week 4

1) ABC Corp. brought a lawsuit against Mr. and Mrs. Morgan, won the suit, and obtained a judgment for monetary damages in the amount of $53,000. ABC Corp. recorded a judgement lien against the Morgans’ homestead property. The homestead property is located an any county, any state. The Morgans then filed for chapter 7 bankruptcy relief and included the judgement lien as a discharge – able debt on their bankruptcy forms. Under the laws of any state, the homestead exemption cap is $40,000 of equity in homestead property. The bankruptcy petition was granted, and the judgement was discharged by the bankruptcy court. The Morgans are maintaining that a satisfaction of judgement should be recorded, removing the lien from the homestead property. ABC Corp. argues that recording a satisfaction of judgement would result in a windfall for the Morgans because state law permits only a $40,000 homestead exemption and the judgement amount is $53,000. Should a satisfaction of judgement be recorded? why or why not?