Opinion
Bankr. No. 00-40956, Chapter 7
June 26, 2001.
Before me is the June 7, 2001 Motion for Order Directing Register of Deeds to Satisfy Mechanic's Liens Discharged in Bankruptcy filed by Charles E. Light. As set forth below, the Motion will be denied.
Summary.
Constance Schenkel filed a Chapter 7 petition on November 9, 2000. Included in her assets were ten acres of realty that she was purchasing on contract from Charles E. Light. Debtor did not declare this property exempt. She stated Light's claim against the property exceeded its value by $2,000.
The case trustee has filed a notice stating he has not found any nonexempt assets to liquidate and pay creditors. The case will be closed shortly.
On June 7, 2001, Light filed a Motion for Order Directing Register of Deeds to Satisfy Mechanic's Liens Discharged in Bankruptcy. Through the Motion, he sought an order from the Bankruptcy Court declaring that two mechanics' liens on the property should be discharged on the county clerk of court's records. The mechanics liens, held by Gary Johnson, d/b/a Johnson Electric, and Fullerton Lumber Company, were both filed before Debtor's bankruptcy petition.
Light argues that the liens were discharged under 11 U.S.C. § 524 and have no value because there was no equity in the real property to support them.
Discussion.
Light's motion to discharge the mechanics' liens must be denied. First, Debtor's discharge only discharged her personal liability on the debts to Johnson Electric and Fullerton Lumber. 11 U.S.C. § 524(a). Any valid lien that attached to the real property before the petition date is unaffected by that discharge.
Second, a determination of the validity, priority, or extent of a lien must be made through a formal adversary proceeding. Fed.R.Bankr.P. 7001. Though an exception to that requirement exists when a debtor is seeking removal of certain liens on exempt property under § 522(f), that is not the situation presented here. The real property at issue here was not declared exempt, the relief sought by Light is not under § 522(f), and, furthermore, not all mechanics' liens are subject to removal under § 522(f).
Finally, even if Light were to file an adversary proceeding, he would have to show why this Court would have jurisdiction over this matter rather than state court. The property is not being administered by the case trustee. There are no bankruptcy law questions presented.
An order denying Light's Motion for Order Directing Register of Deeds to Satisfy Mechanic's Liens Discharged in Bankruptcy will be entered.