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Opinion 32

Case Name: 

Pillow v. Avco Fin. Servs. (In re Pillow), 8 B.R. 404 (Bankr.D.Utah)Geigle v. Avco Fin. Servs. (In re Geigle)Horton v. Avco Fin. Servs. (In re Horton)Revello v. Avco Fin. Servs. (In re Revello)

Judge: 
Judge Mabey
Date: 
Jan-8-1981
Case Number(s): 
80-0059, -0061, -0060, -0058
Status: 

PUBLISHED

Body: 

Debtors in four cases filed complaints against Avco seeking to avoid its liens on their personal property, and Avco moved to dismiss. The court considered whether the 11 U.S.C. § 522(f)(2) lien avoidance provisions applied to security interests created prior to enactment of the Bankruptcy Code, and if so, whether the provisions were constitutional. The court explained that § 522(f)(2) was intended to avoid nonpossessory, non-purchase money liens to the extent they impair exemptions for certain living necessities, tools of trade, and health aids, then concluded that both the statute's language and legislative analysis indicated that § 522(f) was intended by Congress to be retroactive. In considering whether retroactive application of the statute was constitutional, the court concluded that no substantive due process rights outweighed the congressional power to regulate bankruptcies. At most, the court held that the Constitution required a rational connection between § 522(f) and the purpose of its enactment, which was to eliminate certain "evils" in the credit industry. The court held that, under the presumption of constitutionality that was afforded the statute, it would be inappropriate to conclude that § 522(f) does not rationally relate to that purpose and, therefore, the statute was constitutional. Avco's motions to dismiss were denied.

Internal Ref: 
Opinion 32
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