Legal Question in Bankruptcy in Arizona

Avoidable, yet unavoided, security interest.

Please send me your thoughts. I represent a creditor, the holder of a security interest in a car. The security interest was not perfected at time debtor filed Chapter 7;i.e., creditor failed to timely apply for certificate of title to relect lien. Lien was avoidable, but Trustee did not avoid. Questions:

1. Can debtors avoid lien under 11 U.S.C. ��522(f),(g),or (h)? 2. Can secured party enforce security interest by repo and sale after discharge and after vehicle is abandoned from estate?


Asked on 4/17/98, 10:23 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Unperfected lien

Your unperfected lien in bankruptcy is no lien at all. Neither the debtor nor the trustee has to do anything to avoid the lien. You cannot perfect it after filing - section 362 stays any action to create, PERFECT, or enforce any lien against property of the estate - unless you act within the time allowed under state law to perfect the lien such that the perfection would be retroactive to the date of the security agreement, which you have probably missed.

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Answered on 5/05/98, 9:39 pm


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