Carter v. Heimer (In re Carter)
- Citation:
- Eight Circuit Bankruptcy Appellate Panel, No. 11-6073 (March 13, 2012)
- Tag(s):
-
- Ruling:
- Where a judgment creditor satisies a senior consensual lien on property of the debtor in preparation for a sheriff's sale, the judgment creditor is subrogated to the rights of the consensual lienholder and the debtor may not use section 522(f) of the Bankruptcy Code to avoid the senior consensual lien now held by the judgment creditor.
- Procedural context:
- Appeal from a Bankruptcy Court decision denying the debtor's motion to avoid a lien pursuant to section 522(f)(1) of the Bankruptcy Code.
- Facts:
- An Iowa state court entered judgment in favor of Heimer against Carter in the amount of $30,230.74 and issued a writ of execution ordering the sheriff to sell Carter's vehicle to satisfy the judgment. The Bank held a senior consensual lien on the vehicle to secure a claim in the amount of $21,299.79. In compliance with Iowa state law, which requires a levying creditor to satisfy all consensual liens before the sheriff's sale, Heimer paid the Bank $21,299.79 to satisfy the senior consensual lien. Before the sheriff's sale could be consummated, Heimer filed bankruptcy, claimed a $13,600 exemption in the vehicle, and moved to avoid Heimer's lien pursuant to section 522(f) because it impaired his exemption, arguing that Heimer held a single judicial lien. Heimer argued that he held two separate liens: a consensual lien that could not be avoided, and a separate judicial lien that could be avoided. The Court agreed with Heimer, holding that under Iowa state law, Heimer was subrogated to the rights of the Bank when he satisfied the Bank's consensual lien. Therefore, Carter could not avoid Heimer's consensual lien on the vehicle.
- Judge(s):
- Venters, Saladino and Nail
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