1999 #18, Stratman, 7-9-99

In re JOHN STRATMAN, Bankr. No. 96-40778; Chapter 7

The matter before the Court is Debtor's motion to discharge judgments and Charles F. Stratman's objection. This is a core proceeding under 28 U.S.C. § 157(b)(2). This letter decision and accompanying order shall constitute the Court's findings and conclusions under F.R.Bankr.P. 7052. As set forth below, the Court concludes that Debtor's motion must be granted.

Summary of facts. Debtor filed a Chapter 7 petition and schedules on October 7, 1996. On his schedule of real property, he listed his home. He declared that real property exempt as a homestead. On his schedule of unsecured claim holders, Debtor listed Charles Stratman as holding a judgment for $84,479.91. Charles Stratman was served with notice of the bankruptcy filing through the Cheney Law Office. No complaints objecting to the discharge of all debts or to the discharge of a particular debt were filed before the December 31, 1996 deadline. A discharge was entered January 2, 1997.

On June 8, 1999, Debtor filed a motion to discharge the judgment held by Charles Stratman. Charles Stratman filed an objection on June 24, 1999 alleging the judgment was based on a "swindle" and should be paid. The matter was taken under advisement.

Applicable law: Section 524(a)(1) of the Bankruptcy Code provides that when a discharge is entered, it voids a judgment to the extent of the debtor's personal liability on a claim. 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 Bankruptcy 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.

If the debtor did not have any non exempt real property when he filed his bankruptcy petition, there was no real property to which the judgment creditor's judgment could attach as a lien and become enforceable. Therefore, once the judgment is discharged in the bankruptcy case, the creditor no longer has a judgment that can later become a lien on any non exempt real property that the debtor may acquire after the bankruptcy.

Discussion: In this case, Charles Stratman did not timely file any complaint stating his claim against Debtor should not be discharged because it arose from Debtor's fraudulent actions. The time for doing that expired on December 31, 1996. Therefore, the judgment that Charles Stratman held was discharged on January 2, 1997. Further, the only real property that Debtor had when he filed bankruptcy was his homestead, which he declared exempt. No one timely objected to Debtor's claimed exemptions. Consequently, Charles Stratman's judgment did not attach to any non exempt real property before the bankruptcy was filed and Charles Stratman did not obtain an enforceable lien based upon his judgment. The Court, therefore, has no basis on which to sustain Charles Stratman's objection and preserve his judgment. It was voided when the discharge was entered January 2, 1997 and now must be removed from the state circuit court's records.

Counsel for Debtor shall prepare an order granting Debtor's motion. The order shall reference this letter decision.