Barclay v. Boskoski: Homestead Exemption Beats Old Lien

Short answer: When a California homeowner files bankruptcy and asks the court to remove (avoid) a judgment lien on the home, the court measures the homestead exemption as of the bankruptcy filing date, not the date the creditor recorded its lien. The Ninth Circuit confirmed this in Barclay v. Boskoski, a published 2022 decision in which Ahren A. Tiller of BLC Law Center, APC was counsel of record and lead attorney for the debtor. The result: the debtor used California’s $600,000 homestead exemption, not the $100,000 figure from years earlier, and the entire judgment lien was avoided.

Background: an old judgment lien on a Carlsbad home

According to the Ninth Circuit’s opinion, a group of judgment creditors recorded a $256,075.95 judgment lien against the debtor’s Carlsbad, California home in 2014. Seven years later, in August 2021, the debtor filed a Chapter 7 bankruptcy case, and a Chapter 7 trustee was appointed.

By then, interest had pushed the lien to $477,926.82. The debtor valued the home at $1,085,750, and two deeds of trust (home loans) totaling $551,720.47 were also recorded against it. The debtor claimed a $600,000 homestead exemption and moved to avoid the judgment lien under the Bankruptcy Code.

That $600,000 figure came from California’s homestead law as amended effective January 1, 2021, which sharply increased the exemption. We explained that change when it happened in New California Homestead Exemption Law Protects $600,000 of Equity.

The issue: which homestead exemption counts?

The trustee opposed. He argued that the debtor was limited to the $100,000 homestead exemption that applied in 2014, when the lien was recorded. He relied on California Code of Civil Procedure section 703.050(a), which says the amount of an exemption “shall be made by application of the exemption statutes in effect” at the time the judgment creditor’s lien was created.

The difference was enormous. Under the trustee’s math, the debtor could strip off only $43,897.20 of the lien, leaving well over $400,000 attached to the home. Under the debtor’s math, using the $600,000 exemption, the lien could be removed entirely.

How lien avoidance works under 11 U.S.C. § 522(f)

Section 522(f)(1) of the Bankruptcy Code lets a debtor avoid a judicial lien “to the extent that such lien impairs an exemption to which the debtor would have been entitled.” Section 522(f)(2)(A) supplies the formula: add up (1) the lien, (2) all other liens on the property, and (3) “the amount of the exemption that the debtor could claim if there were no liens on the property.” If that total exceeds the value of the debtor’s interest in the property, the lien impairs the exemption to that extent and can be avoided.

The holding

A three-judge panel of the Ninth Circuit (Judges Ikuta, Forrest, and Thomas; opinion by Judge Thomas) affirmed the bankruptcy court. The panel relied on the U.S. Supreme Court’s decision in Owen v. Owen, 500 U.S. 305 (1991), which held that courts applying § 522(f) “ask not whether the lien impairs an exemption to which the debtor is in fact entitled, but whether it impairs an exemption to which he would have been entitled but for the lien itself.”

Applying Owen, the Ninth Circuit wrote that “At the date of Boskoski’s bankruptcy filing, and in the absence of the Greek Village lien, Boskoski would have been entitled to claim a $600,000 homestead exemption.” The court also noted that the exemptions available to a debtor “are fixed as of the filing date of the bankruptcy petition” (the “snapshot rule”). Because the lien, the two deeds of trust, and the $600,000 exemption together exceeded the debtor’s interest in the home by $543,897.20, which was more than the lien itself, the court held that the lien “may therefore be avoided in its entirety.” The judgment was “in all respects AFFIRMED.”

Citation: Barclay v. Boskoski, 52 F.4th 1172 (9th Cir. 2022) (No. 22-55098, decided November 14, 2022).

Why it matters for California homeowners

• Old judgment liens are not frozen in time. A creditor who recorded a lien years ago, when the homestead exemption was much smaller, does not lock in that smaller exemption for § 522(f) lien avoidance in a later bankruptcy case.
• Published and binding. Barclay is a published Ninth Circuit opinion, so bankruptcy courts in California and the rest of the Ninth Circuit follow it.
• The current exemption is large. Under Cal. Civ. Proc. Code § 704.730(a), the homestead exemption is the greater of the countywide median sale price for a single-family home in the prior calendar year (capped at $600,000) or $300,000. Under § 704.730(b), those dollar amounts adjust annually for inflation beginning January 1, 2022, so the figures in effect today are higher than the base amounts in the statute. The amount that applies to you depends on your county and filing date.
• Timing still matters. Because the exemption is measured on the filing date, when you file can affect how much equity you protect. That is a question to review with a lawyer before you file.

For a broader look at protecting a house and other property in bankruptcy, see our guide to protecting your exempt property.

How BLC handled the case

The Ninth Circuit docket lists Ahren A. Tiller of BLC Law Center, APC as counsel of record and lead attorney for the debtor-appellee. The bankruptcy court ruled for the debtor and, calling its decision “a close call on an important question,” certified a direct appeal to the Ninth Circuit, which agreed to accept it. The case was argued on September 23, 2022, and the Ninth Circuit issued its published opinion affirming the bankruptcy court on November 14, 2022.

For the client, the outcome meant a judgment lien of nearly half a million dollars came off the family home. For other California debtors, it produced binding appellate authority on how the homestead exemption is measured in § 522(f) lien avoidance.

Prior results do not guarantee a similar outcome.

Watch the Ninth Circuit oral argument

The Ninth Circuit posts video of its oral arguments. You can watch the argument in this case, 22-55098 Christopher Barclay v. Dejan Boskoski, on the court’s official YouTube channel, or below.

Frequently asked questions

Can bankruptcy remove a judgment lien from my house?

Often, yes. Under 11 U.S.C. § 522(f)(1)(A), a debtor can avoid a judicial lien to the extent it impairs an exemption, such as the homestead exemption. The statute excludes judicial liens securing domestic support obligations, and the formula in § 522(f)(2) does not apply to a judgment arising out of a mortgage foreclosure.

Does the homestead exemption in effect when the lien was recorded control?

Not for § 522(f) lien avoidance in a bankruptcy case in the Ninth Circuit. Barclay v. Boskoski held that the court uses the exemption the debtor would have been entitled to on the petition date, absent the lien.

How much is the California homestead exemption?

Cal. Civ. Proc. Code § 704.730 sets it at the greater of the county’s prior-year median single-family home sale price (up to a cap) or a minimum floor, with both amounts adjusted annually for inflation. Your exact figure depends on your county and when you file.

Does lien avoidance work in Chapter 7 and Chapter 13?

Yes. Under 11 U.S.C. § 103(a), chapter 5 of the Bankruptcy Code, which includes § 522, applies in cases under Chapters 7, 11, 12, and 13. Barclay arose in a Chapter 7 case. If you are trying to keep a home with significant equity or arrears, a Chapter 13 plan may also be worth discussing.

Talk to a San Diego bankruptcy attorney

If a judgment lien is attached to your home, or you are worried about losing equity, our San Diego Chapter 7 bankruptcy attorneys can review your situation. Call 800-551-7922 for a free consultation.

This article is general information, not legal advice.