Opinion
CASE NO. 08-40203
12-01-2016
IN THE MATTER OF: ANGELA SUE ROMACK Debtor
NOT FOR PUBLICATION
DECISION ON MOTION TO AVOID JUDICIAL LIEN
This case was closed more that eight years ago - August 22, 2008. On October 26, 2016, debtor filed a motion to reopen the case, 11 U.S.C. § 350(b), representing that the reason for doing so was "to file a motion to avoid judicial liens that was not resolved by prior counsel." Motion to Reopen, ¶ 3. Since that is a common reason for reopening cases, see, In re Bianucci, 4 F.3d 526, 528 (7th Cir. 1993) (bankruptcy case may be reopened at any time to avoid a lien, absent prejudice to creditor), and reopening is a ministerial act which does not confer any independent relief the court granted it, ex parte. In re OORC Leasing, LLC, 359 B.R. 227 (Bankr. N.D. Ind. 2007); In re Bartlett, 326 B.R. 436 (Bankr. N.D. Ind. 2005). The matter is now before the court on the debtor's promised motion, filed pursuant to 11 U.S.C. §522(f)(1), to avoid a judicial lien, held by Haville Properties LLC, which allegedly impairs an exemption in real estate.
What the debtor did not tell the court in connection with reopening was that before filing the lien avoidance motion she first needed or wanted to amend her claimed exemptions and then, based upon the newly amended exemptions, move to avoid Haville's lien. The court regards that as a significant omission. While amendments to a debtor's voluntary petition, schedules, statements and lists do not need the court's approval (they may be filed "as a matter of course"), they must be filed "before the case is closed." Fed. R. Bankr. P. Rule 1009(a). Furthermore, this court has previously held that it is not appropriate to reopen a case so a debtor can amend their claimed exemptions and then based upon that amendment avoid a judicial lien. Bartlett, 326 B.R. 436; Matter of Clear, 1992 WL 1359570 (Bankr. N.D. Ind. 1992). To do otherwise would transform reopening from a ministerial act, which has no independent significance and confers no rights, into one which creates rights that did not otherwise exist, and that would constitute prejudice. Had the court been fully informed about the debtor's intended actions, it would have exercised its discretion much differently and would have denied the motion to reopen. That would have prevented both the amended exemptions and the motion to avoid lien.
The debtor should not be rewarded for not fully disclosing her post reopening plans and she will not be. "[A] post-closure amendment is of no effect." Bartlett, 436 B.R. at 441. Consequently, although the court will address the debtor's motion to avoid Haville's lien, it will do so based upon the exemptions debtor claimed before the case was closed.
Not every judicial lien may be avoided. Lien avoidance pursuant to §522(f)(1) is available only where the judicial lien impairs a claimed exemption. The first step in that analysis is to determine whether the debtor has actually claimed an exemption in the property in question. Since lien avoidance is available only where an exemption is impaired, if a debtor has not claimed an exemption in the property subject to the lien there is nothing for § 522(f) to protect. See, In re Berryhill, 254 B.R. 242, 243 (Bankr. N.D. Ind. 2000); In re Wall, 127 B.R. 353, 356 (Bankr. E.D. Va. 1991)("[I]t does not make sense to allow a lien to be avoided on property that has not been claimed exempt."); Swaim v. Kleven, 1:04-CV-33 (D. N.D. Ind. 2004). See also, In re Mukhi, 246 B.R. 859, 862 (Bankr. N.D. Ill. 2000)(one requirement for lien avoidance under 522(f) is that debtor claim an exemption); In re Rushdi, 174 B.R. 126, 127 (Bankr. D. Idaho 1994)(debtor has burden of showing that property is listed on debtors schedules as claimed exemption).
Debtor's claimed exemption for the property in question is $0.00. In the court's opinion, a claimed exemption of $0.00 is the equivalent of no exemption whatsoever. See, Schwab v. Reilly, 560 U.S. 770, 130 S.Ct. 2652, 2666-67 (2010) (exemptions claimed by the debtor can be taken at face value). See also, In re Berryhill, 254 B.R. 242 (Bankr. N.D. Ind. 2000); Swaim v. Kleven, 1:04-cv-00033 (D. N.D. Ind. 2004); In re Coppola, 2013 WL 3794098 (Bankr. E.D. N.Y. 2013). Without an exemption in the property there is nothing that § 522(f) can be used to protect, and debtor's motion should be denied. An order doing so will be entered.
Dated: December 1, 2016.
/s/ Robert E . Grant
Chief Judge, United States Bankruptcy Court