Access to the trustee's avoiding powers assists debtors in achieving the underlying purpose of the exemption statutes-- i.e., to retain property necessary to make a "fresh start." [H.R. Rep. No. 595, 95th Cong, 1st Sess. 363 (1977)]
A judicial lien is defined as a lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding. See 11 U.S.C. Section 101(36); Bryant v. General Elec. Credit Corp. (ND Il 1985) 58 BR 144, 146 -- wage garnishment is a judicial lien subject to Section 522(f) avoidance.
Individual debtors have the power to avoid certain liens under 11 U.S.C. Section 522(f) to the extent that they impair exemptions to which the debtors would otherwise be entitled. Where this may come into play in your case or situation is that a creditor, say Discover or Visa, sues you in superior court and obtains a judgment. The creditor may then obtain an abstract judgment or judicial lien that may be avoidable within bankruptcy. If a lien is avoidable, which we can help you determine, a motion needs to be filed with the court to avoid the lien. Please make sure our office is aware of the lien and that you retain us not only for the petition and schedules but also for the lien avoidance work. The no-look fee in the Central District of California's Court Manual is $750 for this type of motion, which is an additional fee on top of your regular case fee. We can be retained for this service either prior to the filing of your case, or after, but it needs to be prior to your meeting of creditors so we have time to do the work before your discharge or case closes.
The types of liens that are subject to avoidance under Section 522(f) are:
- Judicial liens; and
- nonpurchase money, nonpossessory security interests in personal property (e.g., household goods, jewelry, "tools of trade", professionally prescribed health aids, etc.). [11 U.S.C. Section 522(f); see Owen v. Owen (1991) 500 US 305, 313-314, 111 S.Ct. 1833, 1838.
The following are generally not avoidable under Section 522(f)
- Mechanics liens
- IRS and state tax liens
- Municipal real property tax liens
- City water liens
- Attorney charging liens