In Re Short

170 B.R. 128 (1994)

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Nature of the Case

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Facts

On June 20, 1992, Ds entered into a retail installment contract with Anderson Warehouse Furniture for the purchase of bedroom furniture. No interest was charged for one year, and no payments were due until June 20, 1993, when the entire balance of $2,880.00 became due. The contract granted a security interest in the furniture and was assigned to P on the date it was signed. Ds made no payments under the contract. On July 16, 1993, Ds executed a note with P in which they consolidated the June 20 contract obligation with another note to American for $3,642.33 dated June 22, 1992. The new note in the amount of $7,337.30 provided funds to pay off the June 20 and June 22 notes, with the remaining balance applied to pay credit life and disability insurance premiums. The July 16 note, providing for an interest rate of 21.90%, was to be paid in monthly installments, with the final payment due in July 1997. The note described the collateral for the July 16 note as a 'continued purchase money interest' in Ds' bedroom furniture and, on a separate line, listed numerous other recreational and household items owned by Ds. Ds made one payment under the July 16 note of $248.38 and a partial payment of $146.00. On January 4, 1994, Ds filed their Chapter 7 bankruptcy petition. Ds then moved to avoid P's lien on household goods, including the bedroom furniture, under § 522(f)(2). Section § 522(f)(2) allows a debtor to avoid the fixing of a lien on property that would otherwise be exempt if such lien is a nonpossessory, nonpurchase-money security interest.