PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

ANNE LORRAINE BOTKIN, 

Plaintiff-Appellee,

v.

DUPONT COMMUNITY CREDIT UNION,

 No. 10-1681

Defendant-Appellant,

and

CHARLES R. ALLEN, JR.,

Trustee. 

Appeal from the United States District Court

for the Western District of Virginia, at Harrisonburg.

Glen E. Conrad, Chief District Judge.

(5:10-cv-00018-gec; 09-51273)

Argued: May 12, 2011

Decided: June 13, 2011

Before TRAXLER, Chief Judge, and GREGORY and

DAVIS, Circuit Judges.

Affirmed by published opinion. Chief Judge Traxler wrote the

opinion, in which Judge Gregory and Judge Davis joined.
COUNSEL

Paul A. Dryer, FRANKLIN, DENNEY, WARD & LAWSON, Waynesboro, Virginia, for Appellant. John Edward

Whitfield, BLUE RIDGE LEGAL SERVICES, INC., Harrisonburg, Virginia, for Appellee.

OPINION

TRAXLER, Chief Judge:

DuPont Community Credit Union appeals a district court

order reversing a bankruptcy court order ruling that the debtor

could not avoid a judicial lien on her property since she had

not claimed an exemption in the property. Finding no error,

we affirm the district court.

I.

Annie Botkin owns certain residential property in Highland

County, Virginia, with a current market value of $22,500. A

purchase money deed of trust in favor of First and Citizens

Bank encumbers the property and secures an outstanding loan

balance of approximately $24,124. The property is also

encumbered by a $9,800 judicial lien held by DuPont Community Credit Union. 

Botkin filed a voluntary petition for Chapter 7 bankruptcy

relief on August 13, 2009. In conjunction with her filing, she

recorded a homestead deed in the Circuit Court of Highland

County. See Va. Code § 34-4 (providing that in addition to

certain other exemptions, a "householder" under 65 is entitled

"to hold exempt from creditor process arising out of a debt"

property in an amount not exceeding $5,000 plus $500 for

each of the householder’s dependents); Va. Code § 34-14

(requiring householder to record a writing identifying the

2 BOTKIN v. DUPONT COMMUNITY CREDIT UNION
property the householder selects as exempt under § 34-4).

Because Botkin listed one dependent on her homestead deed,

she was entitled to an exemption of up to $5,500. See id. The

deed exempted a total of $2,723 against her anticipated tax

refunds and small balances in her bank account. Although

Botkin had $2,777 in homestead exemptions that she had not

used, she did not claim an exemption for any portion of her

residential property, as she had no equity in the property.

Thus, on her Schedule C listing the exemptions she claimed

in bankruptcy, she listed the items she had exempted on her

homestead deed as well as her modest household furnishings

and personal belongings, see Va. Code § 34-26.

On September 22, 2009, the bankruptcy trustee conducted

a meeting of Botkin’s creditors, see 11 U.S.C.A. § 341 (West

2004 & Supp. 2010), and subsequently reported, as is relevant

here, that the estate had been fully administered and "that

there [was] no property available for distribution from the

estate over and above that exempted by law." J.A. 6. In October 2009, Botkin filed a motion to avoid DuPont’s judicial

lien under 11 U.S.C.A. § 522(f) (West 2004 & Supp. 2010),

which provides, in relevant part, that a 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 judicial lien." The bankruptcy court then

scheduled the motion for a hearing. Although DuPont failed

to file a response by the deadline the bankruptcy court had set,

the court denied Botkin’s motion on the basis that Botkin had

not claimed an exemption in the property subject to the lien.

Botkin then appealed, and the district court reversed and

remanded to the bankruptcy court for further proceedings,

concluding that the Bankruptcy Code does not require a

debtor to actually claim an exemption in the property subject

to the judicial lien sought to be avoided under § 522(f).

BOTKIN v. DUPONT COMMUNITY CREDIT UNION 3
II.

DuPont now argues that the district court erred in this ruling that the Code does not require a debtor to claim an exemption in the property subject to the judicial lien sought to be

avoided under § 522(f). We disagree.1

In the bankruptcy context, the district court acts as a

reviewing court for the bankruptcy court decision, and we, in

turn, review the district court’s decision. See 28 U.S.C.A.

§ 158 (West 2006 & Supp. 2010). This appeal presents a

question regarding the appropriate statutory interpretation of

the Bankruptcy Code, which we review de novo. See Devan

v. Simon DeBartolo Group, L.P. (In re Merry-Go-Round

Enters.), 180 F.3d 149, 154 (4th Cir. 1999). In such matters,

"the plain language of the Bankruptcy Code . . . is our determinant." Patterson v. Shumate, 504 U.S. 753, 757 (1992); see

NVR Homes, Inc. v. Clerks of the Circuit Courts for Anne

Arundel County (In re NVR, LP), 189 F.3d 442, 457 (4th Cir.

1999). We conclude that the district court properly discerned

the Code’s plain meaning.

A bankruptcy estate comprises all the legal and equitable

interests in property that a debtor possesses at the time of filing, as well as the interests that are recovered or recoverable

via transfer and lien-avoidance provisions. See 11 U.S.C.A.

§ 541 (West 2004 & Supp. 2010). However, to help the debtor

achieve a "fresh start," Sheehan v. Morehead (In re Morehead), 283 F.3d 199, 206 (4th Cir. 2002) (internal quotation

marks omitted), the Code exempts certain property from the

bankruptcy estate, see 11 U.S.C.A. § 522 (West 2004 & Supp.

1We express no view on the merits of Botkin’s motion to avoid

DuPont’s lien, other than to decide the narrow legal question before us. In

particular, we do not address the effect of Virginia Code § 34-5, which

provides that "[t]he property exemptions created under this Code shall not

be claimed against . . . debts . . . [f]or the purchase price of such property

or any part thereof." 

4 BOTKIN v. DUPONT COMMUNITY CREDIT UNION
2010). The Code allows a debtor to choose between specified

federal exemptions or those provided by state law, unless state

law provides, as Virginia’s does, that only the state exemptions are available. See 11 U.S.C.A. § 522(b); Snow v. Green

(In re Snow), 899 F.2d 337, 338 (4th Cir. 1990) (citing Va.

Code § 34-3.1).

The Code requires a debtor to file a list of the property

claimed to be exempt from the bankruptcy estate. See 11

U.S.C.A. § 522(l). That list (Schedule C) generally must be

filed with the petition in a voluntary case or within 14 days

after the entry of an order for relief in an involuntary proceeding unless the court extends the deadline. See Fed. Bankr. R.

1007(c). Any property claimed as exempt then becomes

exempt unless a party in interest objects. See 11 U.S.C.A.

§ 522(l). A debtor may amend her list as a matter of course

at any time before a case is closed. See Fed. Bankr. R.

1009(a); Kaelin v. Bassett (In re Kaelin), 308 F.3d 885, 889

(8th Cir. 2002). Following an amendment to a Schedule C, a

creditor generally has 30 days to object to any new exemption. See Fed. Bankr. R. 4003(b). 

In addition to the rights to exempt certain property from the

bankruptcy estate, debtors also, under 11 U.S.C.A. § 522(f),

can move to avoid, or wipe out, a lien or interest that a creditor has in particular property. It is this right that is the subject

of the current appeal. 11 U.S.C.A. § 522(f)(1) provides, as is

relevant here, that a 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 judicial lien." 11 U.S.C.A. § 522(f)(2) defines when a lien

"shall be considered to impair an exemption": It is considered

to do so

to the extent that the sum of 

(i) the lien; 

BOTKIN v. DUPONT COMMUNITY CREDIT UNION 5
(ii) all other liens on the property; and 

(iii) the amount of the exemption that the

debtor could claim if there were no liens on

the property; 

exceeds the value that the debtor’s interest in the

property would have in the absence of any liens.

11 U.S.C.A. § 522(f)(2). DuPont concedes that this mathematical test is satisfied here.

DuPont nevertheless argues that the district court erred by

concluding that a debtor can avoid a judicial lien under

§ 522(f) without having already claimed an exemption in the

property subject to the lien. On this issue, the Supreme

Court’s decision in Owen v. Owen, 500 U.S. 305 (1991), is

instructive. In Owen, the respondent obtained a judgment

against her ex-husband ("the debtor") for approximately

$160,000, which was recorded in Sarasota County, Florida.

See id. at 306. In 1984, the debtor purchased a condominium

in Sarasota County that became subject to his ex-wife’s judgment lien. See id. at 307. Florida subsequently amended its

homestead law such that the condominium, which had not

previously qualified as a homestead, qualified as one. See id.

However, while Florida’s constitution generally provides that

homestead property is exempt from creditor process, the

exemption does not apply to liens that pre-existed the homestead amendment. See id. Nevertheless, in 1986, the debtor

filed for Chapter 7 bankruptcy and claimed a homestead

exemption in his condominium. See id. The bankruptcy court

sustained his claimed exemption and discharged his personal

liability for his debts, but the condominium remained subject

to his former wife’s pre-existing lien. See id. When the debtor

later moved to reopen his case to avoid the lien under

§ 522(f)(1), the bankruptcy court denied his request. See id.

On appeal, the district court affirmed, ruling that the lien

could not be avoided because the property did not qualify for

6 BOTKIN v. DUPONT COMMUNITY CREDIT UNION
the exemption since the lien attached before the homestead

amendment came into force. See id. at 307-08. The Eleventh

Circuit affirmed on the same ground, and the Supreme Court

granted certiorari. See id. at 308.

Before the Supreme Court, the respondent argued that her

judicial lien did not impair the exemption in question because,

as a matter of state law, the existence of the lien prevented the

debtor from being entitled to the exemption. See id. at 309.

The Supreme Court concluded that her argument was at odds

with § 522(f)’s language, explaining: 

To determine the application of § 522(f) [courts] ask

not whether the lien impairs an exemption to which

the debtor is in fact entitled, but whether it impairs

an exemption to which he would have been entitled

but for the lien itself.

As the preceding [underlined] words suggest, this

reading is more consonant with the text of § 522(f)

– which establishes as the baseline, against which

impairment is to be measured, not an exemption to

which the debtor "is entitled," but one to which he

"would have been entitled."

Id. at 310-11 (emphasis in original and footnote omitted). 

It was after Owen, in 1994, that Congress amended § 522,

to add subsection f(2), providing the aforementioned mathematical formula under which courts can determine whether

the judicial lien at issue actually impairs the relevant exemption. See Bankruptcy Reform Act of 1994, Pub. L. No. 103-

394, 108 Stat. 4106, 4132 § 303 (1994). Importantly, one of

the components is "the amount of the exemption that the

debtor could claim if there were no liens on the property." 11

U.S.C.A. § 522(f)(2) (emphasis added). As was the case with

the statutory language on which Owen relied, this language

reflects § 522’s focus not on any actual claim of exemption,

BOTKIN v. DUPONT COMMUNITY CREDIT UNION 7
but rather on the hypothetical exemption that the debtor

would have been entitled to in the absence of the lien.2

Furthermore, the Code’s plain language does not even

appear to allow a debtor to claim an exemption at a time when

the existence of a lien is preventing the property from being

exempt. See 11 U.S.C.A. § 522(b)(2)(A) (allowing a debtor to

exempt "any property that is exempt under . . . State or local

law that is applicable on the date of the filing of the petition"

(emphasis added)); see also Owen, 500 U.S. at 308 ("No

property can be exempted . . . unless it first falls within the

bankruptcy estate.").3 Only if the lien is in fact avoided does

the debtor become entitled to claim the exemption under that

scenario, and a debtor can amend her Schedule C at that time

to do so, see Fed. R. Bankr. P. 1009(a). For all of these reasons, we conclude that the Code plainly provides that debtors

need not claim an exemption as a precondition of avoiding a

lien that the debtor contends impairs that exemption.

DuPont argues that allowing avoidance of a lien under

§ 522(f) before an exemption has actually been claimed

would deny creditors the right to object. But that is simply not

true. Creditors are free to raise exemption issues during litigation of a § 522(f) lien-avoidance issue. See Fed. Bankr. R.

4003(d) ("[A] creditor may object to a motion filed under

§ 522(f) by challenging the validity of the exemption asserted

to be impaired by the lien."). Additionally, when a debtor

amends her Schedule C to add an exemption that a lien had

2The legislative reports accompanying the Bankruptcy Reform Act of

1978 also reflect this focus. See H.R. Rep. No. 95-595, at 362 (1977), as

reprinted in 1978 U.S.C.C.A.N. 5963, 6318 ("The debtor may avoid a

judicial lien on any property to the extent that the property could have

been exempted in the absence of the lien." (emphasis added)); S. Rep. No.

95-989, at 74 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787, 5862

(same). 

3Although the debtor in Owen actually did claim the property at issue

as exempt, see Owen, 500 U.S. at 307, the Court had no reason to consider

the propriety of that procedure. 

8 BOTKIN v. DUPONT COMMUNITY CREDIT UNION
previously prevented, her creditors have 30 days from the

amendment to object to the exemption. See Fed. Bankr. R.

4003(b). 

DuPont also suggests that unless a debtor must claim an

exemption before seeking to avoid a lien that purportedly

impairs that exemption, the bankruptcy courts will be unable

to determine the amount of the exemption at issue or whether

the exemption is impaired. That is also incorrect. A debtor’s

entitlement to § 522(f) avoidance already requires the debtor

to prove the amount of the exemption he would have in the

absence of the lien. An actual claim of the exemption is in no

way necessary for the district court to apply § 522(f)(2)’s

mathematical formula or otherwise evaluate the § 522(f)

motion.

DuPont further maintains that allowing Botkin to avoid

DuPont’s lien without ever having claimed an exemption

"permit[s] her to gain all the benefits of § 522(f) without having to bear the consequences of having to use her limited

exemptions." Brief of Appellant at 19. However, for the reasons we have explained, the language of the Code plainly

does not require a debtor to claim an exemption in order to

avoid a judicial lien on the basis that it impairs the exemption.

Whether such a requirement could have carried with it certain

policy advantages is a question we need not address. See

United States v. Ide, 624 F.3d 666, 670 n.3 (4th Cir. 2010)

("Because we conclude that the language of [the statute] is

plain, we need not address the various public policy arguments that each side advances.").4

4DuPont also notes that Botkin had a reason to claim an exemption in

her property because "[e]quity or no equity, Ms. Botkin’s legal interest in

the real estate passed into the bankruptcy estate" when she filed her bankruptcy petition. Brief of Appellant at 12. DuPont maintains that not having

claimed her home as exempt, Botkin risked the possibility that the trustee

would "take possession of [her] property in order to lease it to generate

assets for the bankruptcy estate" under the authority granted the trustee

BOTKIN v. DUPONT COMMUNITY CREDIT UNION 9
III.

In sum, because we find that the district court correctly

concluded that a debtor is not required to list her property as

exempt in order to avoid a judicial lien that is impairing that

exemption, we affirm the district court’s reversal of the bankruptcy court’s denial of Botkin’s motion to avoid DuPont’s

judicial lien. 

AFFIRMED

under 11 U.S.C.A. § 363 (West 2004 & Supp. 2010). Reply brief of

Appellant at 5-6. Claiming her home as exempt was not an option for Botkin, however, as Virginia law prohibits a debtor from claiming an exemption against debts "[f]or the purchase price of such property or any part

thereof." Va. Code § 34-5. Botkin’s property, valued at $22,500, was

encumbered by a purchase money deed of trust securing an outstanding

loan balance of approximately $24,124. 

10 BOTKIN v. DUPONT COMMUNITY CREDIT UNION