MEMORANDUM OPINION

ROBERT H. JACOBVITZ, Bankruptcy Judge.

This matter is before the Court on Debtor's Amended Motion to Avoid Judicial Lien of Roy McKinney ("Motion to Avoid Lien") (Docket No. 43), Debtor's Motions to Extend Time to File Amendments to Claim of Exemption ("Motion to Extend") (Docket Nos. 51 and 52), and Creditor Roy McKinney's Objection to Debtor's Claim of Amended Exemptions (Docket No. 57).

The Court held an evidentiary hearing on November 16, 2010. The Debtor, Katherine, Hamilton, appeared through counsel, R. Trey Arvizu. Roy McKinney appeared through counsel Tim J. O'Quinn. At the conclusion of the hearing, the Court granted the Motion to Extend, allowing Ms. Hamilton to amend her claim of exemptions. The Court took the remaining matters under advisement.

Ms. Hamilton asserts that the judicial lien held by Mr. McKinney and recorded on December 4, 2008 impairs her homestead exemption and seeks to avoid the lien pursuant to 11 U.S.C. § 522(f)(1)(A). Mr. McKinney contends that the Ms. Hamilton's claim of homestead should be disallowed and the Motion to Avoid Lien denied.

The Court having considered the evidence, argument of counsel, and applicable statutory and case law, will overrule the objection to the amended claims of exemption, and will allow the homestead exemption. The Court will grant the Motion to Avoid Lien on the ground that the judicial lien impairs the Debtor's homestead exemption.

PROCEDURAL HISTORY AND FACTS

In 2001 Ms. Hamilton acquired certain real property located at 5309 N. Prince, Clovis, New Mexico (the "Prince Property" or "Property"). Her father, James Cage Allen, loaned her $67,000 to purchase the Property. The loan was unsecured. There is a metal building on the Property built for use as commercial warehouse. The exterior dimensions of the building are 60' x 60'. There is no evidence before the Court that Ms. Hamilton used the Property prior to 2006. Since 2006 or 2007, Ms. Hamilton has used the Property for the sale of fireworks for an approximate 2-week period each year during the Fourth of July holiday season.

On November 20, 2008, Mr. McKinney obtained a judgment against Ms. Hamilton in the amount of $52,518.44 entered in Cause # D-0905-CV-02007-00133, Ninth Judicial District Court, Curry County, New Mexico entitled Roy A. McKinney and Brenda J. McKinney v. Katherine R. Hamilton. Shortly thereafter, on November 20, 2008, Ms. Hamilton executed a Quitclaim Deed transferring the Prince Property to her father. On December 4, 2008 Mr. McKinney recorded a Transcript of Judgment against Ms. Hamilton in Curry County, New Mexico in the amount of $52,518.44, which created a judicial lien against the Prince Property. The Quitclaim Deed transferring the Prince Property to Mr. Allen was recorded on December 16, 2008.

Ms. Hamilton filed her voluntary petition under Chapter 7 of the Bankruptcy Code on June 18, 2009 (the "Petition Date"), thereby commencing this bankruptcy case. On the Petition Date, Ms. Hamilton filed her schedules of assets and liabilities ("Schedules") and her Statement of Financial Affairs. Schedule A listed the Prince Property. Ms. Hamilton valued the Prince Property at $100,000. Schedule C included a claim of exemption for the Prince Property in the amount of $60,000.00 under N.M.S.A. 1978, § 42-10-9. Schedule D reflected Mr. McKinney's judgment lien against the Prince Property in the amount of the recorded transcript of judgment.

On June 19, 2009, Ms. Hamilton filed a Motion to Avoid Lien in which she sought to avoid Mr. McKinney's judicial lien against the Prince Property on the ground that the lien impaired her homestead exemption. Mr. McKinney objected to the claim of homestead exemption on the ground that the Prince Property is a commercial warehouse, not a dwelling house. An appraisal Ms. Hamilton procured after the filing of the bankruptcy case reflected an estimated market value of the Prince Property of $55,000.00 as of September 15, 2009.

On April 19, 2010, Ms. Hamilton retained new counsel in her chapter 7 case in her original counsel. On July 9, 2010 her new counsel amended her schedules to reflect a value for the Prince Property of $55,000.00 based on a post-petition appraisal, to elect the exemption scheme set forth in 11 U.S.C. § 522(d), and to claim an exemption against the Prince Property under 11 U.S.C. § 522(d)(5) in the amount of $2,481.561. On July 9, 2010, Ms. Hamilton also filed an amended motion under 11 U.S.C. § 522(f) to avoid the judicial lien held by Mr. McKinney on the ground that it impaired her exemption against the Prince Property claimed under 11 U.S.C. § 522(d)(5). Mr. McKinney objected.

At a status conference held on September 20, 2010 on the amended motion to avoid judicial lien Ms. Hamilton's new counsel stated in support of his theory of lien avoidance that he understood there was an unscheduled first priority consensual lien against the Prince Property but needed a title report to confirm it before correcting the Schedules. He further stated that the existence of the consensual lien made litigation over allowance of a homestead exemption unnecessary. Counsel for Mr. McKinney countered that he had a title report on the Property showing no such lien. The order resulting from the status conference entered September 23, 2010 provided that Mr. McKinney would furnish a copy of the title report on the Property to the Ms. Hamilton's counsel, and fixed a deadline for Ms. Hamilton to file a further amendment to her claim of exemptions subject to the right of Mr. McKinney to object. On October 8, 2010, Ms. Hamilton filed a second amended Schedule C by which she elected the exemption scheme under New Mexico law and claimed the $60,000 New Mexico homestead exemption. Mr. McKinney objected to the second amendment of her claim of exemptions.

After the status conference, on September 30, 2010 and October 4, 2010, Ms. Hamilton filed Motions to Extend Time to File Amendments to Claim of Exemptions. On October 8, 2010 she filed an Amended Schedule C claiming exemptions under New Mexico law, including an exemption in the Prince Property under the New Mexico homestead exemption statute set forth in N.M.S.A. 1978, § 42-10-9. On November 8, 2011 Mr. McKinney filed his objection to Debtor's second amended claim of exemptions.

The Court makes the following additional findings of fact:

1. Ms. Hamilton did not act in bad faith by amending Schedule C on October 8, 2010, and there is no evidence of legal prejudice to Mr. McKinney in connection with the amendment.

2. Ms. Hamilton has resided at the Prince Property from the third week of May 2009 until at least the November 16, 2010 evidentiary hearing before this Court with the intent of establishing the Prince Property as her principal residence for the foreseeable future.

3. Ms. Hamilton uses the Prince Property primarily as her residence. The commercial use of the Prince Property is incidental to the residential use.

4. Ms. Hamilton did not intend to hinder, delay, or defraud creditors by her pre-petition conveyance of the Prince Property to her father, by her obtaining a pre-petition reconveyance of the Prince Property to her in contemplation of bankruptcy, or by her establishing the Prince Property as her principal residence in contemplation of bankruptcy and with the intention of claiming a homestead exemption against the property.

DISCUSSION

A. Claim of Homestead Exemption Pursuant to N.M.S.A. 1978, § 42-10-9.

The first issue before the Court is whether Ms. Hamilton's claim of homestead exemption should be allowed. A debtor's claim of exemptions in a bankruptcy case is governed by 11 U.S.C. § 522. Sections 522(b)(1), (2) and (3) permit individual debtors to elect either the exemptions available to them under applicable non-bankruptcy state or federal law, or the exemptions available under 11 U.S.C. § 522(d), unless applicable state law does not permit a debtor to claim exemptions under 11 U.S.C. § 522(d). New Mexico law does not preclude claims of exemptions under 11 U.S.C. § 522(d).2 Ms. Hamilton elected to claim exemptions under New Mexico law. The party objecting to the claim of exemption bears the burden of proving the exemption should be disallowed. See Rule 4003(c), Fed. R.Bankr.P.

Mr. McKinney asserts four grounds for disallowing Ms. Hamilton's claim of homestead exemption: (1) Ms. Hamilton acted in bad faith in connection with amending her claim of exemptions and therefore the amendment should not be permitted; (2) Ms. Hamilton had not actually established the Prince Property as her residence on the Petition Date; (3) the structure situated on the Prince Property is a commercial warehouse, not a "dwelling house" as required by the New Mexico homestead exemption statute; and (4) Ms. Hamilton acted in fraud of creditors by transferring the Prince Property to her father shortly after Mr. McKinney obtained a judgment against her, and by obtaining a reconveyance of the Property and purporting to occupy it on the eve of bankruptcy for the purpose of claiming the homestead exemption. The Court will address each of these grounds separately.

Pursuant to 11 U.S.C. § 521(a)(1)(B) and Rule 7001(b)(c), Fed. R.Bankr.P., debtors have a duty to file a complete and accurate schedule of their assets and liabilities.3 Bankruptcy Rule 1009 provides that debtors may amend their schedules "as a matter of course at any time before the case is closed."4 An amendment to a claim of exemption, however, may be denied if the amendment is made in bad faith or there is legal prejudice to creditors.5 Mr. McKinney has not alleged legal prejudice. The Bankruptcy Code does not define bad faith.6 Courts have, for example, found bad faith and denied amendments to claims of exemptions in cases where debtors intentionally concealed assets and attempted to claim the assets exempt after the concealment was discovered.7

The Court finds that Ms. Hamilton did not act in bad faith by amending her exemptions to claim a homestead exemption under New Mexico law, and therefore will permit her to amend. Ms. Hamilton obtained a new appraisal of the Prince Property about three months after she commenced her bankruptcy case, and amended her schedules about nine months later to reduce the scheduled value of the Prince Property from $100,000 to the $55,000 appraised value. There is no evidence that Ms. Hamilton knowingly or intentionally overvalued the Property in her schedules. Any economic incentive to misstate the value would be to undervalue the Property to facilitate exemption of the entire Property. Further, there is no evidence of bad faith on the part of Ms. Hamilton in delaying her filing of an amended schedule to reflect the lower value or in amending Schedule C twice. Her new bankruptcy counsel amended her schedules within three months of his retention to reflect the lower value of the Prince Property and to amend her claim of exemptions. He amended the claim of exemptions further after learning he was mistaken about the existence of a consensual lien against the Prince Property and that an exemption under 11 U.S.C. § 522(d)(5) would not protect Ms. Hamilton's interest in the Property.

1. The Prince Property is the Debtor's Residence

Mr. McKinney asserts that Ms. Hamilton did not actually reside at the Prince Property on the Petition Date and had not established it as her residence. He maintains that the Prince Property is uninhabitable and that Ms. Hamilton staged the Property to make it appear as her residence.

In In re Robinson, 295 B.R. 147 (10th Cir. BAP 2003) the Tenth Circuit Bankruptcy Appellate Panel affirmed a bankruptcy court's denial of a homestead exemption under Oklahoma law. Id. at 149. The bankruptcy court concluded that the property in question was not the debtor's principal residence as of the commencement of the bankruptcy case. Id. The debtor spent her first night at the property two days before filing her bankruptcy case. Id. at 153. The bankruptcy court found the debtor's testimony regarding repairs she made to the property before moving in not to be credible. Id. at 152. The bankruptcy court found further the debtor's testimony that she had lived at the property for several months before filing bankruptcy was refuted by surveillance videos and other evidence. Id. at 151. The Bankruptcy Appellate Panel determined that the "bankruptcy court correctly concluded that the determination of a debtor's intent to designate a homestead under Oklahoma law requires more than a `snapshot' taken at the date of filing," and that under Oklahoma law a court may examine "a party's acts and conduct prior to actual occupancy to ascertain whether an intention to make the property one's principal residence is present" Id. at 154.

This Court agrees that it may consider a debtor's acts and conduct prior to and after actual occupancy to ascertain whether the debtor had established a property as her principal residence before commencing a bankruptcy case. The Court is convinced that Ms. Hamilton occupied the Prince Property approximately three weeks prior to the Petition Date with the intent to establish it as her principal residence for the foreseeable future, and since the third week of May 2009 has continued to reside at the Prince Property.

The evidence established that there is a 60' x 60' metal building on the Prince Property built as warehouse space. Ms. Hamilton acquired the Property in 2001 with funds borrowed from her father. Since 2006 or 2007, she has used the Property for an approximate 2-week period each year during the Fourth of July holiday season to sell fireworks. At least until May 2009, this was the sole use of the Property while Ms. Hamilton owned it except for her storing some personal items at the Property. There is no water service or gas service to the Property. The building on the Property has no heating or cooling system and little or no insulation. The bathrooms, which are closed off, are very dirty and are unusable. A camping trailer is located on the Property. Aaron McKinney, Mr. McKinney's son, testified that when he inspected the metal building on the Prince Property after Ms. Hamilton commenced her chapter 7 case it was apparent that Ms. Hamilton had staged the Property to make it appear she lived there.

Ms. Hamilton testified that she and her boyfriend, Lance Cooms, moved into the Prince Property during the last week of May 2009, or about three weeks before she commenced her chapter 7 case, that they have resided there since that time, and that she intended at the time she moved in to establish the Prince Property as her residence and still intends to reside at the Prince Property for the indefinite future. The Court finds this testimony credible.

Prior to moving to the Prince Property, Ms. Hamilton did not have a place where she could regularly reside. She stayed with her mother and with her son-in-law, off and on. Ms. Hamilton, Mr. Cooms, and Ms. Hamilton's son-in-law, Paul Sanchez, all testified that Ms. Hamilton moved into the building on the Prince Property in May 2009 and has resided there since. Mr. Cooms testified that he and Ms. Hamilton reside at the Prince Property. Donna Bitner, the owner and operator of a campground six miles from the Property, testified that Ms. Hamilton and Mr. Cooms regularly purchase containers of water from her and use the campground facilities to takes showers. In May 2009, Ms. Hamilton's uncle, Claude Walters, lent Ms. Hamilton money to activate electric service at the Prince Property, and loaned her a portable generator. He also loaned her use of a camping trailer to place on the Property so she would have an operable bathroom facility. The camping trailer is located on the Property. The upstairs loft in the building on the Property has been converted to a bedroom. It has subflooring and carpet padding partially covered by Indian rugs, a bed with bedding, a night table with a small portable stereo, and a 55 gallon barrel used for heating by burning scrap wood. Downstairs there is a microwave oven, a small refrigerator and a toaster. Although improvements at the Prince Property are minimal, it provides Ms. Hamilton with a home.

2. The Structure on the Prince Property is a "Dwelling House" Within the Meaning of the New Mexico Homestead Exemption Statute.

Mr. McKinney also asserts that the metal building on the Prince Property is not a "dwelling house" within the meaning of the New Mexico homestead exemption statute because it is a commercial warehouse.

The New Mexico's homestead exemption, N.M.S.A. 1978, § 42-10-9. That Section provides,

The New Mexico statutes do not define "dwelling house" as used in the exemption statute. In State v. Ervin, 96 N.M. 366, 367, 630 P.2d 765, 766 (Ct.App.1981), the New Mexico Court of Appeals observed:

New Mexico case law interpreting "dwelling house" in the context of burglary cases cite to Uniform Criminal Jury Instruction 16.21, which defines, "a dwelling house as `any structure, any part of which is customarily used as living quarters.'"8 Black's Law Dictionary defines "dwelling house" as "[t]he house or other structure in which a person lives; a residence or abode."9

Ms. Hamilton's use of the Prince Property is mixed commercial and residential. The building was built as a commercial warehouse. Ms. Hamilton uses the Property both as her residence and for the sale of fireworks. Where there is mixed commercial and residential use of a property, courts generally allow the homestead exemption where residential use is primary and business use is incidental, and disallow the exemption where business use is primary and residential use is incidental.10 However, courts applying these criteria have reached varying results.11 If the applicable homestead exemption law is limited by use and the quantity of land but not by dollar amount, courts tend to be more restrictive in allowing the homestead exemption where there is mixed residential and commercial use. In re Springmann, 328 B.R. at 258-59.12 New Mexico's homestead exemption is limited by the use of the property and dollar amount but not by the quantity of land. N.M.S.A. 1978, § 42-10-9.

This Court finds that Mr. McKinney has not satisfied his burden of showing that Ms. Hamilton's use of the Prince Property was not primarily residential and that the business use of the Property was not incidental to the residential use. The 3,600 square foot metal building situated on the Prince Property was designed and built for commercial warehouse use. However, there is no evidence before the Court that Ms. Hamilton used the Property between the time she acquired it in 2001 and when she moved into the Property in May of 2009 for any purpose other than the sale of fireworks for a 2-week period during Fourth of July holiday seasons and to store personal items. The Property is located in an unzoned area in the county where both residential and commercial properties are located. Since Ms. Hamilton moved into the Prince Property, she has used an upstairs loft in the building as a bedroom and a portion of the ground level as a kitchen and to store personal items, and has used part of the ground level to sell fireworks during the Fourth of July holiday season. The remainder of the ground level of the building has remained vacant. There is no evidence before the Court to support a finding that Ms. Hamilton intends to use the Prince Property as her residence only on a temporary basis or to put the Property to substantial commercial use in the foreseeable future.

Under these circumstances, and because New Mexico courts liberally construe exemption statutes to promote the purpose of the statutes,13 the Court finds that Ms. Hamilton occupies a "dwelling house" on the Prince Property within the meaning of New Mexico's homestead exemption statute.

3. Establishing a Homestead in Contemplation of Bankruptcy

Mr. McKinney further argues that Ms. Hamilton acted in bad faith and in fraud of creditors with respect to her claim of a homestead exemption against the Prince Property, and therefore her exemption should be denied. He asserts that after he obtained a judgment against Ms. Hamilton, she transferred the Prince Property to her father without consideration to shield the Property from his collection efforts.14 He further asserts that in contemplation of bankruptcy and for the purpose of claiming a homestead exemption against the Prince Property, she purported to move into the Property only about three weeks prior to filing her chapter 7 case,15 and that she obtained and recorded a reconveyance of the Property from her father only two days before commencing her bankruptcy case.

A claim of exemption under New Mexico law may be disallowed if transmutation of nonexempt property to exempt form would constitute a fraud on creditors. Dona Ana Savings and Loan Ass'n v. Dofflemeyer, 115 N.M. 590, 593, 855 P.2d 1054, 1057 (1993). After analyzing applicable law, this Court held in In re Channon, 424 B.R. 895, 900 (Bankr.D.N.M.2010) that to determine whether an exemption available under New Mexico law should be denied on the basis of a debtor's conversion of non-exempt assets into exempt form the court must determine in each case whether a debtor has crossed the line of taking legitimate advantage of exemptions afforded by the state and is defrauding creditors under the actual fraud provisions of the Uniform Fraudulent Transfer Act ("UFTA") as adopted in New Mexico. In Dofflemeyer, the New Mexico Supreme Court held that the "Uniform Fraudulent Transfer Act and the exemption statutes should be construed together to obtain the purposes of both...." 855 P.2d at 1057. The Dofflemeyer Court further held that to reconcile the two statutes requires an analysis of whether a transmutation of non-exempt property into exempt form serves the underlying purpose of the exemption statutes and was not in furtherance of an intent to defraud creditors. Id. at 1058.

In determining whether a debtor took legitimate advantage of statutory exemptions by converting a non-exempt asset to exempt form or acted with intent to defraud creditors, a court should consider the purpose of the homestead exemption and the badges of fraud. "Badges of fraud represent ... a list of circumstantial factors that a court may use to infer fraudulent intent." In re Sholdan, 217 F.3d 1006, 1009 (8th Cir.2000). The UFTA sets forth a nonexclusive list of the badges of fraud. N.M.S.A. 1978, § 56-10-18. Factors relevant to whether a debtor took legitimate advantage of statutory exemptions by converting non-exempt assets to exempt form or acted with intent to defraud creditors include:

A court need not give equal weight to all of the factors; the relative weight given to individual factors depends upon the facts and circumstances of each case.17

This Court finds, after carefully considering all of the pertinent facts and weighting the relevant factors, that Ms. Hamilton by claiming the New Mexico homestead exemption is taking legitimate advantage of the statutory exemption available to her and has not acted with intent to defraud creditors.18

Although Ms. Hamilton conveyed the Prince Property to her father in response to Mr. McKinney obtaining a judgment against her, the Court is persuaded that Ms. Hamilton transferred the Property to her father in an effort to pay Mr. McKinney and not to shield the Property from his collection efforts. Mr. McKinney obtained a state court judgment against Ms. Hamilton on November 20, 2008 in the amount of $52,518.44. On December 4, 2008, he recorded a transcript of the judgment in Curry County, New Mexico, thereby obtaining a judicial lien against the Prince Property. On November 21, 2008, Ms. Hamilton executed a Quitclaim Deed transferring the Price Property to her father. The Quitclaim Deed was recorded on December 16, 2008. On June 16, 2009, a second Quitclaim Deed was recorded reconveying the Prince Property from Ms. Hamilton's father to Ms. Hamilton. Two days later, on June 18, 2009, Ms. Hamilton commenced her chapter 7 case.

Ms. Hamilton testified that after learning of the State Court's ruling that a judgment in favor of Mr. McKinney would be entered against her, she attempted to obtain a loan from Wells Fargo Bank secured by the Prince Property to pay off the debt but the loan was declined because of her credit. She testified that after talking to a banker she transferred to Prince Property to her father to facilitate his using his better credit to obtain a loan secured by the Property to pay off the debt to Mr. McKinney, but his attempt to obtain the loan from Wells Fargo Bank likewise was unsuccessful. Ms. Hamilton delayed recording the quitclaim deed to her father for almost a month after it was executed, which permitted Mr. McKinney to obtain a judicial lien against the Property by recording a transcript of his judgment prior to recordation of the deed. As a result, Ms. Hamilton's father acquired title to the Property subject to the judicial lien. There was no legal impediment to Mr. McKinney seeking to foreclose the judicial lien against the Prince Property between the date of the transfer and Ms. Hamilton's commencement of her chapter 7 case.

Ms. Hamilton further testified that it did not occur to her at the time that she should ask her father to reconvey the Property to her. She considered herself the owner of the Property even after the transfer to her father. Ms. Hamilton testified that she had decided in June 2008 to move into the Prince Property, a year prior to commencement of her bankruptcy case. Ms. Hamilton was not questioned about what motivated her to move into the Prince Property in May 2009 or whether she moved in after consulting bankruptcy counsel. She testified that she obtained a reconveyance of the Property from her father before commencing her bankruptcy case on the advice of her bankruptcy attorney.

The Court finds credible Ms. Hamilton's testimony that she had intended for some time before moving into the Prince Property to make it her residence despite the proximity of her moving into the Prince Property and the commencement of her chapter 7 case. However, in the absence of any other credible explanation for her decision in May 2009 to actually move into the Property, the Court finds that Ms. Hamilton acted on her prior intention to establish residence at the Prince Property in order to protect the Property in her bankruptcy case by claiming a homestead exemption. This finding is not by itself sufficient to require disallowance of the homestead exemption. A finding that a debtor was motivated in part in transmuting a nonexempt asset into exempt form by an intent to protect an asset from creditors does not by itself establish intent to defraud creditors; otherwise, the exemption always would be disallowed whenever the debtor converted a non-exempt asset into exempt form for the purpose of taking advantage of an exemption statute.

The evidence does not support a finding of bad faith on the part of Ms. Hamilton in connection with the reconveyance of the Prince Property to her on the eve of bankruptcy even though allowance of the homestead exemption against the Prince Property will leave no assets in the bankruptcy estate for creditors and will mean no recovery by Mr. McKinney on his judicial lien. So that she could claim a homestead exemption in her bankruptcy case, on the eve of bankruptcy and on advice of counsel, Ms. Hamilton obtained from her father and recorded a quitclaim deed so that title to the Prince Property would be in her name on the Petition Date. Mr. McKinney has not proven that Ms. Hamilton's failure to obtain a reconveyance of the Property from her father sooner was motivated by an intent to hinder his collection efforts. Ms. Hamilton testified that she considered the Prince Property to be hers. There is no evidence that she gained any advantage by keeping title to the Property in her father's name subject to Mr. McKinney's judicial lien, that she did so for strategic reasons, or that any creditors were prejudiced thereby. There is no evidence that Ms. Hamilton's father made any use of the Prince Property while he was vested with record title to the Property, or exercised any of the incidents of ownership in relation to the Property. The reconveyance of the Prince Property to Ms. Hamilton by her father restored the status quo that existed before the transfer of the Property to him.

The purpose of the homestead exemption is to protect a debtor's home or preserve funds to provide shelter for a debtor and the debtor's dependents, despite insolvency, financial distress or calamitous circumstances.19 Allowance of Ms. Hamilton's claim of homestead exemption serves this purpose. Ms. Hamilton did not have a home and did not rent a place to live prior to her moving into the Prince Property, having stayed with various family members. She moved into the Prince Property so she would have her own place to live. Although living conditions at the Prince Property may be harsh, and its accoutrements austere, it is a refuge that provides Ms. Hamilton with basic shelter, privacy and a sense of security. The Court finds that protection of Ms. Hamilton's home from claims of creditors serves the purpose of New Mexico's homestead exemption statutes without contravening the purposes of the Uniform Fraudulent Transfer Act.

B. Lien Avoidance Under 11 U.S.C. § 522(f)

The second issue before the Court is whether Mr. McKinney's judicial lien impairs Ms. Hamilton's homestead exemption. Ms. Hamilton seeks to avoid the lien under 11 U.S.C. § 522(f) as an impairment to her homestead exemption.20 In accordance with 11 U.S.C. § 522(f), a debtor is entitled to avoid the fixing of a judicial lien to the extent it impairs an exemption that the debtor is otherwise entitled. 11 U.S.C. § 522(f). Mr. McKinney's transcript of judgment constitutes a judicial lien subject to avoidance under 11 U.S.C. § 522(f).21

Whether a judicial lien impairs a debtor's exemption is determined in accordance with the formula found in 11 U.S.C. § 522(f)(2)(A). That section provides:

While the debtor initially listed the Prince Property on her Schedule A and provided a value of $100,000, she subsequently amended her Schedule A to reflect a Property value of $55,000 based on an appraisal dated September 15, 2009. The parties stipulated at the commencement of trial to the $55,000 appraised value. Mr. McKinney's transcript of judgment was recorded in the amount of $52,518.44. Ms. Hamilton's homestead exemption is $60,000.00. N.M.S.A.1978, § 42-10-9. The formula found in 11 U.S.C. § 522(f)(2)(A) applied in this case yields the following:

   McKinney Judicial Lien:      $ 52,518.44
   Homestead Exemption          $ 60,000.00
                                ___________
   (as if there were no liens)
       TOTAL:                   $112,518.44

Because the sum of the judicial lien on the Prince Property and the amount of the exemption that the Debtor could claim if there were no liens on the Property ($112,518.44) exceeds the value that Ms. Hamilton's interest in the Property would have in the absence of any liens ($55,000), Mr. McKinney's transcript of judgment impairs Ms. Hamilton's homestead exemption and the judicial is to be avoided in its entirety. The Court therefore finds in accordance with 11 U.S.C. § 522(f) that the Motion to Avoid Lien of Roy McKinney should be granted.

This Memorandum Opinion shall constitute the Court's findings of fact and conclusions of law under Rule 7052, Fed. R.Bankr.P. An appropriate order will be entered.