1995 #12, Traversie, 4-12-95

In re: JERALD E. TRAVERSIE and JOANN E. TRAVERSIE, Bankr. No. 94-10110, Chapter 7

MEMORANDUM OF DECISION RE: SATISFACTION OF JUDGMENT

The matter before the Court is Debtors' Motion to Remove Judgment Liens and the response thereto filed by A-1 Steam Brothers. This is a core proceeding under 28 U.S.C. [United States Code] § [section] 157(b)(2)(B). This Memorandum of Decision and subsequent Order shall constitute findings and conclusions under F.R.Bankr.P. 7052. As set forth below more fully, the Court concludes that under 11 U.S.C. § 524(a)(1), the judgment held by A-l Steam Brothers against Debtors has been discharged and, therefore, the judgment may be removed from the records of the Brown County Clerk of Courts.

I.

On November 19, 1992, A-1 Steam Brothers obtained a judgment against Jerald Traversie. The judgment was never satisfied by an execution against his non exempt property.

On July 22, 1994, Jerald E. and Joann E. Traversie ("Debtors") filed a Chapter 7 petition in bankruptcy. Debtors received a discharge of the personal liability on their debts on October 28, 1994. On December 13, 1994, Debtors filed a Motion to Remove Judgment Liens. Included in the list of judgments that Debtors wanted removed was the November 19, 1992 judgment held by A-1 Steam Brothers. In their Motion, Debtors contended that the judgments listed in their Motion were discharged and, therefore, should be deemed satisfied on the county's books so that the judgments do not hamper the fresh start that Debtors were given by the discharge order.

A-1 Steam Brothers filed an objection to the Motion on December 16, 1994. They argued the judgment should not be removed because they had performed services for Debtors that remain unpaid. A-1 Steam Brothers' objection did not cite any statute or case law that supported their argument.

A hearing was held January 31, 1995. Appearances included Curt R. Ewinger for Debtors. No one appeared on behalf of A-1 Steam Brothers. The Court took the matter under advisement and ordered interested parties to file briefs by April 3, 1995. Briefs were filed by Debtors and the United States Trustee's office only.

In their briefs, Debtors argued that under 11 U.S.C. § 524(a)(1) and S.D.C.L. [South Dakota Codified Laws] § 15-16-20, a judgment discharged in bankruptcy may be removed from the records of the county clerk of courts because Debtors did not own any non exempt real property pre-petition to which any judgment lien could attach. In other words, Debtors argue that if they had owned non exempt real property before they had filed bankruptcy, the judgment of A-1 Steam Brothers would have become a lien on that property and A-1 Steam Brothers could have enforced that lien, even after bankruptcy. Since Debtors did not own any non exempt real property before they filed their petition and since Debtors received a discharge of debts, Debtors argue A-1 Steam Brothers no longer has a judgment that can be enforced against any property -- real or personal -- that Debtors may acquire after bankruptcy.

In their letter brief, the United States Trustee supported Debtors' arguments. The U.S. Trustee stated the judgment of A-1 Steam Brothers was discharged on October 28, 1994 and that no judgment lien was ever created because Debtors did not own real property pre-petition to which a judgment lien could attach.

II.

Section 524(a)(1) of the Bankruptcy Code provides:

(a) A discharge in a case under this title --

(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived[.]

It is a key part of a debtor's discharge and clearly discharges a debtor's personal liability under a judgment.

Section 15-16-20 of the South Dakota Code establishes the procedure for removing a judgment from the records of a county clerk of courts. Once a bankruptcy debtor receives a discharge, he must file a motion before the Court and get an order that lists the judgments to be discharged. When the clerk of courts receives that order, she must indicate on her records that the judgment is deemed discharged or satisfied.

III.

Debtors and the United States Trustee have correctly stated the law applicable to Debtors' Motion to Remove Judgment Liens. Here, A-1 Steam Brothers obtained a judgment pre-petition. That judgment did not attach to any real property and thus it never became a lien on any real property. When Debtors received their discharge on October 28, 1994, the judgment held by A-1 Steam Brothers was discharged. Pursuant to S.D.C.L. § 15-16-20, Debtors have complied with the procedures for having that judgment removed from the Brown County Clerk of Courts' records. Therefore, the judgment should be removed and A-1 Steam Brothers may no longer collect on the debt nor attempt to enforce any judgment for that debt.

Counsel for Debtors shall submit an appropriate order.

So ordered this 12th day of April, 1995.