Can a Debtor Avoid a Lien under Code § 522(f) on Debtor’s Contingent Future Interests in Property?

No.

As reported by Robin Miller of CBAR, the Chapter 7 debtor could avoid, under Code § 522(f), a creditor’s judgment lien on homestead property owned by the debtor and his nondebtor wife as tenants by the entirety, insofar as the lien attached to the debtor’s interest in the property as a tenant by the entirety, since under Illinois law the creditor, whose judgment was against the debtor only, could not proceed against the property, so that the debtor’s interest as a tenant by the entirety was exempt under Code § 522(b)(2)(B). However, Illinois law did not provide any exemption for the debtor’s contingent future interests in the property should the spouses divorce or the wife die, so that the debtor could not avoid the lien insofar as it attached to those contingent future interests.

In re Yotis, 518 B.R. 481 (Bankr. N.D. Ill., Sept. 30, 2014), appeal filed, Gasunas v. Yotis, Case No. 1:14-cv-8726 (N.D. Ill., filed Nov. 3, 2014)

(case no. 1:14-bk-2689) (Bankruptcy Judge Jack B. Schmetterer)

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