Riley v. Beneficial Consumer Discount Co. (In Re Riley)

MEMORANDUM AND ORDER AVOIDING LIEN OF BENEFICIAL CONSUMER DISCOUNT COMPANY THOMAS WOOD, Bankruptcy Judge. This proceeding by Chapter 7 debtors seeks to avoid a mortgage lien in order to prevent impairment of their $15,000 real estate exemption. The value of the real estate exceeds the amount of the mortgage lien but is less than the amount of the debtors’ exemption. A judgment lien against the property was entered prior to the recording date of the debtors’ mortgage. DISCUSSION The general rule is that a mortgage is not subject to lien avoidance under section 522(f) of the Bankruptcy Code, and we are not persuaded by the debtors’ arguments: (1) That a Pennsylvania mortgage lien is a judicial lien. (2) That a Pennsylvania mortgage is avoidable when an exemption is claimed, regardless of the priority status of the mortgage. However, it is our determination that a Pennsylvania mortgage lien which is subordinate to a judgment lien is subject to avoidance under § 522(f) of the Bankruptcy Code. In reaching this conclusion, we concur with the decision of Judge William B. Washabaugh, Jr., of the Western District of Pennsylvania, In the Matter of Acklin, 17 B.R. 614 (Bkrtcy.W.D.Pa.1982). An appropriate order will be filed herewith.