United States Bankruptcy Court, W.D. Kentucky.
W. Gordon Iler, Owensboro, Ky., for creditor.
Richard A. Robertson, Owensboro, Ky., for debtors.
STEWART E. BLAND, Bankruptcy Judge.
This bankruptcy case comes before the Court on objection of a creditor, Kentucky Finance Company, by counsel, to the avoidance of its lien by the debtors pursuant to 11 U.S.C. § 522(f).
The issue before the Court relates to the nature or character of the interest involved i.e., whether the interest is a purchase money security interest, and as such is not subject to avoidance under § 522(f) of the Bankruptcy Code.
The debtors purchased a General Electric washer and dryer from Star Television and executed a security agreement and financing statement which was then assigned to Kentucky Finance Company. The creditor asserts that it holds a nonavoidable purchase money security interest in these household goods, and the debtors assert that the assignment of the security agreement negates the character of the interest as "purchase money." Thus, the debtors seek to avoid the lien of the creditor on the ground that the interest is a nonpurchase money, nonpossessory security interest in exempt household goods.
Although a factually dissimilar situation was ruled upon by this Court in In Re Littlejohn, Bkrtcy., 20 B.R. 695, case No. 3-81-02298, adversary proceeding No. 3-81-0525, issued March 6, 1982, in that a renewal or later extension of credit was asserted in that case, nevertheless, the reasoning as to the purchase money character of the original interest applies to the instant proceeding. Therefore, the case of In Re Littlejohn, supra, is applicable here and is attached and incorporated by reference as if set out in full herein.
This Memorandum and Order constitutes Findings of Fact and Conclusions of Law pursuant to Rule 752, Rules of Bankruptcy Procedure.
WHEREFORE, IT IS ORDERED AND ADJUDGED that Kentucky Finance Company is the holder of a valid purchase money security interest in household goods which is not subject to avoidance by the debtors pursuant to 11 U.S.C. § 522(f).
IT IS FURTHER ORDERED AND ADJUDGED that the debtors' motion to avoid the lien of Kentucky Finance Company be and is overruled.
Case Name: In Re Smallwood
Citations: 20 B.R. 699
This case can be cited as precedent.