               United States Bankruptcy Appellate Panel
                         FOR THE EIGHTH CIRCUIT


                                   No. 11-6073


In re:                                   *
                                         *
Walter H. Carter;                        *
Debra K. Carter,                         *
                                         *
         Debtors.                        *
                                         *
Walter H. Carter;                        * Appeal from the United
Debra K. Carter,                         * States Bankruptcy Court for
                                         * the Northern District of Iowa
         Appellants,                     *
                                         *
               v.                        *
                                         *
Estate of Leon Jerome Heimer;            *
Mitchell County Sheriff,                 *
                                         *
         Appellees.                      *


                           Submitted: February 7, 2012
                              Filed: March 13, 2012


Before VENTERS, SALADINO, and NAIL, Bankruptcy Judges.


NAIL, Bankruptcy Judge.

       Walter H. Carter and Debra K. Carter appeal the October 26, 2011 judgment
of the bankruptcy court1 denying in part their motion under 11 U.S.C. § 522(f)(1) to
avoid certain liens held by the Estate of Leon Jerome Heimer. We affirm.



         1
        The Honorable Thad J. Collins, Chief Judge, United States Bankruptcy Court
for the Northern District of Iowa.
                                   BACKGROUND

      The relevant facts are few and are not in dispute. Walter H. Carter and Debra
K. Carter ("Debtors") are the owners of a 2005 Cadillac Escalade. They pledged the
vehicle as collateral for two loans from St. Ansgar State Bank ("the bank").

       In March 2011, an Iowa state court entered a judgment for the Estate of Leon
Jerome Heimer ("the Heimer estate") against Debtor Walter H. Carter for $30,230.74
and issued a writ of execution that ordered the sheriff to sell Debtors' vehicle to
satisfy the judgment. In compliance with Iowa law (discussed below), the Heimer
estate paid the bank $21,299.79 to pay off the loans secured by the vehicle, and the
sheriff scheduled a sale. The sale did not take place, however, because Debtors filed
a petition for relief under chapter 7 of the bankruptcy code on April 6, 2011.

       Debtors claimed $13,600.00 of their interest in their vehicle exempt under Iowa
law and filed a motion under 11 U.S.C. § 522(f) to avoid the Heimer estate's judgment
lien. The matter was tried, and the bankruptcy court entered a judgment denying in
part Debtors' motion. Debtors timely appealed.

                              STANDARD OF REVIEW

       We review the bankruptcy court's findings of fact for clear error and its legal
conclusions de novo. See R & R Ready Mix v. Freier (In re Freier), 604 F.3d 583,
587 (8th Cir. 2010) (citing First Nat'l Bank of Olathe, Kansas v. Pontow, 111 F.3d
604, 609 (8th Cir. 1997)). More specifically, we review de novo the bankruptcy
court's interpretation of a statute. See Ferrell v. West Bend Mut. Ins. Co., 393 F.3d
786, 796 (8th Cir. 2005).

                                     DISCUSSION

       Section 522(f) provides, in pertinent part: "[T]he debtor may avoid the fixing
of a lien on an interest of the debtor in property to the extent that such lien impairs
an exemption to which the debtor would have been entitled under subsection (b) of
this section, if such lien is . . . a judicial lien[.]" 11 U.S.C. § 522(f)(1). A lien is a
"charge against or interest in property to secure payment of a debt or performance of

                                           -2-
an obligation." 11 U.S.C. § 101(37). A judicial lien is a "lien obtained by judgment,
levy, sequestration, or other legal or equitable process or proceeding." 11 U.S.C.
§ 101(36).

       The narrow issue presented is whether the $21,299.79 the Heimer estate
advanced to pay off the loans secured by the bank's lien against Debtors' vehicle is
secured by a judicial lien that may be avoided under § 522(f)(1). Debtors argue the
Heimer estate holds only a judicial lien to secure its entire judgment against them,
including the $21,299.79. The Heimer estate argues it holds two liens: a consensual
lien securing the $21,299.79, which may not be avoided under § 522(f)(1), and its
original judicial lien, which it concedes may be avoided under § 522(f)(1). We agree
with the Heimer estate.

       Before the sheriff could sell the vehicle, the Heimer estate was required to pay
off the loans secured by the bank's lien.

             Personal property subject to a security interest not exempt
             from execution may be taken on attachment or execution
             issued against the debtor, if the officer, or the attachment
             or execution creditor, within ten days after such levy, shall
             pay to the secured party the amount of the secured debt
             and interest accrued, or deposit the same with the clerk of
             the district court of the county from which the attachment
             or execution issued, for the use of the secured party, or
             secure the same as in this chapter provided.

I.C.A. § 626.34 (emphasis added).2 When it did so, the Heimer estate stepped into the
shoes of the bank.

             When such sum is paid to the secured party or deposited
             with the clerk, the attachment or execution creditor shall
             be subrogated to all the rights of such holder, and the

      2
        We reject Debtors' unsupported argument that because they claimed a portion
of the vehicle's value exempt, the vehicle itself was entirely exempt from execution.
Under Iowa law, only a debtor's "interest in one motor vehicle, not to exceed in value
seven thousand dollars" is exempt from execution. I.C.A. § 627.6(9) (emphasis
added). Any value above the allowed exemption is thus subject to execution.
                                         -3-
             proceeds of the sale of the collateral shall be first applied
             to the discharge of such indebtedness and the costs
             incurred under the writ of attachment or execution.

I.C.A. § 626.37 (emphasis added).

       Debtors do not dispute the bank was the holder of a consensual lien against
their vehicle. Pursuant to I.C.A. § 626.37, the Heimer estate is subrogated to all the
rights of the bank and is now the holder of that consensual lien. Debtors could not
have avoided that lien under § 522(f)(1) when it was held by the bank, and they may
not avoid it under § 522(f)(1) now that it is held by the Heimer estate.3

                                   CONCLUSION

       Having reviewed the matter de novo, we reach the same conclusion the
bankruptcy court reached: The $21,299.79 the Heimer estate advanced to pay off the
loans secured by the bank's lien against Debtors' vehicle is not secured by a judicial
lien. Accordingly, we affirm the bankruptcy court's judgment denying in part
Debtors' motion under 11 U.S.C. § 522(f)(1).




      3
        Like the bankruptcy court, we do not reach the question of whether the Heimer
estate may now force a sale of Debtors' vehicle when the underlying obligation to the
bank is allegedly not in default. The answer to that question has no bearing on
whether Debtors are entitled to relief under § 522(f)(1).
                                         -4-
