Opinion
Case No. 01-81479-RGM; (Chapter 7)
February 4, 2002.
MEMORANDUM OPINION
THIS CASE was before the court on January 29, 2002, on Eric Butler's motion to release funds held under a garnishment. Eric D. Butler and Patricia Butler filed a voluntary petition in bankruptcy pursuant to chapter 7 of the United States Bankruptcy Code in this court on November 9, 2001. Mr. Butler listed funds subject to a garnishment in favor of Clyde K.C. Lam and Patcharee C. Lam in the amount of $1,800.00 on schedule B and claimed the funds exempt pursuant to § 34-4 of the Code of Virginia on schedule C. The judgment creditors obtained a judgment against the debtors in the General District Court of Prince William County, Virginia. A garnishment issued on the judgment which resulted in payment to the judgment creditors of $1,745.90 on November 7, 2001, two days prior to the filing of the petition in bankruptcy in this case. The judgment was for rent. An additional payment on the garnishment of $110.55 was received by the judgment creditors on November 11, 2001, but was returned to debtors' counsel.
Mr. Butler followed the procedures set forth in General Order 95-2 with respect to the release of garnishments in this division. However, the general order governs only garnishments that have not been fully consummated, that is, where final payment has not been made to the judgement creditor. It is intended to implement an inexpensive and expeditious procedure under § 522(f) of the Bankruptcy Code which allows a debtor to avoid the fixing of a judicial lien on property of the debtor to the extent that the judicial lien impairs the exemption of the debtor. Once the garnished funds are paid over to the judgment creditor, the debtor has no further interest in the funds and § 522(f) is not applicable. See United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S.Ct. 2309 (1983).
The motion of the debtors will be denied because the garnished funds were paid to the judgment creditors prior to the filing of the petition in bankruptcy in this case. Section 522(f), is therefore, not applicable.
At the hearing, the court raised the question of whether the nature of the underlying claim, that is, a claim for rent, affected the Homestead Exemption in an action under § 522(f). Upon further review the court notes that while § 34-4 of the Code of Virginia at one time was not available with respect to claims for rent, the rental exception was repealed by the General Assembly effective July 1, 1990. This court previously considered the impact of the prior law. In re Godfrey, 93 B.R. 451 (Bankr.E.D.Va. 1988) (Bostetter, C.J.); In re Shines, 39 B.R. 879 (Bankr.E.D.Va. 1984) (Shelley, J.).