Motion to Avoid Lien - Oklahoma

UNITED STATES BANKRUPTCY COURT

☐ NORTHERN ☐ EASTERN ☐ WESTERN DISTRICT OF OKLAHOMA

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).

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). 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 against the Debtor's real property by filing a Statement of Judgment with the county clerk of [COUNTY] County on [__/__/____] (12 O.S. § 706), Book/Instrument No. [____________].

☐ 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 (Oklahoma Opt-Out)

8. Oklahoma has opted out of the federal bankruptcy exemptions of 11 U.S.C. § 522(d). See 31 O.S. § 1(B) ("No natural person residing in this state may exempt from the property of the estate in any bankruptcy proceeding the property specified in subsection (d) of Section 522 of the Bankruptcy Reform Act of 1978 ... except as may otherwise be expressly permitted under this title or other statutes of this state."). Oklahoma debtors must use the Oklahoma exemptions; the federal § 522(d) set is unavailable. The Oklahoma exemption determines the amount used in the § 522(f)(2)(A) impairment calculation. The § 522(f) right to avoid liens applies notwithstanding the opt-out.

9. The Debtor claimed on Schedule C the following Oklahoma exemption(s) (check the basis):

☐ Homestead — 31 O.S. § 1(A)(1)-(2) (home or manufactured home as principal residence), with area and value governed by 31 O.S. § 2. The Oklahoma homestead is unlimited in dollar value, subject to area limits: up to 1 acre if within a city or town; up to 160 acres if outside a city or town (for a family) or up to 80 acres (for a single person). If more than 25% of the property's total square footage is used for business purposes, the exemption is capped at $5,000. The homestead claimed: $[____________] (or "unlimited / full equity").

☐ Manufactured/mobile home as principal residence — 31 O.S. § 1(A)(2).

☐ Motor vehicle — 31 O.S. § 1(A)(13) ($7,500); ☐ household goods / personal property — 31 O.S. § 1(A)(3) (no dollar cap for ordinary household and kitchen furniture held for personal/family use); ☐ tools of the trade / implements of husbandry — 31 O.S. § 1(A)(5)-(6) (up to $10,000 aggregate); in the amount of $[____________].

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

10. Federal homestead cap (11 U.S.C. § 522(p)). ☐ The Debtor acquired the homestead interest more than 1,215 days before filing, so § 522(p) does not cap the exemption; or ☐ the interest was acquired within 1,215 days, and the homestead is capped at the federal § 522(p) amount (verify the current figure for the filing period) notwithstanding Oklahoma's unlimited homestead.

11. 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)

12. 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).

13. 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

14. 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.

☐ 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 the Debtor or any party in interest may file a certified copy of the order with the county clerk of [COUNTY] County to release the judgment lien of record;

(c) Direct the creditor to release the avoided 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

15. NOTICE IS HEREBY GIVEN that any party opposing this Motion must file a written objection or response with the Clerk and serve it on the undersigned within the time prescribed by the applicable Local Bankruptcy Rules and notice procedures.

☐ Pursuant to Local Bankruptcy Rule, you have [____] days from the date of service 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], Courtroom [____].

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:

Dated: [__/__/____]

[____________________________________]
[ATTORNEY NAME], OBA No. [________]
Attorney for Debtor
[FIRM NAME] · [ADDRESS] · [PHONE] · [EMAIL]

PROPOSED ORDER

UNITED STATES BANKRUPTCY COURT

☐ NORTHERN ☐ EASTERN ☐ WESTERN DISTRICT OF OKLAHOMA

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 Oklahoma law (Oklahoma having opted out under 31 O.S. § 1(B)). Accordingly,

IT IS ORDERED:

1. The Motion is GRANTED.

2. The lien of [CREDITOR NAME] ☐ perfected by Statement of Judgment filed on [__/__/____] with the county clerk of [COUNTY] County (Case No. [____________]) / ☐ 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 filed with the county clerk of [COUNTY] County to release the judgment lien of record.

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

DATED: [__/__/____]

[____________________________________]
United States Bankruptcy Judge

OKLAHOMA PRACTICE NOTES

Opt-out state. Oklahoma has opted out under 31 O.S. § 1(B) — the federal § 522(d) exemptions are unavailable. Oklahoma debtors use the Oklahoma exemptions of Title 31. The Oklahoma amount fills Line C of the § 522(f)(2)(A) formula.

Unlimited homestead — value, but limited by area — 31 O.S. § 1(A)(1)-(2), § 2. Oklahoma offers one of the strongest homestead protections in the country: there is no dollar cap on the equity protected, provided the property is the debtor's principal residence and falls within the statutory area limits — up to 1 acre within a city or town, and up to 160 acres (family) or 80 acres (single person) outside a city or town. Two important limits: (1) if more than 25% of the property's total square footage is used for business, the exemption is capped at $5,000 (31 O.S. § 2); and (2) the federal § 522(p) cap applies to a homestead interest acquired within 1,215 days before filing, regardless of Oklahoma's unlimited exemption — verify the current § 522(p) figure for the filing period.

Judicial liens often do not attach to the homestead. Because the Oklahoma homestead is generally exempt from forced sale for the payment of debts (31 O.S. § 1(A)), a judgment creditor's lien commonly does not attach to the homestead in the first place. Section 522(f) is still useful to clear any cloud on title and is the operative tool for non-homestead property and for § 522(f)(1)(B) security interests. With the unlimited homestead, Line C of the formula is typically the full value of the debtor's interest, so a judicial lien on the homestead is almost always wholly avoidable (subject to the area, 25%-business, and § 522(p) limits).

Three districts — NDOK, EDOK, WDOK. Oklahoma has three bankruptcy districts: Northern (NDOK — Tulsa), Eastern (EDOK — Okmulgee/Muskogee), and Western (WDOK — Oklahoma City), within U.S. Trustee Region 20. Serve the U.S. Trustee (Oklahoma is a U.S. Trustee district). Each district has its own Local Bankruptcy Rules and § 522(f) motion practice; confirm the local response period and any required local form.

Judgment liens — Statement of Judgment. An Oklahoma money judgment becomes a lien on the debtor's non-exempt real property in a county when a Statement of Judgment is filed with the county clerk there (12 O.S. § 706). Reference the filing county, date, and book/instrument number.

Section 522(f)(1)(B) and household goods. A nonpossessory, nonpurchase-money security interest in the § 522(f)(1)(B) categories is avoidable to the extent it impairs the personal-property exemption (31 O.S. § 1(A)(3)).

Section 522(f)(2)(A) mechanics. Add the lien to be avoided + all other liens + the exemption the debtor could claim, compared to the value of the debtor's interest absent liens; the excess is the impairment, and the lien is avoided up to that amount. Address multiple judicial liens in inverse order of priority.

Unsettled / verify points. (1) Acreage tier (urban 1 acre vs. rural 160/80) and the 25%-business-use $5,000 cap; (2) the federal § 522(p) cap and the 1,215-day rule where the homestead interest was recently acquired; (3) whether a judicial lien attached to the homestead at all; (4) the district/judge's notice and hearing requirements and any required local form; (5) 11 U.S.C. § 522(b)(3)(A) domicile (730-day) rule where the debtor recently moved to Oklahoma.

SOURCES AND REFERENCES

• 11 U.S.C. § 522(f), (f)(2)(A) (lien avoidance; impairment formula); § 522(p) (1,215-day homestead cap).
• Fed. R. Bankr. P. 4003(d), 9014, 7004.
• 31 O.S. § 1(B) (opt-out: "No natural person residing in this state may exempt ... the property specified in subsection (d) of Section 522 ...").
• 31 O.S. § 1(A)(1)-(2) (home / manufactured home homestead); § 1(A)(3) (household goods), (5)-(6) (tools / implements, $10,000), (13) (motor vehicle, $7,500).
• 31 O.S. § 2 (homestead area and value: 1 acre urban; 160 acres rural family / 80 acres single; $5,000 cap if >25% business use).
• 12 O.S. § 706 (Statement of Judgment; lien on real property).
• U.S. Bankruptcy Courts for the N.D. Okla., E.D. Okla., and W.D. Okla. — Local Bankruptcy Rules; U.S. Trustee Region 20.