Sharon T. Sparrow

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
NEW BERN DIVISION
IN RE:
SHARON T. SPARROW,
Debtor. 	Case No. 07-03050-8-JRL
Chapter 13
_____________________________________________________________________________
ORDER
This case is before the court on the debtor’s motions to avoid the liens of American General
Financial Services (“American General”), Time Financing Service (“Time”), and Future Financial
Services (“Future Financial”). On December 5, 2007, the court conducted a hearing on this matter
in Wilson, North Carolina.
On August 21, 2007, the debtor filed for relief under Chapter 13 of the Bankruptcy Code.
On August 22, 2007, the debtor filed three motions to avoid the liens of several creditors holding
perfected security interests in household goods and tools of the debtor: (1) a motion to avoid the lien
of American General, which holds perfected security interests in one television and a Dell computer
and accessories; (2) a motion to avoid the lien of Time, which holds perfected security interests in
one forty-eight inch Magnavox television, one thirty-two inch RCA television, one twenty-seven
SO ORDERED.
SIGNED this 11 day of December, 2007.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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1Accordingly, the motion to avoid the lien of Time was withdrawn in its entirety and is
not addressed in this order. The motions to avoid the liens of American General and Future
Financial remained in part and are addressed herein.
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inch Magnavox television, and one nineteen inch television; and (3) a motion to avoid the lien of
Future Financial, which holds perfected security interests in one sixty inch Phillips HD television,
one twenty-seven inch RCA television, one RCA VCR/DVD combination, and a Techwood Stereo
with speakers. 	The motions were withdrawn with respect to all property except for the Dell
computer and accessories, the sixty inch Phillips HD television, the RCA VCR/DVD combination,
and the Techwood Stereo and speakers (“the collateral”).1
The Bankruptcy Code provides that a “debtor may avoid the fixing of a lien on an interest
of the debtor in property to the extent that such lien impairs an exemption to which the debtor would
have been entitled . . . if such lien is . . . a nonpossessory, nonpurchase-money security interest in
any household furnishings [or] household goods . . . that are held primarily for the personal, family,
or household use of the debtor or a dependent of the debtor.” 11 U.S.C. § 522(f)(1)(B)(i). Section
522(f) therefore requires that a two-part test be satisfied in order for a debtor to avoid a
nonpossessory, nonpurchase-money security interest: (1) that the collateral is exempt from the
bankruptcy estate under federal or state law, and (2) that the security interest is in either household
goods or another type of collateral listed in § 522(f)(1). In re Mundy, 2006 Bankr. LEXIS 109, at
*5 (Bankr. D. S.C. Jan 10, 2006). North Carolina has opted out of the federal exemptions listed in
§ 522(d), so debtors in North Carolina are limited to state law exemptions. N.C. Gen. Stat. §
1C-1601-1604 (2005). Under North Carolina state law, a debtor may exempt “[t]he debtor’s
aggregate interest, not to exceed five thousand dollars ($5,000) in value for the debtor . . . in
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household furnishings [and] household goods . . . that are held primarily for the personal, family,
or household use of the debtor or a dependent of the debtor.” Id. § 1C-1601(a)(4).
The security interests that the debtor seeks to avoid fall squarely within the two-part test
of 11 U.S.C. § 522(f). First, personal computers, televisions, VCR’s, and stereos are types of
property that are routinely exempted pursuant to N.C. Gen. Stat. § 1C-1601(a)(4). Further, the
security interests of American General and Future Financial are in household goods, as the term
is used in 11 U.S.C. § 522(f)(1). See 11 U.S.C. § 522(f)(4) (stating that the term “household
goods” includes one television, one personal computer and related equipment, one VCR, and one
radio). Therefore, the debtor has satisfied the two-part test for avoiding a nonpossessory,
nonpurchase-money security interest as to the Dell computer and accessories, Phillips HD
television, RCA VCR/DVD combination, and Techwood stereo.
For the foregoing reasons, the court ALLOWS the debtor’s motions to avoid the lien of
American General in the debtor’s Dell computer and accessories and the liens of Future
Financial in the Phillips HD television, RCA VCR/DVD combination, and the Techwood stereo
pursuant to 11 U.S.C. § 522(f).
END OF DOCUMENT
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