Kellogg v. First Land Development, LLC, et al., Adv. No. 19-1029 EEB

Judgment creditor with a prepetition judgment lien against the debtor’s home allowed the lien to expire following entry of discharge in the debtor’s chapter 7 bankruptcy case. The creditor then sought to obtain a new judgment lien by renewing its judgment and filing it with the county clerk and recorder. The debtor filed an adversary proceeding against the creditor, alleging violation of the discharge injunction. The creditor moved for summary judgment, arguing its actions did not violate the discharge injunction because liens ride through bankruptcy, thereby allowing the creditor to initiate in rem actions against the debtor’s property. The Court held that, although liens do ride through bankruptcy, that principle only protects liens in existence on the petition date. When the creditor allowed its prepetition judgment lien to expire under Colorado law, it became merely an unsecured creditor of a discharged debt and lost its ability to execute against the debtor’s property. Because creation of a new lien necessarily involved establishing the in personam liability of the debtor for a discharged debt, the creditor’s actions violated the discharge injunction.