                                                    [DO NOT PUBLISH]


            IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                                                               FILED
                     ________________________ U.S. COURT OF APPEALS
                                                       ELEVENTH CIRCUIT
                                                              April 29, 2005
                            No. 04-13727
                                                        THOMAS K. KAHN
                        Non-Argument Calendar               CLERK
                      ________________________

                 D. C. Docket No. 04-00544-CV-RWS-1
                     BKCY No. 03-98427 BKC-SW

IN RE: ARNOLD ELIOT TARAS,

                                                                          Debtor.
_________________________________

THE CADLE COMPANY,

                                                          Plaintiff-Appellant,

                                 versus

ARNOLD ELIOT TARAS,

                                                         Defendant-Appellee.


                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Georgia
                    _________________________

                            (April 29, 2005)
Before BIRCH, BLACK and BARKETT, Circuit Judges.

PER CURIAM:

       Pursuant to § 522(f)(1) of the Bankruptcy Code, Chapter 7 debtor Arnold

Taras moved to avoid a judicial lien held by The Cadle Co. (Cadle). The

bankruptcy court granted Taras’ motion, and the district court affirmed. The

primary issue on appeal is the proper application of the formula set out in 11

U.S.C. § 522(f)(2)(A) for determining when a judicial lien impairs an exemption to

which the debtor was entitled. Because we conclude the bankruptcy court and the

district court correctly applied 11 U.S.C. § 522, we affirm.

                                    I. BACKGROUND

       Bobby D. Associates obtained a judgment against Taras and assigned its

interest in the judicial lien to Cadle. The lien was secured by Taras’ residence and

was perfected on September 6, 2001. On August 5, 2003, Taras filed for Chapter 7

bankruptcy. At that time, the total amount due on the judgment was $18,911.54.

       Taras and his wife jointly own their home, which is valued at $213,000.1

The home is subject to a first priority mortgage of $85,193 owed by Taras and his

wife. Taras’ undivided one-half interest in the home is also subject to Cadle’s


       1
         Before the bankruptcy court, Taras contended the value of the home was $170,000, and
Cadle asserted the residence was worth $213,000. The bankruptcy court construed this issue in
favor of Cadle and applied the higher valuation of $213,000. The court noted that regardless of
which figure is used, the result will be the same.

                                               2
second priority judicial lien in the amount of $18,911.54. Moreover, there is a

third priority Internal Revenue Service (IRS) tax lien of $389,168 owed by Taras

and his wife.

       Section 522(b) of the Bankruptcy Code permits a debtor to claim an

exemption in property that is exempt under state or local law. 11 U.S.C.

§ 522(b)(2)(A). Under Georgia law, a debtor’s interest in his residence is exempt

up to the amount of either $10,000 or $20,000. Ga. Code Ann. § 44-13-100. The

Georgia statute provides that if “title to property used for the exemption . . . is in

one of two spouses who is a debtor, the amount of the exemption hereunder shall

be $20,000.00.” Id. Pursuant to this statute, Taras sought an exemption of

$20,000 in the residence he owned jointly with his wife.2

       In addition, § 522(f)(1) of the Bankruptcy Code allows a debtor to avoid a

judicial lien “to the extent that such lien impairs an exemption to which the debtor

would have been entitled.” 11 U.S.C. § 522(f)(1). On the same day Taras filed for

bankruptcy, he also moved to avoid the judicial lien held by Cadle, asserting that

the lien impaired his home exemption. The bankruptcy court granted Taras’




       2
         Taras initially claimed an exemption of $507,000. The bankruptcy court, however,
found this figure to be “a scrivener’s error” because it exceeded the value of the residence and
because Taras claimed the exemption under the Georgia statute which permits a maximum
exemption of $20,000.

                                                 3
motion, avoiding Cadle’s judicial lien in its entirety. The district court affirmed.

Cadle now appeals the district court’s affirmance of the bankruptcy court’s grant of

Taras’ motion.

                           II. STANDARD OF REVIEW

      We review the bankruptcy court’s findings of fact under the clearly

erroneous standard; however, “conclusions of law, whether from the bankruptcy

court or the district court, we review de novo.” In re Fretz, 244 F.3d 1323, 1326

(11th Cir. 2001) (citation omitted).

                                 III. DISCUSSION

      Section 522 of the Bankruptcy Code is designed to provide the debtor with a

“fresh start” by protecting the debtor’s exemptions. See Deel Rent-a-Car, Inc. v.

Levine, 721 F.2d 750, 757 (11th Cir. 1983). This Court has explained:

                 Section 522 of the Bankruptcy Code, 11 U.S.C. § 522,
          sets out a statutory scheme permitting a debtor in bankruptcy
          to exempt certain property from his or her bankruptcy estate.
          For property to qualify for an exemption, it must first be part
          of the bankruptcy estate. If the debtor has mortgaged his or
          her property, the debtor has retained only an equitable interest
          in the property. Absent a provision providing otherwise, only
          that equitable interest would be property of the estate and
          eligible for an exemption.

                 Section 522(f), however, provides a special mechanism
          for the debtor to “avoid” certain liens on property, thereby
          bringing the whole property within the bankruptcy estate and
          potentially qualifying it for an exemption.

                                           4
In re Lehman, 205 F.3d 1255, 1256 (11th Cir. 2000) (citation omitted). As stated

above, § 522(f) provides that a debtor may avoid a judicial lien to the extent it

impairs an exemption. 11 U.S.C. § 522(f). In 1994, Congress amended § 522(f)

and added a formula for determining the extent to which a lien impairs an

exemption:

             (2)(A) For the purposes of this subsection, a lien shall be
      considered to impair an exemption to the extent that the sum of—
                   (i) the lien;
                   (ii) all other liens on the property; and
                   (iii) the amount of the exemption that the debtor could
                   claim if there were no liens on the property;
      exceeds the value that the debtor’s interest in the property would have
      in the absence of any liens.

11 U.S.C. § 522(f)(2)(A).

      In this case, even though the tax lien is junior to Cadle’s judicial lien, the

bankruptcy court found that the tax lien should be included in the calculation under

§ 522(f)(2)(A). Thus, in calculating the amount of the impairment, the bankruptcy

court included Taras’ half of the tax lien, or $194,584. When the tax lien is

included in the calculation, the sum of the liens and the exemption greatly exceeds

Taras’ interest in the property. As a result, the bankruptcy court granted Taras’

motion, concluding Cadle’s judicial lien can be avoided in its entirety.

      On appeal, Cadle argues the bankruptcy court, and subsequently the district

court, erred in finding the junior tax lien is included in the calculation under

                                           5
§ 522(f)(2)(A). Cadle contends state priority rules must be considered in

determining whether its judicial lien impairs Taras’ home exemption. According

to Cadle, junior unavoidable liens, like the tax lien in this case, should not be

included in the computation of the impairment. Using this approach, the junior tax

lien should have been removed from the impairment calculation, and no amount of

Cadle’s judicial lien would be avoided.

       In In re Kolich, 328 F.3d 406 (8th Cir. 2003), the Eighth Circuit considered

whether liens junior to the judicial lien in question should be included in the

calculation under § 522(f)(2)(A).3 The court pointed out that subsection

522(f)(2)(A)(ii) states the computation of the impairment shall include “all other

liens on the property.” The Eighth Circuit interpreted the term “all other liens on

the property” to include junior liens. 328 F.3d at 410; see also In re Smith, 315

B.R. 636, 641 (Bankr. D. Mass. 2004) (holding § 522(f)(2) “does not distinguish

between senior liens and junior liens, between those having greater and lesser

priority under state law”).




       3
          The parties have not identified any other federal circuit court which has addressed this
precise issue. This Court’s decision in In re Lehman, 205 F.3d 1255 (11th Cir. 2000) did not
address the issue now before us. As the Eighth Circuit pointed out, Lehman was concerned with
“the formula’s mathematical progression,” and not with the impact of third priority or junior
liens. Kolich, 328 F.3d at 409–10.

                                                6
       Cadle contests the Eighth Circuit’s interpretation and argues subsection

522(f)(2)(B) implicitly requires courts to consider state priority rules when

applying the statutory formula.4 As an initial matter, we note subsection (B) of

522(f)(2) does not refer to the priority position of liens under state law. Rather,

that subsection simply states when liens have already been avoided, they should

not be considered in the impairment calculation. 11 U.S.C. § 522(f)(2)(B). In

Kolich, the Eighth Circuit explained if Congress had intended to exclude junior

liens from the calculation, it could have easily incorporated such language. 328

F.3d at 410 (“This problem may not be dismissed as a mere ‘quirk in drafting,’

because it would have been relatively easy to draft § 522(f)(2)(A)(ii) to exclude

such junior consensual liens from the phrase ‘all other liens on the property.’”); see

also Smith, 315 B.R. at 641 (“[Section 522(f)(2)(B)] excluded only those [liens]

that have already been avoided—that is, those which are no longer liens. It did not

instruct the Court to exclude junior unavoidable liens, and this does not appear to

have been for lack of attention to detail.”).

       The Eighth Circuit further explained that when Congress enacted the

statutory formula in § 522(f), it specifically intended to disrupt lien priorities



       4
          This subsection states: “In the case of a property subject to more than 1 lien, a lien that
has been avoided shall not be considered in making the calculation under subparagraph (A) with
respect to other liens.” 11 U.S.C. § 522(f)(2)(B).

                                                  7
created by state law. 328 F.3d at 410. The court concluded the inclusion of junior

liens advanced the statutory purpose of § 522(f):

           To be sure, the Bankruptcy Code usually looks to state law to
           define the property rights and priorities of creditors, including
           secured creditors. But § 522(f) is an exception to that policy.
           It was enacted to permit the avoidance of judicial liens that
           can interfere with the debtor’s post-petition fresh start. This
           selective avoidance gives an advantage under federal law to
           secured creditors holding consensual liens, typically,
           residential mortgage lenders. But Congress intended to treat
           consensual lienholders more favorably, because their
           contractual relationships with the bankruptcy debtor typically
           allow the debtor to acquire equity in the exempt property by
           making post-petition mortgage payments. The 1994
           amendment creating the statutory formula here at issue was
           expressly aimed at overruling prior judicial decisions
           compromising that intent.

Id. (citations omitted).

      We agree with the Eighth Circuit and apply its reasoning here. We conclude

the bankruptcy court correctly included Taras’ half of the junior tax lien, $194,584,

when it computed the extent to which Taras’ home exemption was impaired under

the statutory formula in § 522(f)(2)(A). Because the tax lien is included in the

calculation, the sum of the liens and the amount of the exemption substantially

exceeds Taras’ interest in the property. Therefore, we agree with the bankruptcy

court’s conclusion that Cadle’s judicial lien of $18,911.54 impairs Taras’ home

exemption and can be avoided in its entirety.



                                           8
                                IV. CONCLUSION

      Because the bankruptcy court and the district court correctly interpreted and

applied the statutory formula in § 522(f)(2)(A), we discern no reversible error.

Accordingly, we affirm the district court.

      AFFIRMED.




                                             9
