UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON DIVISION

IN RE:

GARNETT KENDALL ROSS and

KAREN LYNN ROSS CASE NO. 07-51391

DEBTORS

ORDER

           This matter having come before the court on Debtors’ Motion to Avoid Judgment Liens (DOC 55), and the matter having been heard on April 16, 2009, and the court having taken the matter under submission, the court hereby issues this order.

     The Debtors seek to avoid two judgment liens, one held by Whitaker Bank, and the other held by Discover Card.

     Whitaker Bank has objected to the motion. Whitaker Bank contends that the Debtors fraudulently filed three mortgages shortly before the bankruptcy filing. Whitaker Bank admits that if those transfers are allowed to stand that there is no equity for its lien to attach.

     Whitaker Bank admits that the Trustee has done nothing to avoid the mortgages as either preferential or fraudulent. Whitaker Bank also admits that no legal proceeding has ever been instituted alleging fraud. However, Whitaker Bank relies on 11 U.S.C. § 522(o) to argue that the homestead exemption is reduced by the value of the exemption attributable to property disposed by the debtors within the last ten years with an intent to defraud. This argument is in essence an objection to exemption argument which would have had to have been filed within 30 days after the meeting of creditors pursuant to Federal Bankruptcy Procedure Rule 4003. The objection is late as the meeting of creditors was held on August 22, 2007, and this objection was not filed until March 23, 2009. It is too late for Whitaker Bank to object to the exemption.  

     Whitaker Bank also complains that debtors filed the herein motion after they were granted a discharge. However, the majority of courts have found no bar to the exercise of lien avoidance rights after the granting of a discharge. See In re Keller, 24 B.R. 720 (Bankr. Ohio 1982).

     For those reasons, Debtors’ Motion to Avoid Judgment Liens (DOC 55) is hereby SUSTAINED.

Copies to:

Lee M. Dean, Esq.

Castil Williams, Esq.

Robert J. Brown, Esq.

Debtors

U.S. Trustee