Case No. 00-80757-SSMUnited States Bankruptcy Court, E.D. Virginia
October 4, 2000
MEMORANDUM OPINION
ROBERT MAYER, Bankruptcy Judge
THIS CASE came on for a hearing on October 3, 2000, on the motion of Patricio H. Alvarez and Lourdes C. Alvarez to avoid a judicial lien against their real property pursuant to § 522(f) of the United States Bankruptcy Code. No response was filed to the motion.
The motion alleges that the property has a fair market value of $229,740.00 and is encumbered by the lien of a first trust in the amount of $215,000.00. The debtors filed a homestead deed pursuant to § 34-4
of the Code of Virginia exempting $11,813.00 of the equity of the property. Jorge Zelaya and Yolanda Zelaya obtained and docketed a judgment against the debtors for $245,132.00.
Section 522(f) of the United States Bankruptcy Code permits the debtors to avoid the fixing of a lien on an interest of the debtors in property to the extent that the lien impairs an exemption to which the
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debtors would otherwise have been entitled if the lien is a judicial lien. Here the lien is a judicial lien and is avoidable. Section 522(f)(2)(a) sets forth the manner of determining the amount of a judicial lien that impairs an exemption. It is the amount by which the sum of the judicial lien, all other liens on the property and the amount of the exemption exceeds the fair market value of the property. Here, the fair market value of the property is $229,740.00. The sum of the judicial lien ($245,132.00) and all other liens, in this case only the lien of the deed of trust ($215,000.00) and of the exemption ($11,813.00) equals $471,945.00. This exceeds the fair market value of the property ($229,740.00) by $242,205.00 and is the extent of the judicial lien that may be avoided. Since the judicial lien is $245,132.00 and the amount avoided is $242,205.00, the judicial lien will remain in the reduced amount of $2,927.00 plus interest that may accrued after October 4, 2000 on $2,927.00. The interest rate will be the rate set forth in the judgment.
It appears to the court that interest on the judicial lien probably has not been computed. To the extent any additional interest would accrue, it would also be avoided. It would increase both the amount of the judicial lien and the amount avoided. The better practice is to make the mathematical computation of the amount of the lien that is not avoided so as to avoid future uncertainty. That amount is $2,927.00.