United States Bankruptcy Appellate Panel

For the Eighth Circuit

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No. 13-6039

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In re: Mirella S. Goben

lllllllllllllllllllllDebtor

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Mirella S. Goben

lllllllllllllllllllllDebtor - Appellant

v.

Corydon State Bank

lllllllllllllllllllllObjector - Appellee

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 Appeal from United States Bankruptcy Court 

for the Southern District of Iowa - Des Moines

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 Submitted: August 20, 2013

 Filed: September 23, 2013

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Before KRESSEL, SCHERMER and NAIL, Bankruptcy Judges. 

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SCHERMER, Bankruptcy Judge
Mirella S. Goben (the “Debtor”) appeals from the bankruptcy court’s order

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sustaining Corydon State Bank’s (the “Bank”) objection to the Debtor’s claimed

exemption in a vehicle, and ruling that the Debtor cannot avoid the Bank’s lien under

§ 522(f) of Title 11 of the United States Code (the “Bankruptcy Code”). We have 2

jurisdiction over this appeal from the final order of the bankruptcy court. See 28

U.S.C. § 158(b). For the reasons set forth below, we affirm. 

ISSUE

The first issue in this case is whether the bankruptcy court properly concluded

that the Debtor had no interest in a vehicle in which she could claim an exemption

where the vehicle was fully encumbered. We agree with the bankruptcy court’s

decision that the Debtor could not claim an exemption in the Vehicle. The second

issue is whether Bankruptcy Code § 522(f) allows the Debtor to avoid the Bank’s

lien. We also agree with the bankruptcy court’s ruling that the Bankruptcy Code

provides for no such avoidance. 

BACKGROUND

On January 2, 2013, the Debtor filed a voluntary petition for relief under

Chapter 7 of the Bankruptcy Code. On her Schedule C (claimed exemptions), the

Debtor claimed a $1,000 exemption in her 2000 Hyundai Tiburon (the “Vehicle”)

under Iowa law. The Debtor listed the value of this vehicle as $1,000 on her

Schedule C. 

TheHonorable AnitaL. Shodeen, Chief Judge,UnitedStatesBankruptcy 1

Court for the Southern District of Iowa.

It is unclear whether the Debtor appeals the § 522(f) portion of the

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bankruptcy court’s decision. To give the benefit of the doubt to the Debtor, we

address the § 522(f) ruling.

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The Bank objected to the Debtor’s claimed exemption in the Vehicle, stating

that it made loans to the Debtor, and claiming a perfected security interest in the

Vehicle. The Debtor filed an Objection to Bank’s Objection to Exemption (the

“Debtor’s Objection”). After a hearing, the bankruptcy court held that it was “unclear

whether the Bank holds a perfected lien against [the Vehicle].” The court then

ordered the Bank to provide documentsto show that it had a perfected lien against the

Vehicle. The court stated that after receipt of the requested documents, the court

would make a decision without a further hearing.

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In May 2013, the bankruptcy court entered an order on its docket finding that

the Debtor had listed the Vehicle on her Schedule C with a value of $1,000, and as

exempt (under IOWA CODE § 627.6) in the amount of $1,000. The court stated that

the Bank objected to the claimed exemption “based upon two loans with an

outstanding balance of $4,233.39,” that the loans were secured by the Vehicle and

that the Bank’s lien was noted on the Vehicle’s Certificate of Title. The court

concluded that the debtsecured by the Vehicle exceeded the value of the Vehicle and,

therefore, “the Debtor has no interest in the motor [V]ehicle to claimas exempt.” The

bankruptcy court also stated that § 522(f) of the Bankruptcy Code “is not available

to the Debtor to avoid this type of lien.” Therefore, the bankruptcy court sustained

the Bank’s objection to the Debtor’s exemption and overruled the Debtor’s

Objection. 

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The Debtor did not provide us with a copy of the hearing transcript, so 3

we do not know the exact arguments that were made at that hearing. However, the

orders entered by the bankruptcy court on the merits of this matter rule on both the

Debtor’s claimed exemption, and on whether § 522(f) applies to avoid the Bank’s

liens.

On June 12, 2013, the bankruptcy court entered an order including the

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same findings and conclusions as those set forth in the May 2013 order, and also

recognizing that the Debtor was not able to timely appeal the May 2013 order because

service of it was not made on her. The bankruptcy court stated that “[t]he time period

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STANDARD OF REVIEW

The bankruptcy court’s findings of fact are reviewed for clear error, and it

conclusions of law are reviewed de novo. Abdul-Rahim v. LaBarge (In re AbdulRahim), 720 F.3d 710, 712 (8th Cir. 2013) (citation omitted). 

DISCUSSION

“The Bankruptcy Code allows debtors to exempt certain property from their

bankruptcy estates, which are otherwise comprised of all the debtor’s legal or

equitable interests in property.” Abdul-Rahim, 720 F.3d at 712 (citing 11 U.S.C. 

§§522(d) and 541(a)). We construe exemption statutes liberally. Foellmi v. Ries (In

re Foellmi), 473 B.R. 905, 908 n. 7 (B.A.P. 8th Cir. 2012)(citations omitted)).

Generally, a debtor may exempt property that is exempt under § 522(d), or

under applicable state law and federal law other than § 522(d). 11 U.S.C. §§ 522

(b)(1), (2) and (3). A state may “opt out” of the Bankruptcy Code’s §522(d)

exemptions, which Iowa has done. 11 U.S.C. § 522(b)(2); IOWA CODE §627.10. 

The Debtor claimed an exemption under § 627.6(9) of the Iowa Code, which

providesthat “[a] debtor who is a resident of [Iowa] may hold exempt from execution

. . . [t]he debtor’s interest in one motor vehicle, not to exceed in value seven thousand

dollars.” IOWA CODE § 627.6(9). 

The bankruptcy court correctly determined that the Debtor is not entitled to an

exemption under IOWA CODE § 627.6 because she does not hold an interest in the

Vehicle that she could claim to be exempt. To determine the Debtor’s interest in the

Vehicle that is subject to her claim of an exemption, we subtract the amount of the

for appeal pursuant to Bankruptcy Rule 8002(a) will be governed by the date this

Nunc Pro Tunc Order is filed on the docket.” The Debtor timely appealed the June

2013 order. The May 2013 order istechnically res judicata asto the June 2013 order.

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secured debt from the value of the Vehicle. The Debtor does not dispute that the

value of her Vehicle is less than the amount she owes to the Bank. Therefore, the

Debtor enjoys no equity, and has no interest in the Vehicle to exempt.

We also agree with the bankruptcy court’s statement that “11 U.S.C. [§] 522(f)

is not available to Debtor to avoid this type of lien.” Section 522(f)(1) provides that:

(1) . . . the debtor may avoid the fixing of a lien on an interest of the

debtor in property to the extent that such lien impairs an exemption to

which the debtor would have been entitled under subsection (b) of this

section, if such lien is —

(A) a judicial lien . . . ;

(B) a nonpossessory, non-purchase money security interest in any —

(i) household furnishings, household goods, wearing apparel,

appliances, books, animals, crops, musical instruments, or jewelry that

are held primarily for the personal, family, or household use of the

debtor or a dependent of the debtor; 

(ii) implements, professional books, or tools, of the trade of the

debtor or the trade of a dependent of the debtor; or

(iii) professionally prescribed health aids for the debtor or a

dependent of the debtor.

11 U.S.C. § 522(f)(1). Nothing in the record suggests, even remotely, that the Bank’s

interest in the Vehicle qualifies under any category enumerated in § 522(f)(1). 

CONCLUSION

For the reasons set forth above, the decision of the bankruptcy court is

AFFIRMED.

 

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