Krajci v. Mt. Vernon Consumer Discount Co. (In Re Krajci)

OPINION

EMIL F. GOLDHABER, Bankruptcy Judge:

The issue at bench is whether fraud can be raised as a defense in an action to avoid a lien under Section 522(f)(1) of the Bankruptcy Code. We conclude that it cannot.

The facts of the instant case are as follows: 1 In August, 1978, Leonard and Renee Krajci (“the debtors”) entered into a loan transaction whereby they became indebted to Mt. Vernon Consumer Discount Company (“the creditor”) in the amount of $2,304. That loan was secured by a mortgage on the debtors’ residence. On June 20, 1979, the debtors entered into another loan transaction whereby…