Problem.Avoiding liens that impair exemptions

    A. Reconsider the the ITT loan described in Problem.FTC Rule.  In most consumer Chapter 7 cases, all of the collateral taken as security by ITT would be exempt from the reach of the bankruptcy trustee and thus the value of that collateral (admittedly slight) would be unavailable for distribution to the debtor's unsecured creditors.  If exempt, could the debtor avoid ITT's security interest under Bankr. Code 522(f)(1)(B)? If ITT had also taken a security interest in an automobile owned by the debtor, and if the automobile were exempt property in a Chapter 7 proceeding filed by the debtor, could the debtor avoid ITT's security interest in the automobile under Bankr. Code 522(f)(1)(B)?  Could the sisters in Problem.Secured creditor in Chapter 7 have avoided the security interest in the furniture? 

     B.  Suppose that ITT financed the debtor's acquisition of furniture and thereafter the debtor filed bankruptcy.  Now could the debtor avoid the security interest in the furniture under Bankr. Code 522(f)(1)(B)?  Suppose that after acquiring the furniture but before filing bankruptcy the debtor started falling behind in payments to ITT.  ITT then worked out a new deal with the debtor in which ITT loaned the debtor some extra money, reduced the amount of monthly payments, and extended the period of repayment (often such a deal is referred to as "flipping," from an old loan into a new one).  Is the new loan purchase-money or non-purchase money or partly both?  See U.C.C. 9-103(a), (b), (f), (g), (h).  May the lien, or any part of it, be avoided under Bankr. Code 522(f)(1)(B)?

     C.  Following a foreclosure on real property by the holder of a senior deed of trust, plaintiff obtained a $125,000 judgment on a promissory note which had been secured by a sold out junior lien.  (Recall Savings Bank of San Diego Cty. v. Central Market, in which the court concluded that the plaintiff's action on a note secured by a sold out junior lien was not barred by the security first rule.)   Suppose the judgment had been rendered against defendant Selina Garcia, for whom Central Market was simply a fictitious business name.   The plaintiff recorded an abstract of its judgment in the county in which Selina owned a home (real property other than the real property on which the foreclosure had occurred).  The home is worth about $500,000 and is encumbered by a deed of trust securing a debt in the amount of $350,000.  The state homestead exemption is for $75,000 equity in a home and this exemption is also applicable for debtors who file a Chapter 7 bankruptcy in the federal bankruptcy court located in the state.  Six months after recording its abstract, the judgment creditor initiated execution on the home.   After the sheriff had levied the writ of execution and noticed an execution sale, Selina filed a Chapter 7 petition.  May she avoid the judgment lien and the execution lien on the real property?  If so, to what extent? See Bankr. Code 522(f)(1)(A) and 522(f)(2)).  What if her home were also subject to a second deed of trust, securing a debt of $100,000, recorded prior to plaintiff's recording of the abstract of judgment?