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Chapter 7
Avoidance of Liens
Avoidance of Liens Securing Penalties: The trustee may avoid a lien securing the type of claim described in Bankruptcy Code section 726(4) for a fine, penalty, or forfeiture, or for punitive, multiple, or exemplary damages that do not constitute compensation for actual pecuniary loss. Bankruptcy code §721(a), note: The priority claimants entitled to distribution under section 724(b)(2) do not include seventh priority unsecured tax claims Bankruptcy code §507(a)(7).(iii) To the extent that the allowed secured tax
claim is greater than the total of all distributions made under section
724(b)(2) to priority claimants: Bankruptcy code §724(b)(3);
(iv) To any lien holder possessing an allowed claim
secured by a non-avoidable lien on the collateral that is junior to the
tax lien: Bankruptcy code §724(b)(4);
(v) To the tax lien holder to the extent that the allowed secured tax claim is not satisfied under section 724(b)(3): Bankruptcy code §724(b)(5); and
(vi) To the Chapter 7 estate Bankruptcy code §724(b)(6).
Example
The bankruptcy debtor Corporation files a voluntary Chapter 7
bankruptcy petition, and
the only property available for distribution is a building that is worth
$20,000. The Internal
Revenue Service holds an allowed claim for $7,000, secured by a
perfected tax lien on the building. Bank A holds a $10,000 claim secured
by a non-avoidable lien on the building that is senior to the tax lien.
Bank B holds a $2,000 claim secured by a non-avoidable lien on the
building that is junior to the tax lien. Administrative expenses in the
bankruptcy case total $4,000, and there also are priority claims in the amount of
$1,000 for pre-petition wages owed to employees of the bankruptcy Debtor Corporation.
If the building is sold for a price of $20,000, distribution in the case
will be as follows: (i) to Bank A in the amount of $10,000; (ii) to the
priority claimants for the expenses of administration ($4,000) and for
the employees' wages ($1,000); (iii) to the IRS in the amount of $2,000,
which is the extent that its allowed secured tax claim ($7,000) exceeds
the total payments to the priority claimants in the bankruptcy case ($5,000); (iv) to Bank B in
the amount of $2,000; and (v) to the IRS in the amount of $ 1,000, which
arc the only funds remaining. Thus, as a result of the subordination of
its lax lien in the Chapter 7 bankruptcy case, the IRS receives a total
distribution of only $3,000 on its allowed secured claim. Bankruptcy
code
§724(h).
Levels of Claimants
Payment to more than one claimant within any particular level of distribution under section 724(b) (above) is made in the order that would have been required under the Code outside of the provisions for the treatment of lax liens. Bankruptcy code §724(c)].Our Services
If you are facing foreclosures, repossessions, wage garnishments, liens, and constant calls and letters from creditors and collection agencies, we are ready to assist you. The Pacific Bankruptcy Center is a debt relief agency, aiding clients in filing for bankruptcy relief under the Bankruptcy Code. Contact a bankruptcy lawyer at our firm today to learn more through an honest assessment of your situation
San Bernardino
San Bernardino is the county seat of San Bernardino County, California. San Bernardino's estimated population as of 2006 was 205,010. As of 2006 it was the 18th largest city in California and the 101st largest city in the United States. San Bernardino is part of the Riverside-San Bernardino-Ontario Metropolitan Area, the 14th largest metro in the nation also part of the Greater San Bernardino Area which is just referred to divide the San Bernardino-Riverside Area counties (San Bernardino County and Riverside County). It is an anchor city of the Inland Empire. San Bernardino has three major events, the annual Route 66 Rendezvous, a multi-day classic automobile event held in downtown San Bernardino each September, the National Orange Show, held each April/May, and the Western Regional Little League Championships each August. The world's largest fast food chain, McDonald's, began in the city in 1940 by brothers Dick and Mac McDonald.
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