Farron et al v. Carter

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
IN RE: ) CHAPTER 7
)
DREW SCOTT FARRON AND ) CASE NO. 11-60711
CYNTHIA GAY FARRON, )
) ADV.NO. 11-6067
Debtors. )
) JUDGE RUSS KENDIG
DREW SCOTT FARRON AND )
CYNTHIA GAY FARRON, )
)
Plaintiffs, )
) MEMORANDUM OF OPINION
V. ) (NOT INTENDED FOR
) PUBLICATION)
JAMES CARTER, )
)

Defendant.

Plaintiffs filed a motion for default judgment on October 7, 2011. They initiated an
adversary complaint under 11 U.S.C. § 547 on August 15, 2011. Defendant failed to file a

responsive pleading.

The court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334 and the
general order of reference entered in this district on July 16, 1984. Venue in this district and
division is proper pursuant to 28 U.S.C. § 1409. This is a core proceeding under 28 U.S.C.
§ 157(b)(2)(F). The following constitutes the court’s findings of fact and conclusions of law.

This opinion is not intended for publication or citation. The availability of this
opinion, in electronic or printed form, is not the result of a direct submission by the Court.

Peon Doc 13 FILED 10/17/11 ENTERED 10/17/11 12:09:59 Page 1 of 3

FACTS

Plaintiff-debtors filed a joint chapter 7 bankruptcy case on March 10, 2011. Prior to
the filing, Defendant-creditor James Carter recovered $3,528.68 from wage garnishments and
bank attachments. Plaintiffs contend Defendant’s recovery was preferential and subject to
avoidance under 11 U.S.C. § 547. The chapter 7 trustee did not pursue avoidance of the

transfers.

ANALYSIS

The authority for Debtors to recover a preference is found in 11 U.S.C. § 522(h).
The statute provides:

The debtor may avoid a transfer of property of the debtor
or recover a setoff to the extent that the debtor could have
exempted such property under subsection (g)(1) of this
section if the trustee had avoided such transfer, if --

(1) such transfer is avoidable by the trustee under
section 544, 545, 547, 548, 549, or 724(a) of
this title or recoverable by the trustee under
section 553 of this title; and

(2) the trustee does not attempt to avoid such
transfer.

A preference is avoidable by the trustee under § 547. Since the trustee did not attempt to
avoid the preferential transfers, Debtors have the opportunity to do so. However, their
recovery is limited to the amount which can be exempted under subsection (g)(1). 11 U.S.C.

§ 522(h).
Section 522(g)(1) states:

Notwithstanding sections 550 and 551 of this title, the
debtor may exempt under subsection (b) of this section
property that the trustee recovers under section 510(c)(2),
542, 543, 550, 551, or 553 of this title, to the extent that
the debtor could have exempted such property under
subsection (b) of this section if such property had not been
transferred, if --

(1)(A) such transfer was not a voluntary transfer of
such property by the debtor; and

11-06067-rk Doc13 FILED 10/17/11 ENTERED 10/17/11 12:09:59 Page 2 of3

(B) debtor did not conceal such property; or

(2) the debtor could have avoided such transfer
under subsection (f)(1)(B) of this section.

The import of this provision means that as long as Debtors did not voluntarily transfer or
conceal the property to be recovered, they are entitled to exempt the property in accordance
with Ohio’s exemption scheme. Wage garnishments and bank attachments are involuntary
transfers. The transfers were disclosed in Debtors’ Statement of Financial Affairs in
response to question 4b. Consequently, Debtors can recover the transfers to the extent they

can exempt the transfers.

Debtors have failed to persuade the court that the preferential transfers are
exemptible. Ifthe transfers are not exempt, they cannot be recovered. A review of Schedule
C indicates that Debtors claimed more than their allowed exemption under Ohio Revised
Code § 2329.66(a)(3). The bulk of their exemption allowance under § 2329.66(a)(18) has

been applied to a tax refund.

The court is not inclined to grant the motion for default judgment without a showing
that the transfers are exempt and can be recovered. The court will permit Debtors two weeks
to review the matter. Debtors are advised that this court looks disfavorably on attempts to
jockey exemptions after a case has concluded. See In re Lambert, Case No. 09-65025

(Bankr. N.D. Ohio Sept. 14, 2010).
An order will be issued concurrently with this opinion.

#t #t #

Service List:

Lynn A Beaumont
43 W Ohio Ave
Rittman, OH 44270-1431

Drew Scott Farron
Cynthia Gay Farron
545 Fairlawn
Smithville, OH 44677

James Carter
605 Madison Trail
Doylestown, OH 44230

11-06067-rk Doc13 FILED 10/17/11 ENTERED 10/17/11 12:09:59 Page 3of3