| ABI

December 9, 2024

Having Committed Fraud Doesn’t Prevent a Debtor from Vacating a Judicial Lien

If a creditor’s judicial lien is avoided, how can the creditor collect the underlying debt if it’s excepted from discharge?

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Opinion Link

View Opinion

https://abi-opinions.s3.us-east-1.amazonaws.com/Mirabal.pdf

Case Details

Case Citation

In re Mirabal, 23-10862 (Bankr. D.N.M. Dec. 2, 2024)

Case Name

In re Mirabal

Case Type

Consumer

Court

10th Circuit

New Mexico

Bankruptcy Tags

Bankruptcy Litigation

Fraud

Consumer Bankruptcy

Comments

Submitted by Christopher Klein on December 9, 2024

Bill — I have faced the question you ask and ruled that the judgment on the nondischargeable debt can be recorded post-bk with a record dates post -bk that will put it ahead of other post-bk judgments.

Submitted by Dale Schian on December 9, 2024

Hi Bill, I agree with Judge Thuma's analysis. We assess blame in determining whether or not to discharge debts; however, saints and sinners generally have an equal right to retain assets as exempt. Unless other applicable law creates an exception to the ability to exempt property, e.g., taxes, child support, or conduct such as described in fn 4 of the opinion, it's not within the discretion afforded to courts to decide who is or is not worthy of retaining exempt assets.

Submitted by Sidney Swinson on December 10, 2024

Bill: I, too, agree with the decision. The requirements of Section 522(f) to avoid to lien were met, and the holding in Law v. Seigel precludes the court from denying an exemption (or refusing to avoid a judgment lien) for equitable reasons. Even though the judgment lien against the homestead is avoided, the underlying non-dischargeable debt survives. Federal law avoiding the judgment lien supersedes any state law that may permit the refiling of the judgement lien to secure the same debt. It seems implausible that Congress would create a scenario where a debtor would have to serially file bankruptcy to repeatedly avoid a judgment lien resulting from the same judgment, even though it was excepted from the discharge.