In Re Sandor Chabot in Re Betty B. Chabot, Debtors. City National Bank v. Sandor Chabot Betty B. Chabot

The debtors in this bankruptcy appeal challenge the district court’s holding that a junior judicial lien did not impair their homestead exemption and therefore could not be avoided under 11 U.S.C. § 522 (f). 131 B.R. 720 . We affirm the district court and deny avoidance.

I.

FACTS AND PRIOR PROCEEDINGS .

This case involves a dispute over a judicial lien on the Chabots’ residence held by the appellees, City National Bank (CNB). On September 30, 1983, the Chabots guaranteed a demand note in favor of CNB for $165,277. CNB instituted an action to collect on September 23, 1984. On March 19, 1986, CNB obtained a summary judgment against the Chabots for $212,115.87 and recorded the abstract of judgment on April 18, 1986. CNB’s lien had an outstanding balance of $241,579.08 at the time of the filing of the bankruptcy petition.

Two prior deeds of trust on the appellants’ residence and the homestead exemption; both of which have priority over CNB’s lien, are undisputed. The first deed was recorded in 1977 and had a balance of $86,412.42 at the time of the filing of the bankruptcy petition. The second deed was recorded in 1984 and had a balance of $38,540.88. The homestead exemption is…