In re King

643 B.R. 75

IN RE: Tyrelle Lamar KING, Debtor.

Case No.: 21-19296-ABA

United States Bankruptcy Court, D. New Jersey.

Hearing Date: June 21, 2022

Signed July 28, 2022

Charles M. Izzo, Law Office of Charles M. Izzo, Camden, NJ, for Debtor.

MEMORANDUM DECISION

Andrew B. Altenburg, Jr., United States Bankruptcy Judge

I. INTRODUCTION

The debtor filed a chapter 13 bankruptcy case with the goal to cram down a property tax lien. The lien concerned real property that the debtor became a co-owner of after a complaint to foreclose the equity of redemption had been filed. He filed this bankruptcy case just days before summary judgment was entered in the state court. The plaintiff in the foreclosure matter quickly filed a Motion for Relief from Stay, Dismissal, and/or for Sanctions here. This court now decides that dismissal of the case is appropriate due to the debtor's lack of good faith and inability to propose a feasible plan. In addition, because stay relief would otherwise have been merited, the debtor would not have been able to confirm a plan.

II. JURISDICTION AND VENUE

The court has jurisdiction over this contested matter under 28 U.S.C. §§ 1334(a) and 157(a), (b)(1)(G), and the Standing Order of the United States District Court dated July 23, 1984, as amended September 18, 2012, referring all bankruptcy cases to the bankruptcy court. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(A), (O). Venue is proper in this Court pursuant to 28 U.S.C. § 1408. The statutory predicates for the relief sought herein are 11 U.S.C. §§ 362 and 1307.

Pursuant to Fed. R. Bankr. P. 7052, the court issues the following findings of fact and conclusions of law.

III. BACKGROUND

In July 2019, Greta King, the grandmother of the debtor, Tyrelle Lamar King,¹ purchased property located at 1300 Decatur Street, Camden, New Jersey (the "Decatur Property") from Ashante Johnson for $1. Doc. No. 12, ex. C (deed); Doc. No. 23, p.2 (Tyrelle through counsel reciting that Johnson purchased the property for $1,500 and two years later sold it to Greta). The property was already in property tax arrears and subject to a tax sale certificate sold to the City of Camden back in June 2011. Doc. No. 12, ex. B. In June 2021, the City of Camden assigned the certificate to Anedia Henriquez for $9,000, which was less than the amount then owed. Id. , ex. D. In July 2021, Ms. Henriquez filed a complaint against Greta and subsequent lienors to foreclose the equity of redemption, and recorded a lis pendens . Id. , ex. E. In August 2021, Greta transferred title to the Decatur Property from herself to herself and Tyrelle for $1 by quitclaim deed prepared by attorney Charles Izzo. Id. , ex. G.² The transfer was recorded in September 2021. Id. The state court entered summary judgment in Ms. Henriquez's favor on December 3, 2021, stating that Greta had not presented a valid defense to the foreclosure action. Doc. No. 46, ex. B. Just two days before, Tyrelle filed this chapter 13 bankruptcy case, represented by Mr. Izzo.

Other than the property tax claim, Tyrelle's schedules disclosed just $4,107 in claims, all unsecured. Doc. No. 1. Tyrelle added no other creditors in his case. Ultimately, unsecured creditors filed $5,051 in claims. See Claims Register. Tyrelle first proposed a chapter 13 plan paying $441 per month for 60 months. Doc. No. 3. He would cram down Ms. Henriquez's claim to the $19,000 value he assigned to the Decatur Property, plus statutory interest of 18%, see 11 U.S.C. § 551, for a total of $25,000. A scheduled $2,576 claim of the Bergen Square Community Development (later identified as also holding a tax sale certificate on the Decatur Property) would not be paid at all. The City of Camden would receive $1,000 on a secured claim. The City filed a claim in error that it later withdrew. See Claim #7.³ Unsecured creditors would be paid 100 percent.

Tyrelle later modified this plan to pay $720 per month for the remaining 57 months, for a total of $42,363 (three months at $441 plus 57 months at $720). Doc. No. 29. The explanation provided was so that the plan was essentially "modified to agree with appraisal of collateral." Id . p. 9, Part 9. The value assigned to the collateral was $35,000. Id . p. 5. Under the modified plan, Tyrelle proposed to pay a total of $39,000 on Ms. Henriquez's claim. Id . Unsecured creditors now would only receive pro rata payments from any remaining funds. Id . p. 6, Part 5.

Tyrelle proposed to pay $720 per month despite disclosing $1,467 in net monthly income on Schedule s I/J. See Doc. No. 1, p. 28. As of the date of this Opinion, Tyrelle is behind on trustee payments by $213, having not paid in June or July. But the chapter 13 trustee's website has not updated to show the proposed increased monthly payment starting in Month 5. Taking this into account, Tyrelle is behind by $1,050.

The increase in plan payment certainly resulted from an appraisal Tyrelle simultaneously filed with the amended plan, estimating the value of the Decatur Property at $35,000. See Doc. No. 31. The appraisal of the three-bedroom,⁴ one bath house shows a boarded-up, fenced-in property in poor condition. See id. According to Tyrelle, nobody lives in the Decatur Property: he, Greta, his uncle, Walter, and a cousin live together elsewhere in Camden. Doc. No. 46, ex. C, p. 21. Indeed, the appraiser remarked that "Major repairs are necessary at the time of inspection," Doc. No. 31, p. 5, and Tyrelle himself noted on his Schedule A/B that the property was in "disrepair," a description he did not change when later amending that schedule. Doc. No. 1, p. 10; Doc. No. 48, p. 1.

Ms. Henriquez took a deposition of Tyrelle on April 11, 2022, that revealed several discrepancies in Tyrelle's disclosures and certifications and a lack of knowledge about the Decatur Property. Doc. No. 46, ex. C. Tyrelle testified that he had attended college but did not graduate. Id. , p. 8. He works in the warehouse of a Target Distribution Center making $23.50 an hour, working 40 hours weeks. Id. , p. 10. Regarding a creditor listed on his petition, South Jersey Auto Finance, he said he did not know he owed it any money. Id. , p. 12. He admitted he is not actually paying several of the expenses he disclosed on his Schedule I/J, a difference of $657. Id. , pp. 9-14. Before filing for bankruptcy, nobody was suing him for any reason. Id. , p. 12. Despite listing debts of $200 owing to four different municipalities, Tyrelle testified that he only owed one.⁵ Id. , p. 13. He has been able to pay his bills on time as they came due. Id. , p. 13. Regarding Covid, Tyrelle testified that he had just recovered from having the virus and had not had it before. Id. , p. 13. The Covid crisis did not affect him financially; did not stop him from paying his bills. Id. , p. 14. Tyrelle does not pay rent, property taxes or utilities living with Greta, and pays for repairs only "when necessary." Id. , p. 9.

As for the Decatur Property, Tyrelle testified that it was Greta's idea for him to purchase half of the property. Id. , p. 19. The deed was presented to him at Mr. Izzo's office with Walter present. Id. , p. 20. Walter paid Mr. Izzo for the deed preparation. Id. Asked whether he got a title search done before taking the deed, Tyrelle said he did not know what that was. Id. , p. 21. He did not know that a foreclosure was pending at the time. Id. , p. 21. He could not remember when he bought his interest in the Decatur Property. Id. , p. 15. He had only visited the property "maybe twice," and only after he had already become a co-owner. Id. , pp. 15-16. He had never been inside the property. Id. , p. 17. He had "no clue" of the value of the property when he bought it. Id. , p. 16. He did not inquire about the value or whether there were liens on the property, he "didn't even know there were liens on the property." Id. , p. 16. He could not recall when he learned that there were liens on the property and did not know how much was owed on the property at the time of the deposition. Id. He could not confirm that more was owed on the property than it is worth. Id. , p. 17. He did not know whether there was insurance on the property or whether the current taxes had been paid. Id. , p. 18. He stated that his uncle, Walter, takes care of maintenance, expenses and taxes there. Id. , p. 14. Tyrelle does not pay any expenses connected with the Decatur Property. Id. , p. 15. He does not even know what expenses there are for the property. Id. Tyrelle stated for the first and only time in this case that he wants the Decatur Property for himself and the son he is expecting. Id. , p. 18. Yet when asked why he thought this property was an opportunity despite only having seen it twice, he answered "I'm not sure." Id. , p. 19.

Tyrelle testified that he considered filing for bankruptcy even before he bought the property. Id. , p. 22. He did so due to "outstanding bills and all so I wanted to build my credit score up." Id. , p. 22. Mr. Izzo told him filing bankruptcy would help his credit score. Id. , p. 22. Tyrelle denied that filing bankruptcy was part of the plan in his buying the Decatur Property. Id. , p. 22.

The court found this exchange revealing:

Q. Would you agree that buying a property with over $50,000 in tax liens on it pretty much increased your debt by over 10 times?

A. You said what happened?

Q. Before you filed bankruptcy you owed people maybe $4,000, right?

A. I'm not sure about that number but I know it was money though.

Q. How much do you think you owed people when you filed bankruptcy?

A. I'm not sure. I had debts that I didn't even fully know about.

Q. So now you bought a property and increased your debt load by over $50,000, is that correct?

A. I'm not sure.

Q. Whose idea was it for you to file bankruptcy?

A. It was my idea.

Q. But didn't you say your uncle also had something to do with that?

A. No, I never said that.

Q. How much did you agree to pay Mr. Izzo for filing bankruptcy?

A. I didn't really

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