Judgment Liens Securing Nonsupport Family Law Obligations

If a judgment lien on the debtor’s homestead secures a nonsupport obligation e.g., a property settlement obligation, whether the lien may be avoided under 522(f)(1)(A) is controlled by the rationale of Farrey v. Sanderfoot, 500 U.S. 291 (1991). In that case, the Supreme Court held that a judgment lien could not be avoided under this provision unless the debtor owned the property interest before the lien attached. In that case, the parties had stipulated that, as a result of the divorce decree, the parties’ old interests in the homestead were extinguished and the debtor’s interest in the homestead represented a new interest. Therefore, the lien could not be avoided.

Several courts in the Ninth Circuit have held that the law of the relevant state results in the same extinguishment of old interests and the creation of new ones. See In re Cath, 999 F.2d 1405 (9th Cir. 1993) (Washington law); In re Barnes, 198 B.R. 779 (B.A.P. 9th Cir. 1992) (California law); In re Yerrington, 144 B.R. 96 (Bankr. 9th Cir. 1992), aff’d, 19 F.3d 32 (9th Cir. 1994) (Alaska law).

This issue took an unexpected twist in In re Stoneking, 225 B.R. 690 (B.A.P. 9th Cir. 1998). In that case, the debtor’s former spouse’s attorney had obtained a judicial lien securing his fees on the couple’s homestead while it was still community property. The community was later divided, and the home, still subject to the attorney’s lien, was awarded to the debtor as his separate property. When the debtor filed a bankruptcy petition and moved to avoid the attorney’s judgment lien under 522(f)(1), the attorney argued the motion should be denied because the debtor’s current interest in the homestead did not exist before the creation of the lien. The bankruptcy appellate panel rejected the argument, distinguishing if from the lien in Farrey v. Sanderfoot because the "lien nevertheless was not created simultaneously with the termination of the Debtor’s interests in Residence." Stoneking, 225 B.R. at 693. The lesson taught by Stoneking is that, to preserve a family law attorney’s lien, the lien should be specifically re-created as part of the judgment creating the new property interest.

Useful Online Tools

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

Recent Related Blog Posts
    All Bankruptcy Blog Posts

Related Article Archives
Cost of Divorce
Financial Planning & Divorce
Property & Debt Division
Property Valuations
Tax Aspects
    All Article Archives

Related Categories
Alimony & Spousal Support
Divorce, Dollars & Debt
Divorce Financial Planning
Taxes & Divorce
    All Categories
Related Forums
Financial Aspects
Property & Debt
Tax Aspects
    All Forums

Resources & Tools

Bookstore Promotion Discount

Start Your Divorce Online Start Your Divorce
Several Options to Get Started Today.
Divorce Tools Online Divorce Tools
Keeping it Simple to Get the Job Done.
Divorce Downloads Download Center
Instantly Download Books, Guides & Forms.
Divorce and Custody Books Discount Books
Over 100 of the Best Divorce & Custody Books.
Negotiate Online Negotiate Online
Settle your Divorce and Save.
Custody and Support Tracking Custody Scheduling
Make Sure You Document Everything.
TWO KINDS OF BANKRUPTCIES -- Individuals filing for bankruptcy choose one of two types, Chapter 7 and Chapter 13. Chapter 7, the so-called "straight bankruptcy," eliminates all dischargeable debt and stays on the debtor's credit report for 10 years, but the debtor emerges from the bankruptcy with a clean slate. Chapter 13 restructures debt so that the debtor takes a longer time to repay but he or she keeps some property, and it remains on the debtor's credit report for seven years.

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:


Featured Book Divorce & Money: How to Make the Best Financial Decisions

Divorce & Money: How to Make the Best Financial Decisions

Divorce & Money: How to Make the Best Financial Decisions


Featured Download The Effects of Bankruptcy During Divorce

The Effects of Bankruptcy During Divorce

The Effects of Bankruptcy During Divorce

Start Reaching Potential Clients Through Divorce Source. Learn More

Guarantee Official PayPal Seal Facebook Twitter Versign Secure Site
Limited Offer Women's Rights Manual For Divorce
Cover Price: $55.95
Your Price: $29.95
You Save: $26.00

"The Absolute Best Investment in Your Divorce"

Men's Rights Manual For Divorce
Cover Price: $55.95
Your Price: $29.95
You Save: $26.00

"Uncover Your Options and Unleash Solutions"