State law insulated a recorded judgment lien from future increases in the homestead exemption. Bankruptcy law trumps that limitation, says the 9th Circuit in Barclay v. Boskoski. [T]he Bankruptcy Code requires courts to determine the amount of the exemption to whichthe debtor would have been entitled in the absence of the lien at issue The issue was literally a half-million dollar question. When the judgment creditor recorded its abstract of judgment, the California homestead was $100,000 for a married couple. When the homeowner filed bankruptcy, the homestead exemption had been increased to $600,000. By statute, California law insulated a judgment lien creditor from future increases in the homestead. Civil Procedure Section 703.050(a). When the debtor sought to avoid the lien as impairing the homestead in effect when he filed bankruptcy, the judgment creditor argued that the applicable homestead was the much lesser amount provided in 2014 when the lien was … [Continue reading...]
