James Cole, Esquire
Bankruptcy court permits a Chapter 7 case that was closed for eight years to be reopened for lien avoidance under § 522(f). In re Shelton, No. 04-52378-659 (Bankr. E.D. Mo. October 24, 2013).
Debtors’ Chapter 7 case was filed on 9-29-04, and
debtors received a discharge on 1-05-05. Debtors did not move to avoid any liens. On 1-31-13, a creditor holding a pre-petition judgment lien levied on the debtors’ real property in circuit court. Debtors filed in the bankruptcy court to reopen the Chapter 7 to avoid the judgment lien as an impairment of their exemptions under § 522(f).
Held: The bankruptcy code does not set a deadline for motions to avoid liens under § 522(f), and the doctrine of laches requires “unreasonable and inexcusable delay resulting in prejudice to the creditor.” (Slip op. at 3.) Creditor failed to make a showing of prejudice sufficient to overcome debtors’ right to avoid the lien. The case was reopened for further proceedings on debtors’ motion to avoid lien.