[WSBARP] effect of bkr discharge on judgment attaching to homestead

[PrestonFoskey]

The debt is discharged but the lien is not affected.  The Debtor should have moved for a lien avoidance in the bankruptcy if it affected his homestead exemption.  Debtor could likely reopen the case to accomplish this if it has been discharged and closed.  If Debtor's interest in homestead was in excess of $125,000 and he or she took state exemptions some or all of the lien may not be avoidable.

Preston L. Foskey, Attorney at Law
WSBA # 12509
Preston L. Foskey, P. S.
8248 East D Street
Tacoma, Washington 98404-1042
Phone:  253.535.5829  Fax:  253.535.9391
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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rod Harmon
Sent: Tuesday, June 02, 2015 8:51 AM
To: REALPROP at yahoogroups.com; 'WSBA Real Property Listserv'
Subject: [WSBARP] effect of bkr discharge on judgment attaching to homestead

A $75,000 judgment is recorded and becomes a lien on the value of the judgment debtor's homestead property in excess of the $125,000 homestead exemption.  There are no other liens on the property.  Six months later, the judgment debtor files a chapter 7 bankruptcy case and obtains a discharge.   What effect does the bkr discharge have on the judgment?

As I understand it, the discharge eliminates unsecured debts, but not secured debts.  So, the judgment is still owed and is a lien on the homestead property, but can only be collected against the value in excess of the homestead exemption.  But does the bkr discharge fix in time when that excess is calculated?  Let's say that at the time the bkr case is filed the homestead has a market value of $150,000.  But five years after the bkr discharge, the judgment creditor has the sheriff levy on the homestead property, which is now worth $250,000.   How much of the judgment can the judgment creditor collect?  The $25,000 excess value at the time of bkr filing?  Or up to the $125,000 excess value at the time of levy? Or is there another possibility.

I seem to recall a case somewhere, maybe a bkr case, that said that after discharge the creditor could only collect the judgment up to the amount of the excess value at the time of the bkr filing, but I can't locate it and am not sure I remember it accurately.  I would very much appreciate anyone's thoughts.

Rod Harmon

RODNEY T. HARMON
       Attorney at Law
         P.O. Box 1066
      Bothell, WA   98041
     Tel:   (425) 402-7800
     Fax:  (425) 458-9096
    www.rodharmon.com<http://www.rodharmon.com>
   rodharmon at msn.com<mailto:rodharmon at msn.com>


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