By Diane Davis
A Chapter 7 debtor can’t avoid a lien on her vehicle title held by First Franklin Financial Corporation as a “tool of the trade,” the U.S. Bankruptcy Court for the Northern District of Georgia held.
The debtor’s vehicle doesn’t qualify as a “tool of the trade” under Georgia exemption law because the “essence” of her occupation isn’t travel, Judge Paul Baisier wrote March 21.
Generally, debtors may exempt certain property from their bankruptcy estates under Bankruptcy Code Section 522. Some states, however, have opted out of the federal exemption scheme and a debtor must look to state law to determine if certain property may be exempted.
Under Georgia law, a debtor can exempt up to $1,500 in value under “tools of the trade.” But the Georgia legislature failed to define what that means exactly, and there is a split of authority on whether a motor vehicle may qualify.
Cherice Chamaine Mitchell obtained a loan from First Franklin Financial Corp. to buy a 2006 Ford Five Hundred. In exchange, she granted the lender a lien to secure the financing. This is called a non-possessory, non-purchase money security interest.
After Mitchell filed Chapter 7, she wanted the bankruptcy court to avoid First Franklin’s lien on her car’s title under the “tools of the trade” exemption. Her work as a law clerk and tutor requires her to use the vehicle to travel to and from work sites and client visits, she said, according to the court summary.
First Franklin argued that the vast majority of case law on the issue has ruled that a debtor’s vehicle used solely as a means for transportation to work doesn’t qualify as a “tool of the trade.”
Mitchell failed to show that her occupation is “uniquely dependent” on the vehicle, or that the vehicle is integral to her occupation, the court said.
Her use of the vehicle with regard to her trade is solely limited to commuting purposes, the court said, noting it didn’t want to “open a Pandora’s box.”
Daniel L. Wilder of Emmett L. Goodman, Jr., LLC represented FIrst Franklin Financial Corp.
The case is Mitchell v. First Franklin Fin. Corp. (In re Mitchell) , 2018 BL 97272, Bankr. N.D. Ga., 17-68428-PMB CHAPTER 7 CONTESTED MATTER, 3/21/18 .
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