Cite as: Keith M. Lundin, Lundin On Chapter 13, § 49.4, at ¶ ____, LundinOnChapter13.com (last visited __________).
The changes to § 522(f) by BAPCPA would be humorous if lien avoidance wasn’t so widely used and important to consumer debtors. The fundamental premise of § 522(f) is not affected by the new law: Chapter 13 debtors can avoid nonpossessory, nonpurchase money security interests that impair exemptions in “household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry” held primarily for the personal, family or household use of the debtor or a dependent.1 But BAPCPA tacked on to the end of § 522(f) a new subsection (4), which defines “household goods”:
(4)(A) Subject to subparagraph (B), for purposes of paragraph (1)(B), the term “household goods” means—
(iv) 1 radio;
(v) 1 television;
(vi) 1 VCR;
(xi) educational materials and educational equipment primarily for the use of minor dependent children of the debtor;
(xii) medical equipment and supplies;
(xiii) furniture exclusively for the use of minor children, or elderly or disabled dependents of the debtor;
(xiv) personal effects (including the toys and hobby equipment of minor dependent children and wedding rings) of the debtor and the dependents of the debtor; and
(xv) 1 personal computer and related equipment.
(B) The term “household goods” does not include—
(i) works of art (unless by or of the debtor, or any relative of the debtor);
(ii) electronic entertainment equipment with a fair market value of more than $500 in the aggregate (except 1 television, 1 radio, and 1 VCR);
(iii) items acquired as antiques with a fair market value of more than $500 in the aggregate;
(iv) jewelry with a fair market value of more than $500 in the aggregate (except wedding rings); and
(v) a computer (except as otherwise provided for in this section), motor vehicle (including a tractor or lawn tractor), boat, or a motorized recreational device, conveyance, vehicle, watercraft, or aircraft.2
This new statutory definition of household goods is evidence that everyone in Washington was sound asleep for this portion of BAPCPA. Household goods is now defined to include “clothing.”3 A Chapter 13 debtor is empowered by § 522(f)(1)(B) to avoid nonpossessory, nonpurchase money security interests in “household goods” and “wearing apparel.” Why does BAPCPA define “household goods” to include “clothing” when “wearing apparel” is a separate statutory category? If clothing is a subcategory of household goods, then what different meaning do we give wearing apparel?
Ask similar questions with respect to “furniture” in new § 522(f)(4)(A)(ii) and “household furnishings” in § 522(f)(1)(B). Are “appliances” included in household goods by new § 522(f)(4)(A)(iii) different from “appliances” in § 522(f)(1)(B)? If “one television” is a household good under new § 522(f)(4)(A)(v), is a second television an “appliance” under § 522(f)(1)(B)(i)? For what purpose does new § 522(f)(4)(A) contain separate entries for “furniture” and for “furniture exclusively for the use of minor children, or elderly or disabled dependents of the debtor” when household goods, by definition, include items used by the debtor or a dependent of the debtor?
Notice that new § 522(f)(4)(A) defines household goods as the 15 items listed—this new subsection does not contain the word “includes.” The listing of 15 items could be interpreted to be comprehensive and exclusive of other items that a debtor might claim as household goods for lien avoidance purposes. But ordinary canons of statutory construction require that any limitation on the definition of household goods in new § 522(f)(4)(A) must be interpreted to leave meaning for the separate words found elsewhere in § 522(f)(1)(B). In other words, that household goods includes (only) one radio, one television and one VCR under new § 522(f)(4)(A)(iv)–(vi) would not preclude a finding that appliances in § 522(f)(1)(B)(i) include one or more DVD players.
This analysis becomes only a little more daffy when the new statutory exclusions from household goods are considered. Under new § 522(f)(4)(B)(iv), for example, jewelry “with a fair market value of more than $500 in the aggregate” is excluded from household goods, with an exception to the exclusion for wedding rings. Just a few lines earlier, new § 522(f)(4)(A)(xiv) states that wedding rings are included in personal effects, which are a new sub-category of household goods. But then “jewelry” is a category altogether separate from household goods for purposes of the lien avoidance power in § 522(f)(1)(B)(i). Reading the three sections together: wedding rings are personal effects included in household goods; wedding rings are not subject to the exclusion from household goods of jewelry with a fair market value in the aggregate greater than $500; jewelry (other than wedding rings) with a fair market value in the aggregate greater than $500 can’t be household goods; but jewelry worth more than $500 could be just plain jewelry with respect to which lien avoidance under § 522(f)(1)(B)(i) remains an option.
If the folks who drafted BAPCPA wanted to limit the items of personal property that were subject to lien avoidance under § 522(f)(1), why didn’t they just list the items of personal property with respect to which lien avoidance was not available? Is this new definition of household goods a vestige of some larger legislative plan that failed to flower? Whatever was intended, what actually happened is considerable corruption of a relatively uncontroversial process before BAPCPA—the avoidance of nonpossessory, nonpurchase money security interests in small items of personal property that could be exempted by individual debtors in consumer bankruptcy cases. New § 522(f)(4) is substantial evidence of bad policy and worse draftsmanship that would be laughable if it didn’t threaten the few sticks and personal items that consumer debtors can exempt in spite of liens by lenders who contributed nothing to acquisition of those items. Chapter 13 debtors will contribute good money to their lawyers to sort out the nonsense in § 522(f)(4).