Motion to Avoid Lien - Virginia

UNITED STATES BANKRUPTCY COURT

☐ EASTERN ☐ WESTERN DISTRICT OF VIRGINIA

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 real estate by docketing in the judgment lien docket of the Circuit Court of [____________] [County/City], Virginia, on [__/__/____] (Va. Code Ann. § 8.01-458) [recording reference: [____________]].

☐ 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 (Virginia Opt-Out)

8. Virginia has opted out of the federal bankruptcy exemptions of 11 U.S.C. § 522(d). See Va. Code Ann. § 34-3.1 ("No individual may exempt from the property of the estate in any bankruptcy proceeding the property specified in subsection (d) of § 522 of the Bankruptcy Reform Act ... except as may otherwise be expressly permitted under this title."). The Debtor must therefore claim Virginia state exemptions (together with any applicable federal nonbankruptcy exemptions). For a debtor in bankruptcy, the claim of exemptions listed on Official Form Schedule C is sufficient to claim the homestead exemption (Va. Code Ann. § 34-6, as amended in 2020 — a separate "homestead deed" is no longer required in a bankruptcy case). The § 522(f) right to avoid liens nevertheless applies. The exemption the Debtor "could claim" supplies Line C of the § 522(f)(2)(A) calculation below.

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

☐ Homestead — principal residence — Va. Code Ann. § 34-4, real or personal property used as the principal residence of the householder or the householder's dependents, not exceeding $50,000 in value (amount set by 2024 c. 656; CPI-U indexing begins April 1, 2027), in the amount of $[____________].

☐ Homestead — general — Va. Code Ann. § 34-4, real and personal property (including money and debts due the householder) not exceeding $5,000 (or $10,000 if the householder is 65 years of age or older), plus $500 for each dependent, in the amount of $[____________].

☐ Disabled veteran additional exemption — Va. Code Ann. § 34-4.1, an additional $10,000 for a veteran residing in Virginia with a service-connected disability of 40% or more (as rated by the U.S. Department of Veterans Affairs), in the amount of $[____________].

☐ Poor debtor's exemption — Va. Code Ann. § 34-26 (household furnishings up to $5,000; motor vehicle up to $10,000; tools of trade up to $10,000; etc. — verify current amounts), 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.

☐ 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 record a certified copy of the order with the Clerk of the Circuit Court of [____________] [County/City] 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 or response with the Clerk and serve it on the undersigned within the time prescribed by the applicable Local Rules and notice procedures.

☐ Pursuant to Local Bankruptcy Rule and the district's notice procedure, 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], Virginia State Bar No. [________]
Attorney for Debtor
[FIRM NAME] · [ADDRESS] · [PHONE] · [EMAIL]

PROPOSED ORDER

UNITED STATES BANKRUPTCY COURT

☐ EASTERN ☐ WESTERN DISTRICT OF VIRGINIA

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 Virginia law (Virginia having opted out under Va. Code Ann. § 34-3.1). Accordingly,

IT IS ORDERED:

1. The Motion is GRANTED.

2. The lien of [CREDITOR NAME] ☐ docketed on [__/__/____] in the judgment lien docket of the Circuit Court of [____________] [County/City] / ☐ 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 Clerk of the Circuit Court of [____________] [County/City].

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

DATED: [__/__/____]

[____________________________________]
United States Bankruptcy Judge

VIRGINIA PRACTICE NOTES

Opt-out state. Virginia is an opt-out state under Va. Code Ann. § 34-3.1 — the federal § 522(d) exemptions are unavailable. Debtors use Virginia's statutory exemptions (Title 34, plus other Virginia and federal nonbankruptcy exemptions). Section 522(f) lien avoidance applies regardless of opt-out, because it is a federal right keyed to "an exemption to which the debtor would have been entitled," here the Virginia exemption.

Homestead — § 34-4 (amended 2024). As amended by 2024 c. 656, § 34-4 provides (i) a general homestead of $5,000 in any real or personal property ($10,000 if the householder is 65 or older), (ii) an additional $500 per dependent, and (iii) a separate exemption for real or personal property used as the principal residence of the householder or the householder's dependents not exceeding $50,000 (this principal-residence amount was raised from $25,000 by the 2024 amendment). These amounts are scheduled to be adjusted for CPI-U on April 1, 2027, and every three years thereafter (rounded to the nearest $25); the adjustment does not apply to bankruptcy cases commenced before April 1, 2027. Verify the controlling amounts as of the petition date.

Disabled veteran — § 34-4.1. A veteran residing in Virginia with a service-connected disability of 40% or more (VA-rated) is entitled to an additional $10,000 exemption in real or personal property. This stacks on top of § 34-4.

Claiming the exemption — § 34-6 (no homestead deed in bankruptcy). Since the 2020 amendment to § 34-6, a debtor in a bankruptcy case claims the § 34-4 / § 34-4.1 / § 34-13 exemptions simply by listing them on Schedule C; the former requirement to record a homestead deed in the circuit court does not apply in a bankruptcy case (it still applies outside bankruptcy). Note also that under § 34-21, as amended in 2020, a claimed homestead amount counts against the maximum only for eight years.

Poor debtor's exemption — § 34-26. Separate from the homestead, § 34-26 exempts enumerated personal property: household furnishings (up to $5,000), a motor vehicle (up to $10,000), tools of trade (up to $10,000), firearms (up to $3,000), wearing apparel (up to $1,000), family heirlooms (up to $5,000), and more (subject to CPI-U indexing on the same April 1, 2027 schedule — verify). A nonpossessory, nonpurchase-money security interest in the § 522(f)(1)(B) categories is avoidable to the extent it impairs the exemption the debtor could claim in those goods.

Tenancy by the entirety. Virginia recognizes tenancy by the entirety. Where only one spouse files, entireties realty may receive additional protection against the individual debts of the filing spouse (interacting with 11 U.S.C. § 522(b)(3)(B)). Analyze separately; it can affect the value of the debtor's "interest" on Lines C and E.

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. Where multiple judicial liens exist, address them in inverse order of priority.

Recording / perfection. A Virginia money judgment becomes a lien on the debtor's real estate when docketed in the circuit court judgment lien docket of the county or city where the property lies (Va. Code Ann. § 8.01-458). Reference the docketing court and date in the motion and order so the avoidance can be recorded to clear title.

Local procedure. Virginia has two districts — Eastern (Richmond, Norfolk, Newport News, Alexandria) and Western (Roanoke, Lynchburg, Harrisonburg, Big Stone Gap, Charlottesville). Confirm each district's local rules and the assigned judge's procedures for lien-avoidance motions, the negative-notice response period, and lodged-order requirements. Serve the creditor under Fed. R. Bankr. P. 7004.

Unsettled / verify points. (1) Current § 34-4 amounts (general, 65+, per-dependent, and the $50,000 principal-residence amount) and whether the April 1, 2027 CPI-U adjustment applies to the case; (2) current § 34-26 amounts; (3) entireties treatment where only one spouse files; (4) the district's negative-notice period and required notice language; (5) 11 U.S.C. § 522(b)(3)(A), (p), (q) where domicile or recently acquired equity is at issue.

SOURCES AND REFERENCES

• 11 U.S.C. § 522(f), (f)(2)(A) (lien avoidance; impairment formula).
• Fed. R. Bankr. P. 4003(d), 9014, 7004.
• Va. Code Ann. § 34-3.1 (opt-out: § 522(d) property not exempt).
• Va. Code Ann. § 34-4 (homestead; $5,000 general / $10,000 if 65+ / $500 per dependent / $50,000 principal residence per 2024 c. 656; CPI-U from 4/1/2027).
• Va. Code Ann. § 34-4.1 (additional $10,000 for disabled veterans with 40%+ service-connected disability).
• Va. Code Ann. § 34-6 (claim of exemption via Schedule C in bankruptcy; homestead deed not required in bankruptcy).
• Va. Code Ann. § 34-21 (eight-year accounting of claimed homestead).
• Va. Code Ann. § 34-26 (poor debtor's exemption).
• Va. Code Ann. § 8.01-458 (docketing of judgment as lien on real estate).
• United States Bankruptcy Courts for the E.D./W.D. Va. — Local Rules.