### The Honorable Edward J. McManus, United S tates District Judge 1 

### for the Northern District of Iowa. The Honorable Paul J. Kilburg, United Sta tes Bankruptcy Judge 2 

### for the Northern District of Iowa. ___________ No. 95-3110

___________ Rene Lee Meseraull, also known * as Rene Lee O'Donnell, * * Appellant, * * Appeal from the United States v. * District Court for the * Northern District of Iowa. Rick Miller Construction, Inc. * * Appellee. * [UNPUBLISHED]

___________ Submitted: February 23, 1996 Filed: April 19, 1996

___________ Before FAGG, BOWMAN, and HANSEN, Circuit Judges.

___________ PER CURIAM.
Chapter 7 bankruptcy debtor Rene Lee Meseraull appeals from th e district court's order affirming the order of the bankruptcy court 1 2 denying her motion to avoid the judicial lien of Rick Miller Construction, Inc. We affirm.
In her voluntary Chapter 7 bankruptcy petition, Meseraull liste d Rick Miller Construction, Inc. (Miller), as a secured creditor holding a $43,00 0 claimagainst her; the claim had been reduced to a judgment lien against her homestead. The parties stipulated that Miller had restored Meseraull' s homestead after it

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was damaged by fire, and that Meseraull's debt to Miller was exclusively for wo rk done, and materials furnished, to restore the homestead

. Meseraull claimed her homestead as property that was exempt pursuant to 11 U.S .C. § 522 from the bankruptcy estate under Iowa Code § 561 (1993) ; Miller did not object to the claimed exemption. Meseraull then moved to avoid Miller's judicial lien under 11 U.S.C. § 522(f), arguing the lie n encumbered exempt property. Miller objected, arguing the lien was no t avoidable because a homestead is not exempt from the sort of debt Meseraul l owed it pursuant to Iowa Code § 561.21(3).

After a h earing, the bankruptcy court denied Meseraull's motion and sustained Miller's ob jection. The bankruptcy court first determined that Miller could raise exemption issues in objection to Meseraull's lie n avoidance motion, even though it failed to timely object to her claime d
exe mption. Relying on In re Streeper , 158 B.R. 783 (Bankr. N.D. Iow a 1993), the bankruptcy court noted that Iowa law defined the homestea d exemption to exclude a homestead subject to a li en for a section 561.21(3) debt, and concluded that, as Meseraull's homestead thus would not be exemp t
even if the lien were avoided, Miller's lien was not avoidable based on th e analysis in Owen v. Owen , 500 U.S. 305 (1991). The district court affirme d the bankruptcy court's order.

On a ppeal, Meseraull challenges both the bankruptcy court' s conclusio ns. This court sits as a second court of review in bankruptc y proceedings, applying the same standard of review as the district court. In re Kjellsen , 53 F. 3d 944, 946 (8th Cir. 1995) (per curiam). We review de novo the bankruptcy court's conclusions of la w, and for clear error its findings of fact. Id.

We co nclude that Miller is precluded from challenging Meseraull' s home stead's exemption from the bankruptcy estate, because Miller neve r filed an objection. See Abramowitz v. Palmer , 9 99 F.2d 1274, 1276-77 (8th Cir. 1993). Miller's failure to object

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to the claimed exemption, however, does not bar it from challengin g Meseraull's ability to avoid the lien. See In r e Montgomery , 80 B.R. 385, 388 (Bankr. W.D. Tex. 1987); In re Indvik , 118 B .R. 993, 1007 (Bankr. N.D. Iowa 1990).

Sta tes are allowed to opt out of the federal exemption schem e contained in the Bankruptcy Code, thereby determining what property debtor s may exemp t from the bankruptcy estate. See 11 U.S.C. § 522(b); In r e Ger rald , 57 F.3d 652, 654 (8th Cir. 1995). Iowa has opted out of th e federa l exemption scheme. See Iowa Code § 627.10 (1992). Iowa Cod e § 56 1.16 provides that "the homestead of every person is exempt fro m judicial s ale where there is no special declaration of statute to th e contrary." Section 561.21 contains a special de claration to the contrary, providing that a "homestead may be sold to satisfy debts . . . incurred fo r
wor k done or materials furnished exclusively for the improvement of th e homestead."
Federal law applies to determine whe ther a lien may be avoided under section 522(f), In re Thompson , 884 F.2d 1100, 1102 (8th Cir. 1989), and Meseraull had the burden of establishing that she was entitled to avoi d Miller's lien, see In re Catli , 999 F.2d 1405, 1406 (9th Cir. 1993). In Owen , the Supreme Cou rt held that a judicial lien may impair an exemption
even t hough an opt-out state's statutory definition of exempt propert y specif ically excludes property encumbered by judicial liens. Owen , 50 0 U.S. at 306, 308-11. In determining whether such a lien is avoidable the question is "not whether the lien impairs an exe mption to which the debtor is in fac t entitled, but whether it impairs an exemption to which [she ] would have been entit led but for the lien itself." Id. at 310-13. Under Iowa l aw, homesteads are not exempt from section 561.21(3) debt

. Accordingly, Miller's lien does not impair an ex emption to which Meseraull would be entitled but for the lien, as even if M iller's lien were avoided, Meseraull's homestead would not be exempt from her debt to Miller. Thus, Meseraull has not met her

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burden of establishing that she is entitled to avoid Miller's lien.
Accordingly, we affirm the order of the district court.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.