Motion to Avoid Lien that Impairs Exemption
A Motion to Avoid Lien that Impairs Exemption is filed by a debtor seeking to avoid a lien which is held by a creditor on property which the debtor is claiming as exempt property. The motion is governed by 11 U.S.C. § 522(f) and S.D.Ind. B-4003-2 and requires no filing fee.
Definition: “An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping the collateral (i.e. the car) that would otherwise be subject to repossession.”
If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the Court pursuant to 11 U.S.C. § 524(c). The Bankruptcy Code requires that reaffirmation agreements contain an extensive set of disclosures as described within 11 U.S.C. § 524(k). Among other things, the disclosures must advise the debtor of the amount of the debt being reaffirmed and how it is calculated and that reaffirmation means that the debtor's personal liability for that debt will not be discharged in the bankruptcy.
The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which showsincome sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the Court may decide not to approve the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.
If the debtor was represented by an attorney in connection with the reaffirmation agreement, the attorney must certify in writing that he or she advised the debtor of the legal effect and consequences of the agreement, including a default under the agreement. The attorney must also certify that the debtor was fully informed voluntarily entered into the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor's dependants pursuant to 11 U.S.C. § 524(k). The Bankruptcy Code requires a reaffirmation hearing if the debtor has not been represented by an attorney during the negotiating of the agreement, or if the Court disapproves the reaffirmation agreement pursuant to 11 U.S.C. § 524(d) and (m). The debtor may repay any debt voluntarily, however, whether or not a reaffirmation agreement exists pursuant to 11 U.S.C. § 524(f).