truck a $6,000 property exemption. The court avoided the creditor’s judicial lien against the truck to the extent of the $6,000 exemption. The debtor claimed the remaining secured claim was $2,000 (the original lien amount less the exemption). The creditor claimed it retained a $4,000 secured claim (truck value less the exemption).

The court gave the creditor an secured claim for $4,000 representing the difference between the exemption and the current truck value, plus an unsecured claim for $2,000 representing the amount of the lien avoidance. In re: Mahendra Mootosammy, 07-6553

posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida

Comments

[do-it-yourself bankruptcy]

Courts are coming up with good ways to protect creditors. I think in cases where there are assets, and the petitioner was simply irresponsible financially, they should allow for the creditors to have recourse such as this. The area of student loans is a much dicier issue though - very murky.

[Jeremy]

Jon,

I would walk on the loan. Stop paying now and save the money and live there as long as possible.

[Larry Carson]

I just paid off my bankruptcy attorney for chapter 7,it took me over a year,today I was hit with a lawsuit so i called my attorneys office,she told me it would be quicker to mail my questinaire back to my attorneys office.I came across this,Have i filed before i checked yes ,but they want the case number of my chapter 13 in 97 but i dont have these anymore,case number date of filing name of judge,what should i do about that,or just say i dont have that info?

[jon ells]

My lender is currently seeking to foreclose on our property. We have spoke with different attorneys and get many different answers. The house is worth $50,000 less than what we paid. We tried to sell but with no luck. We were told the house is not worth saving because our value has dropped. The house payment and other bills put a financial strain on us. Any advice would be appreciated. Thanks, Jon

[Char]

we know attorneys can't hold onto their clients bankruptcy records forever.
www.bankruptcy-records.us is a website to assist the public in getting their bankruptcy records fast and usually costs less money than the courthouse will charge.