Court Opinion

ID: 9710421
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:09:25.533255+00
Date Added: 2024-06-11T18:22:56.669008
License: Public Domain

CARTER, Justice
(dissenting).
I dissent. Iowa Code section 628.3 creates a right of redemption in the judgment debtor as a property right. That right is assignable pursuant to section 628.25. Federal bankruptcy courts have recognized that the debtor’s right of redemption of real property is a legal and equitable interest in property and constitutes part of the debtor’s bankruptcy estate. Johnson v. First Nat’l Bank, 719 F.2d 270, 276 (8th *56Cir.1983), cert. denied, 465 U.S. 1012, 104 S.Ct. 1015, 79 L.Ed.2d 245 (1984). It is expressly provided in 11 U.S.C.A. § 541(c)(1) (West Supp.1987) that
an interest of the debtor in property becomes property of the estate ... notwithstanding any provision in an agreement, transfer instrument, or applicable non-bankruptcy law—
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(B) that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title, or on the appointment of or taking possession by a trustee ... and that effects or gives an option to effect a forfeiture, modification, or termination of the debtor’s interest in property.
(Emphasis added.) Under the majority’s interpretation of Iowa Code section 628.4, property in which the debtor holds an interest is forfeited on commencement of the case under title 11 U.S.C. Clearly, such interpretation is contrary to the foregoing statute for purposes of the bankruptcy court’s administration of the property and therefore invalid under the supremacy clause of the federal constitution. I believe that interpretation is similarly invalid with respect to the debtor’s rights after the property is released by the bankruptcy court. It adversely affects the power of the bankruptcy court to carry out the intention of the federal statutes vis-a-vis debtor rehabilitation. Moreover, it will often produce a chilling effect on the debtor’s opportunity to seek such rehabilitation under federal law.
Notwithstanding the fact that the appellant has not relied on the significance of 11 U.S.C. § 541 in the present case, we have an obligation to interpret our statutes in a manner which avoids potential constitutional infirmities. Consequently, I would interpret section 628.4 as not providing for the loss of a debtor’s right to redeem upon the filing of a voluntary petition in bankruptcy.
SCHULTZ, J., joins this dissent.