In the Matter of Irma E. Hintz; In the Matter of Ronald C. Foth and Joan Foth

Summary

The United States Bankruptcy Court for the Eastern District of Wisconsin considers whether dairy-farmer debtors may avoid the Farmers Home Administration's nonpossessory, non-purchase-money security interests in farm machinery under 11 U.S.C. § 522(f)(2)(B). Applying the Seventh Circuit's interpretation in In re Patterson, the court distinguishes modest tools from capital assets and grants lien avoidance for certain miscellaneous tools while denying it for most listed farm implements.

Holdings

1. Under the Seventh Circuit's interpretation in In re Patterson, § 522(f)(2)(B)'s references to implements and tools of the trade do not encompass farm capital assets such as tractors and other substantial farm machinery merely because the assets are exempt under state law.
2. On the record presented, the debtors could avoid FmHA's liens on the specifically listed miscellaneous tools and similar items, but not on the other listed farm machinery.

Questions Presented

1. Whether farm machinery claimed exempt under Wisconsin's exemption statute qualifies as an implement or tool of the trade under 11 U.S.C. § 522(f)(2)(B), permitting avoidance of FmHA's nonpossessory, nonpurchase-money liens.
2. Whether the listed farm machinery constituted capital assets outside the scope of the implements-and-tools-of-the-trade category, while miscellaneous tools and similar items remained eligible for lien avoidance.

Disposition

other