Motion to Avoid Lien - Arizona

UNITED STATES BANKRUPTCY COURT

DISTRICT OF ARIZONA

DEBTOR'S MOTION TO AVOID [JUDICIAL LIEN / NONPOSSESSORY, NONPURCHASE-MONEY SECURITY INTEREST] UNDER 11 U.S.C. § 522(f)

[DEBTOR NAME] (the "Debtor"), by and through undersigned counsel, respectfully moves this Court, pursuant to 11 U.S.C. § 522(f) and Federal Rules of Bankruptcy Procedure 4003(d) and 9014, for an order avoiding the lien described below to the extent it impairs an exemption to which the Debtor is entitled. In support, the Debtor states:

1. Jurisdiction and Authority

1. This Court has jurisdiction under 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(K) (determinations of the validity, extent, or priority of liens).

2. The Debtor filed a voluntary petition under Chapter [____] of Title 11 on [__/__/____].

3. This Motion is brought under 11 U.S.C. § 522(f)(1), which permits a debtor to avoid the fixing of a lien on an interest of the debtor in property to the extent the lien impairs an exemption to which the debtor would have been entitled under 11 U.S.C. § 522(b). The procedure is governed by Fed. R. Bankr. P. 4003(d) and 9014, with service under Fed. R. Bankr. P. 7004.

2. The Lien To Be Avoided

4. The lien the Debtor seeks to avoid is held by the following creditor:

5. The lien is (check one):

☐ A judicial lien under 11 U.S.C. § 522(f)(1)(A), arising from a judgment entered in [COURT NAME], Case No. [____________], on [__/__/____], in the amount of $[____________], and perfected as a lien by:

☐ recording a certified copy of the judgment / abstract with the [COUNTY] County Recorder on [__/__/____] at Recording/Instrument No. [____________] (Book [____], Page [____]) (A.R.S. § 33-961 et seq.); or

☐ [OTHER METHOD OF PERFECTION].

☐ A nonpossessory, nonpurchase-money security interest under 11 U.S.C. § 522(f)(1)(B) in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, jewelry, implements, professional books, tools of the trade, or prescribed health aids, created by a security agreement dated [__/__/____] in favor of the creditor.

6. The lien does not secure a domestic support obligation and is therefore not excepted from avoidance under 11 U.S.C. § 522(f)(1)(A)(i)–(ii).

3. The Property

7. The lien attaches to the following property in which the Debtor holds an interest:

4. The Claimed Exemption (Arizona Opt-Out)

8. Arizona has opted out of the federal bankruptcy exemptions of 11 U.S.C. § 522(d). See A.R.S. § 33-1133(B). A debtor domiciled in Arizona claims the exemptions allowed under Arizona law together with any applicable federal nonbankruptcy exemptions (11 U.S.C. § 522(b)(2), (b)(3)). The federal § 522(d) exemption set is not available to Arizona debtors.

9. The Debtor claimed the following exemption on Schedule C in the property described above (check the applicable basis):

☐ Homestead — A.R.S. § 33-1101, in the amount of $[____________] (statutory amount $400,000, automatically adjusted each January 1 by the cost-of-living index and rounded up to the nearest $100 per A.R.S. § 33-1101(D) — VERIFY current amount as of the petition date).

☐ Household furniture, furnishings, and appliances — A.R.S. § 33-1123, in the amount of $[____________] (aggregate statutory amount $15,000, adjusted annually per § 33-1123(B) — VERIFY).

☐ Personal items / specific personal property — A.R.S. § 33-1125, in the amount of $[____________].

☐ Money benefits / other personal property — A.R.S. § 33-1126, in the amount of $[____________].

☐ Tools of the trade — A.R.S. § 33-1130, in the amount of $[____________].

☐ Other Arizona exemption — [CITATION], in the amount of $[____________].

10. The exemption was claimed on Schedule C and ☐ has not been objected to / ☐ is the subject of [DESCRIBE]. ☐ An amended Schedule C is filed concurrently.

5. Impairment Under 11 U.S.C. § 522(f)(2)(A)

11. A lien impairs an exemption to the extent that the sum of (i) the lien sought to be avoided, (ii) all other liens on the property, and (iii) the exemption the debtor could claim absent any liens, exceeds the value the debtor's interest in the property would have in the absence of any liens. 11 U.S.C. § 522(f)(2)(A).

12. Applying the formula, the sum on Line D ($[____________]) exceeds the value on Line E ($[____________]). The lien therefore impairs the Debtor's exemption.

6. Extent of Avoidance

13. The lien is avoided as follows (check one):

☐ In its entirety. Because the impairment (Line F) equals or exceeds the amount of the lien (Line A), the lien is wholly avoided. See Bank of America, N.A. v. Caulkett, 575 U.S. 790 (2015); In re Salanoa, 263 B.R. 120 (Bankr. S.D. Cal. 2001) (applying § 522(f)(2)(A)).

☐ In part. The lien is avoided in the amount of $[____________], and survives as a lien in the amount of $[____________].

7. Relief Requested

WHEREFORE, the Debtor respectfully requests that the Court:

(a) Enter an order avoiding the lien described above under 11 U.S.C. § 522(f) to the extent it impairs the Debtor's exemption;

(b) Declare the avoided lien void and of no further force or effect against the Debtor and the subject property, and provide that, upon entry of the order (and, in a Chapter 13 case, completion of the plan where applicable), the Debtor or any party in interest may record a certified copy of the order with the [COUNTY] County Recorder to clear title;

(c) Direct the creditor to release the lien of record within [____] days of the order; and

(d) Grant such other relief as is just and proper.

8. Notice and Opportunity to Object

14. NOTICE IS HEREBY GIVEN that any party opposing this Motion must file a written objection with the Clerk of the United States Bankruptcy Court for the District of Arizona and serve it on the undersigned within the time prescribed by the applicable Local Rules and notice procedures.

☐ Pursuant to Local Rule, you have [____] days from the date of service of this Motion to file and serve a written objection.

☐ If no objection is timely filed, the Court may grant the relief requested without a hearing.

☐ A hearing is scheduled for [__/__/____] at [____] [a.m./p.m.] before the Honorable [JUDGE NAME].

9. Certificate of Service

I certify that on [__/__/____], a true and correct copy of this Motion, supporting papers, and the proposed order was served on the parties below in the manner indicated, including service on the creditor in compliance with Fed. R. Bankr. P. 7004 (service on an insured depository institution or corporation by certified mail addressed to an officer, where applicable):

Dated: [__/__/____]

[____________________________________]
[ATTORNEY NAME], State Bar of Arizona No. [________]
Attorney for Debtor
[FIRM NAME] · [ADDRESS] · [PHONE] · [EMAIL]

PROPOSED ORDER

UNITED STATES BANKRUPTCY COURT

DISTRICT OF ARIZONA

ORDER AVOIDING LIEN UNDER 11 U.S.C. § 522(f)

This matter came before the Court on the Debtor's Motion to Avoid Lien under 11 U.S.C. § 522(f). The Court finds that notice was adequate, that no timely objection was filed (or that any objection has been resolved or overruled), and that the lien impairs an exemption to which the Debtor is entitled under Arizona law (A.R.S. § 33-1133(B) opt-out). Accordingly,

IT IS ORDERED:

1. The Motion is GRANTED.

2. The lien of [CREDITOR NAME] ☐ recorded on [__/__/____] at Recording/Instrument No. [____________] (Book [____], Page [____]) with the [COUNTY] County Recorder / ☐ created by security agreement dated [__/__/____], on the property described as [____________________________________], is AVOIDED under 11 U.S.C. § 522(f):

☐ in its entirety; or ☐ in the amount of $[____________], leaving a surviving lien of $[____________].

3. The avoided lien is void and of no further force or effect against the Debtor and the subject property to the extent avoided. A certified copy of this Order may be recorded with the [COUNTY] County Recorder.

4. The creditor shall release the avoided lien of record within [____] days of entry of this Order.

DATED: [__/__/____]

[____________________________________]
United States Bankruptcy Judge

ARIZONA PRACTICE NOTES

Opt-out, not choice. Arizona is an opt-out state under A.R.S. § 33-1133(B) — debtors may not elect the federal exemptions in 11 U.S.C. § 522(d). They use the Arizona statutory exemptions (Title 33, Chapter 8) plus any federal nonbankruptcy exemptions. The right to avoid liens under § 522(f) is independent of the opt-out and applies in full.

Homestead — A.R.S. § 33-1101. Protects up to $400,000 in equity in a dwelling, condominium/cooperative, or mobile home in which the debtor resides (single amount per person or married couple; not doubled). Proposition 209 (eff. Dec. 2022) raised the amount from $250,000 to $400,000 and added an annual CPI adjustment that begins January 1, 2024 and recurs each January 1, rounded up to the nearest $100 (§ 33-1101(D)). Verify the current figure as of the petition date. Note that under A.R.S. § 33-964 a recorded money judgment generally does not attach to homestead property in the first instance; nonetheless, a § 522(f) order is the standard tool to clear any cloud on title in bankruptcy.

Household goods and other personal property. A.R.S. § 33-1123 (household furniture, furnishings, goods, and appliances — aggregate $15,000, annually adjusted per § 33-1123(B)); § 33-1125 (specific personal items); § 33-1126 (money benefits and bank funds — e.g., $5,600 in a single account); § 33-1130 (tools of the trade). All amounts adjust and must be verified.

Section 522(f)(1)(B) and household goods. A nonpossessory, nonpurchase-money security interest in the categories listed in § 522(f)(1)(B) (household furnishings, goods, apparel, appliances, tools of the trade, prescribed health aids, etc.) is avoidable to the extent it impairs an exemption — most commonly the § 33-1123 household-goods exemption.

Section 522(f)(2)(A) mechanics. Run the statutory arithmetic: lien to be avoided + all other liens + the exemption the debtor could claim, compared to the value of the debtor's interest absent liens. Any excess is the impairment, and the lien is avoided up to that amount. Multiple judicial liens are addressed in inverse order of priority; calculate each separately.

Local procedure. File in the United States Bankruptcy Court for the District of Arizona (divisional offices in Phoenix, Tucson, Yuma, and Flagstaff). Follow the District of Arizona Local Bankruptcy Rules (and any judge-specific procedures) for negative-notice/objection periods, service, and order submission. Serve the creditor in compliance with Fed. R. Bankr. P. 7004 — a corporation or insured depository institution must be served on an officer or agent by the method the rule prescribes.

Unsettled / verify points. (1) Current adjusted homestead and household-goods amounts; (2) whether the assigned judge requires a hearing or permits negative-notice disposition; (3) the precise objection period under the Local Rules; (4) treatment when CA/AZ residency or domicile timing affects which state's exemptions apply (11 U.S.C. § 522(b)(3)(A) 730-day rule).

SOURCES AND REFERENCES

• 11 U.S.C. § 522(f), (f)(2)(A) (lien avoidance; impairment formula).
• Fed. R. Bankr. P. 4003(d), 9014, 7004.
• A.R.S. § 33-1133(B) (Arizona opt-out).
• A.R.S. § 33-1101 (homestead; $400,000; annual adjustment) — azleg.gov/ars/33/01101.htm.
• A.R.S. § 33-1123 (household furnishings; $15,000; annual adjustment) — azleg.gov/ars/33/01123.htm.
• A.R.S. §§ 33-1125, 33-1126, 33-1130 (personal property, money benefits, tools of the trade).
• A.R.S. §§ 33-961, 33-964 (recording of judgments; non-attachment to homestead).
• Proposition 209 (2022) (homestead increase to $400,000).
• Bank of America, N.A. v. Caulkett, 575 U.S. 790 (2015).
• United States Bankruptcy Court for the District of Arizona, Local Rules — azb.uscourts.gov.