Matter of Barner, Bankruptcy No. 81-01378
Decision Date | 25 May 1982 |
Docket Number | Adv. No. 81-0844.,Bankruptcy No. 81-01378 |
Citation | 20 BR 428 |
Parties | In the Matter of Hattie BARNER, Debtor. Hattie BARNER, Plaintiff, v. ASSOCIATES FINANCIAL SERVICES COMPANY OF WISCONSIN, INC., Defendant. |
Court | U.S. Bankruptcy Court — Eastern District of Wisconsin |
Alan S. Goldberg, Milwaukee, Wis., for plaintiff.
Mark A. Phillips, Stupar, Gollin & Schuster, S.C., Milwaukee, Wis., for defendant.
Pursuant to the stipulation of the parties at the pretrial conference, the issue to be decided is whether a complaint to avoid a lien under 11 U.S.C. § 522(f) must be filed prior to discharge. The debtor, Hattie Barner, received a discharge and then filed a complaint to avoid a nonpossessory, nonpurchase money lien on her household and personal goods claimed by Associates Financial Services (Associates). Associates moved to dismiss alleging untimeliness in filing the complaint because the discharge had been granted.
11 U.S.C. § 522(f) provides in pertinent part:
In arguing that the debtor must file a lien avoidance complaint prior to discharge, Associates relies upon In re Betty Gene Adkins, 7 B.R. 325, 6 Bankr.Ct.Dec. (CRR) 997 (Bkrtcy., S.D.Cal., 1980); Associates Financial Services v. Porter, (In re James and Janice Porter), 11 B.R. 578, 7 Bankr.Ct.Dec. (CRR) 959 (Bkrtcy., W.D.Okl., 1981); and In re Gilbert Franklin Krahn, 10 B.R. 770, 7 Bankr.Ct.Dec. (CRR) 767 (Bkrtcy., E.D.Wis., 1981). The debtor relies upon Associates Financial Services v. Swanson (In re Steven Jay Swanson), 13 B.R. 851, 8 Bankr.Ct.Dec. (CRR) 13 (Bkrtcy., D.Idaho, 1981) to argue that a lien avoidance complaint can be filed after discharge.1
Some authority for the debtor's position is derived from the case of In re Smart wherein the court criticized Adkins in route to deciding that it should not fix a time limit for filing § 522(f) actions in the absence of legislative authority.
This Adkins analysis uses only one remedy designed to benefit the debtor, namely reaffirmation, to preclude the use of a second unrelated remedy, namely lien avoidance under § 522(f). While failure to take advantage of the avoidance powers of § 522(f) prior to discharge may in some instances deprive the debtor from using reaffirmation as an alternative means of retaining possession of certain property, this factor should not further serve as a burden on the debtor by preventing the use of § 522(f) itself in a proper case to avoid the effect of a lien on exempt property in a timely manner during the continued administration of the debtor\'s estate. Smart, 13 B.R. at 840.
The Swanson case, which was relied upon by the debtor echoes the view expressed in Smart wherein it states:
The fact that it may be in a debtor\'s best interest to avoid liens under § 522(f) before his time to reaffirm passes, is not a valid reason for saying he must do so before discharge or forfeit the right to do so. In most cases the exemption covers the security in its entirety and no need to reaffirm arises. Swanson, 8 Bankr.Ct. Dec. at 14.
Additional criticisms of Adkins are that it fails to take into account 11 U.S.C. § 350(b),4 which permits the court to reopen a closed case "to accord relief to a debtor," and 11 U.S.C. § 722,5 which permits a debtor to redeem property after a discharge. Baskins, 14 B.R. at 111; Gortmaker, 14 B.R. at 68.
This court believes that the foregoing criticisms of Adkins and its progeny are valid and that judicially imposed deadlines for filing lien avoidance complaints, with the exception of those promulgated by the U.S. Supreme Court pursuant to its rule making authority, are contrary to congressional intent.6 "Subsection (f) of section 522 of the Bankruptcy Code protects the debtor's exemptions, his discharge, and thus his fresh start by permitting him to avoid certain liens on exempt property."7 In this case where the debtor is attempting to protect her exemptions as well as her discharge, there is no just reason, consistent with those legislatively sanctioned objectives, to deny the debtor the opportunity to proceed on her complaint. On the other hand, if Associates has taken steps after discharge to recover property subject to its lien, it may be entitled to reimbursement of expenses. See In re Bennett, 13 B.R. at 643.
For the reasons stated above the defendant's motion to dismiss is denied.
1 Not discussed by either party are the following cases which support debtor's position: Gortmaker v. Avco (In re Jerry Gortmaker), 14 B.R. 66, 8 Bankr.Ct.Dec. (CRR) 67 (Bkrtcy., S.D., 1981); Baskins v. Household Finance (In re Carl Baskins) 14 B.R. 110, 5 Collier Bankr. Cas.2d (MB) 130; Bankr.L.Rptr. (CCH) ¶ 68,352 (Bkrtcy., E.D.N.C., 1981); Smart v. Avco (In re Granville Preston Smart), 13 B.R. 838, (New Developments) Bankr.L.Rptr. (CCH) ¶...
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