## Facts

- Thomas J. Silveira filed a Chapter 7 bankruptcy petition in the District of Massachusetts and claimed a $15,000 homestead exemption under 11 U.S.C. § 522(d)(1).
- Silveira’s primary residence had a stipulated fair market value of $157,000.
- The residence was encumbered by a consensual mortgage of $117,680.
- East Cambridge Savings Bank held a judicial lien against the residence in the amount of $209,500.
- Silveira moved to avoid the Bank’s judicial lien under 11 U.S.C. § 522(f)(1) and § 522(f)(2)(A).
- The bankruptcy court granted complete avoidance of the judicial lien, and the district court affirmed based on Chapter 7’s “fresh start” policy.
- The Bank appealed.

## Issues

1. Whether 11 U.S.C. § 522(f)(1) permits complete avoidance of a judicial lien when the property value exceeds the sum of consensual liens plus the debtor’s claimed exemption.
2. Whether, under § 522(f)(2)(A)’s impairment formula, lien avoidance is limited to the portion of the judicial lien that actually impairs the exemption.

## Decision

- The First Circuit vacated the district court’s judgment and remanded.
- The court held that § 522(f)(1) authorizes avoidance only “to the extent” a judicial lien impairs the debtor’s exemption.
- Because the stipulated property value exceeded the consensual mortgage plus the exemption, some value remained non-exempt; the judicial lien could not be stripped from that non-exempt equity.
- The debtor could avoid only the portion of the judicial lien equal to the statutory impairment amount calculated under § 522(f)(2)(A), not the entire lien.

## Legal Principles

- Section 522(f)(1) is a limited remedy that protects a debtor’s exempt interest and does not permit avoidance beyond the impairment of the exemption.
- “To the extent” in § 522(f)(1) imposes a quantitative cap: a judicial lien is avoidable only in the amount necessary to prevent impairment of the exemption.
- Under § 522(f)(2)(A), impairment is measured by the extent to which the sum of (a) the judicial lien, (b) all other liens, and (c) the exemption exceeds the value of the debtor’s interest in the property.
- General Chapter 7 policy cannot expand a debtor’s exemption beyond amounts set by Congress or justify eliminating a lien against non-exempt equity.

## Conclusion

The First Circuit ruled that § 522(f) does not allow complete elimination of a judicial lien when the debtor has non-exempt equity in the property; avoidance is limited to the portion of the lien that impairs the debtor’s statutory exemption as determined by § 522(f)(2)(A)’s formula.


In re Silveira, 141 F.3d 34 (1st Cir. 1998)