Avoidance of Liens Security Debts Incurred in Divorce Proceeding
Key Points
  • Bankruptcy laws are very specific as to what can be or cannot be included in the bankruptcy, including any liens, judicial or otherwise.

Section 522(f)(1) of the Bankruptcy Code provides as follows:
  1. Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is

    1. a judicial lien, other than a judicial lien that secures a debt

      1. to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of the court of record, determination made in accordance with state or territorial law by a governmental unit, or property settlement agreement; and

      2. to the extent that such debt

      3. is not assigned to another entity, voluntarily, by operation of law, or otherwise; and

      4. includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support[.]



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Suggested Reading
Divorce & Money: How to Make the Best Financial Decisions
This book is a practical guide to evaluating assets during divorce. It explains how to determine the real value of marital property including houses, businesses, retirement plans and investments and how to negotiate a settlement that is fair to both sides.

Authors: Violet Woodhouse & Dale Fetherling


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