# Tyrelle Lamar King

> United States Bankruptcy Court, D. New Jersey · July 28, 2022

URL: https://www.frixlaw.com/law-library/cases/10459670

## Case

- **Court:** United States Bankruptcy Court, D. New Jersey
- **Decided:** July 28, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10459670

## How later opinions describe it (automated extraction)

- finding retention of investment property not indicative of bad faith where debtor testified attempting to sell but had difficulty doing so, and all unsecured creditors were to be paid in full

## Opinion text

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY

In Re:
Case No.: 21-19296-ABA

Tyrelle Lamar King, Chapter: 13

Judge: Andrew B. Altenburg, Jr.
Debtor.
Hearing Date: June 21, 2022

MEMORANDUM DECISION

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.

1 Due to several King parties, the court hereafter will refer to each by their first name.

2 As the deed did not indicate how the property was conveyed, Tyrelle took as a tenant in common with Greta. N.J.S.A.
46:3-17.

3 As will be explained in the Procedural History below, the City’s claim was preserved through this Court’s Order of
June 2, 2022, Doc. No. 52, wherein the City and Ms. Henriquez “agreed that Ms. Henriquez shall receive a refund for
the amount paid for the assignment plus lawful interest and additional costs with the remainder of the redemption
moneys being paid to the City in accordance with N.J.S.A. 54:5-114.8.” Id. In its letter attached to the Order, the City
offered to file a proof of claim to memorialize this agreement however, the court believes that the Order and letter
preserve the City’s claim and/or certainly serves as an informal proof of claim. See In re Kern, 20-18381-ABA, 2020
WL 7066327, at *2 (Bankr. D.N.J. Dec. 2, 2020) citing In re Roper & Twardowsky, LLC, 15-32878 (SLM), 2017 WL
3311222, at *7–8 (Bankr. D.N.J. July 5, 2017) (J. Meisel).
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

4 The appraisal’s photographs only show two bedrooms, but the appraisal claims three.

5 Interestingly, no municipality filed a proof of claim despite having received notice of the case and a deadline to file
its proof of claim. See Doc. No 7 and Claims Register.
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 discuss the matters of the money, I let my uncle handle that.

* * *

Q. Is there a fee agreement that you signed by which you agree to pay [Mr. Izzo]?
A. I’m not sure what exactly that is.
Q. Do you owe Mr. Izzo any money?
A. No.
Q. Have you paid Mr. Izzo any money?
A. I haven’t but my uncle may have.
Q. Has anyone else paid him for you?
A. Yes.
Q. Who else has paid him for you?
A. My uncle.
Q. When did you first learn about the foreclosure?
A. I’m still figuring this stuff out. I’m not even really too sure about a foreclosure
or anything like that. I’m figuring this out as the days go on.
Q. So, if I understand correctly, this idea of you filing bankruptcy for this property
was your uncle’s idea?
A. No, the bankruptcy wasn’t filed for the property purposes, it was for filed for
my own personal reasons, like credit score, like I said, and also just a brand new
fresh restart.
Q. But you indicated to me you were able to pay all of your bills as they came due,
right?
A. You said what happened? The ones that I was aware of, yes, the ones I was
aware of, yes.
Q. Who first told you about the foreclosure against 1300 Decatur?
A. I’m unaware of a foreclosure, I wasn’t sure about that.
Q. When did you first learn about it?
A. After coming to the office here and speaking with Izzo.
Q. Who told you about the foreclosure?
A. Izzo.

Id., pp. 23-25.

This deposition occurred four months after Tyrelle had filed the bankruptcy case.

IV. PROCEDUAL HISTORY

Within days of the bankruptcy filing, Ms. Henriquez filed a Motion for Stay Relief,
Dismissal and/or for Sanctions. Doc. No. 12 (the “Stay Relief Motion”). She alleged that Tyrelle
filed his chapter 13 bankruptcy case in bad faith to thwart the foreclosure of the tax sale certificate
owned by her. She alleged that the chapter 13 plan was not proposed in good faith as the unsecured
creditors could be paid in full in three months. She argued that cause existed for vacating the stay
as to her foreclosure action because the property secured by her tax sale certificate had no equity
and, as the debtor did not live there, was not necessary for reorganization. She alleged that the
transfer of the deed constituted a fraudulent transfer intended to delay the foreclosure action,
supporting dismissal of the case. Her proposed order sought stay relief and reimbursement of her
attorney’s fees and costs as a sanction to make the creditor whole.

In response, Mr. Izzo filed a brief accusing Ms. Henriquez of Malicious Abuse of Process
for making allegations without any supporting evidence, citing Lobiondo v. Schwartz, A-4325-
04T5, 2007 WL 2188600, at *3 (N.J. Super. Ct. App. Div. Aug. 1, 2007), aff’d in part as modified,
rev’d in part, 199 N.J. 62 (2009). Doc. No. 15. Regarding Ms. Henriquez’s statement that that the
property was transferred for no value, Mr. Izzo cited a New Jersey statute exempting transfers
between parents and their children from New Jersey’s Realty Transfer Fee. Id. Neither of these
arguments were responsive to the Stay Relief Motion, as Lobiondo defined malicious abuse of
process as a cause of action requiring a showing “‘that the litigator perform[ed] further acts after
the issuance of process which represent the perversion or abuse of the legitimate purposes of that
process[,]’” Lobiondo v. Schwartz, at *3 (quoting Penwag Prop. Co., supra, 148 N.J. Super. at
499, 372 A.2d 1162) (emphasis added)), and Ms. Henriquez had complained about the amount
Tyrelle paid to purchase the property, not whether a realty transfer fee had been paid. The statute
cited did not even apply to the transaction as Greta and Tyrelle’s relationship is of
grandmother/child, not parent/child. Granted, Mr. Izzo had independently certified that Greta had
adopted Tyrelle as her son, Doc. No. 15, but Tyrelle refuted that in a later submission. See Doc.
No. 40, p. 2, n. 1.

Mr. Izzo concluded his brief with the following:

Debtor has presented admissible evidence in the form of the appended Declarations
of the Slandered Parties, declared under penalty of perjury, which unequivocally
refute the maniacally absurd and frivolous allegations set forth in Creditor’s
moronic argument based exclusively upon speculation and conjecture in the
absence of a single shred of evidence. The Court may take judicial notice of the
Creditor’s moronic lust to acquire a windfall by any method of demented
skullduggery conceivable in the baseless, liable, and slanderous content of
Creditor’s brief not supported by a single shred of proffered evidence and dismiss
Creditor’s frivolous argument for lack of supporting evidence.

WHEREFORE, for the foregoing reasons Debtor respectfully requests this
Honorable Court to enter a judgment dismissing Creditors [sic] motion as having
been submitted in Bad Faith for purposes of delay and distraction in a misguided
effort to contaminate judicial process to obtain an objective not intended by law.

Doc. No. 15, p. 7. In addition to the inappropriateness of the language utilized by Mr. Izzo, the
court notes that the lack of equity is evidenced by the $76K claim exceeding the $19K value6
originally asserted by Mr. Izzo’s client at the time, thus Mr. Henriquez did not fail to present
evidence, and it is the debtor’s burden to prove that the property is necessary to an effective
reorganization. See 11 U.S.C. § 362(g).

The response attached “declarations” of Greta, Tyrelle and Mr. Izzo. Greta declared that:

My decision to provide my biological grandson with a percentage of my property
was based upon the impact of COVID 19 raising concerns of Wills and Heir
Property Distribution in the wake of such a deadly pandemic and was not in any
manner influenced by any existing foreclosure or bankruptcy proceedings.

Doc. No. 15, p. 9.7

6 Or even the $35K value set forth in the modified plan.

7 As mentioned above, as the deed did not state indicate how the property was conveyed, Tyrelle took as a tenant in
common with Greta. N.J.S.A. 46:3-17. Thus, upon Greta’s death, Tyrelle would not own the entire property, but
Greta’s interest would devolve to her heirs, who would own the property with Tyrelle. Weiss v. Cedar Park Cemetery,
240 N.J. Super. 86, 98 (App. Div. 1990).
In contrast to later deposition testimony regarding the lack of impact on him of Covid,
Tyrelle declared:

My decision to file for Chapter 13 was done in Good Faith after my financial
stability was seriously impacted following the COVID 19 pandemic which is
currently governed by the intent and purposes of congress [sic] under the provisions
of Section 1113 of the CARES Act. My motive for filing this matter at this interval
is to enjoy the added benefits of these provisions, which will sunset, or expire, on
March 26, 2022, unless extended again.

Id., p. 10.

Mr. Izzo’s declaration merely repeated Tyrelle’s statement. Id., p. 11. Mr. Izzo had
referenced the CARES Act amendment in his brief, stating that the purpose of the CARES Act
was both to “expedite bankruptcy processes” and to allow chapter 13 debtors to extend (i.e., not
expedite) plans to up to seven years. Id., p. 7. Notably, none of Tyrelle’s proposed chapter 13 plans
sought seven-year terms.

Ms. Henriquez replied, pointing out that nothing in the debtor’s response refuted cause for
relief from the stay or the allegation that the transfer of ownership constituted a fraudulent transfer
to delay a creditor. She also argued that Tyrelle cannot redeem the tax sale certificate unless he
intervened in the state court action, as only parties to the foreclosure action may redeem. Doc. No.
16.8 Moreover, Ms. Henriquez argued that Tyrelle cannot obtain cramdown relief against Ms.
Henriquez without Greta’s participation, citing 11 U.S.C. § 524(e) (discharge “does not affect the
liability of any other entity, or the property of any other entity for, such debt.”). Ms. Henriquez
later conceded that the Bankruptcy Code would allow Tyrelle to cram down her claim, see Doc.
No. 46, p. 7, though she argued that it would be an abuse of the bankruptcy provisions to do so.

Ms. Henriquez also filed an objection to Tyrelle’s plan, asserting that neither it nor the
petition were filed in good faith, that the plan does not meet the best interest of creditors test, and

8 This is not entirely correct. New Jersey law provides that:

all persons claiming an interest in or an encumbrance or lien upon such property . . . which . . . could be recorded . . .
and which shall not be so recorded . . . at the time of the filing of the complaint . . . shall be bound by the proceedings
in the action so far as such property is concerned, in the same manner as if the person had been made a party to and
appeared in such action, and the judgment therein had been made against the person as one of the defendants therein[.]
[S]uch person, upon causing such conveyance. . . may apply to be made a party to such action. No person, however,
shall be admitted as a party to such action, nor shall the person have the right to redeem the lands from the tax sale
whenever it shall appear that the person has acquired such interest in the lands for less than fair market value after the
filing of the complaint, except where such transferee is related by blood or marriage to, or who, because of other close
or personal relationship with the transferor, would in normal course be a party to an instrument for little or no
consideration, or where such party acquired his interest at a judicial sale.

N.J.S.A. 54:5-89.1.

Thus, not having a recordable interest as of the filing of the state court complaint, Tyrelle would yet be bound
by any judgment entered so far as the property is concerned. Being Greta’s grandson, “related by blood,” he can
redeem despite having received the property interest for little or no consideration.
that it fails to pay her secured claim in full or all projected disposable income, priority taxes such
as postpetition real estate taxes in full, the tax claim at its state law interest rate pursuant to 11
U.S.C. § 511, and her wholly-secured claim in full. Doc. No. 20. Some of these objections are
incorrect: As the debtor has no assets available for liquidation, the plan could not fail the best
interest of creditors test, and Tyrelle did propose to pay the tax claims at their state law interest
rate.

The subsequently-filed modified plan did not cure any of the valid objections. See Doc.
No. 29.

Mr. Izzo’s reply brief to the Stay Relief Motion on behalf of his client began with
wondering why Ms. Henriquez was “alarmed” at a plan that proposed “to redeem a certain secured
lien in full . . . .” Doc. No. 23, p. 2. He concluded without specifics that Tyrelle had demonstrated
that he could “facilitate a very orderly predictable and full redemption of the subject lien.” Id.
(emphasis added). But Tyrelle never in any of his plans proposed to pay the lien in full, but instead,
to cram it down.

Mr. Izzo then continued to recite the history of holders of tax liens on the Decatur Property,
seeming to find significant that an earlier holder had also been the client of Ms. Henriquez’s
attorney, but not explaining why. He stated that Tyrelle had “testified that he joined his
Grandmother on the Deed in an effort to fortify her finances and to finally facilitate a redemption
of the now 20 year old City Tax Lien. . . .” Id., pp. 2-3. As Tyrelle had not testified in court, and
his deposition occurred later, the court assumes the testimony referred to occurred at the section
341 hearing. But Mr. Izzo did not attach a transcript of that hearing or have his client certify to the
statement, therefore the assertion is hearsay. Yet if true, it would mean that Tyrelle sought to
“fortify” Greta’s finances at the same time that he alleged he was suffering serious financial
repercussions due to Covid, and it conflicts with Greta’s certification that she transferred the
property for estate-planning purposes and Tyrelle’s later testimony that he wanted the property as
a place to live with his son.

Mr. Izzo complained that Ms. Henriquez had no seeming connection to the property, but
“voluntarily [came] forward and insert[ed] herself as a ‘bidder,’” thereby becoming a creditor in
this matter, but did not explain why that was relevant or recognize that the same could be said of
Greta and Tyrelle. Id., p. 4. He characterized Ms. Henriquez’s claim as a “windfall” since she
obtained the tax sale certificate for only $9,000 when that the claim had reached $70,000 by the
time of her purchase. Id. But upon redemption, Ms. Henriquez is only entitled to receive her
investment plus interest and costs. N.J.S.A. 54:5-60. Mr. Izzo asserted that his client’s proposal to
pay $35,000 plus interest was fair since it “is far in excess of the moving party’s $9,000[] direct
investment” and would “provide for full reimbursement . . . along with all interest earned by her
after the assignment and full payment of all fees and costs allowed to be recovered under New
Jersey law and Bankruptcy Law.” Id., p. 5.

Mr. Izzo then cited N.J.S.A. 54:5-54.1 as providing that the amount required to redeem a
tax lien certificate is to be determined by the tax collector or pursuant to bankruptcy law, arguing
then that this court must ignore the proof of claim and independently determine what is to be paid
to Ms. Henriquez and what to the City of Camden. Id., p. 5. This is incorrect. The cited statute
provides that “[a]ll redemptions shall be made through the tax collector’s office, unless authorized
by court order or pursuant to federal bankruptcy law.” N.J.S.A. 54:5-54.1 (emphasis provided). It
states nothing about who determines the amount of the redemption.

Mr. Izzo then argued that a secured creditor seeking in rem relief on the theory that the
debtor exhibited a lack of good faith as part of a scheme to hinder, delay and defraud must meet a
“substantial evidentiary burden,” citing a case discussing 11 U.S.C. § 362(d)(4). Doc. No. 23, p.
6; see In re O’Farrill, 569 B.R. 586 (Bankr. S.D.N.Y. 2017). But Ms. Henriquez did not proceed
under section 362(d)(4). Indeed, subsection (d)(4) concerns transfer of ownership or interest in
property “without the consent of the secured creditor or court approval.” 11 U.S.C. § 362(d)(4)(A).
Ms. Henriquez never alleged that she or a court had to approve any transfer of ownership.

Mr. Izzo continued on to concede that bad faith in filing is a basis for granting relief from
the stay, and that the party requesting relief need only show lack of equity in property while the
party opposing relief has the burden of proof on all other issues, citing 11 U.S.C. § 362(g). He then
posited that the filing of an unconfirmable plan might support bad faith and quoted the entirety of
section 1325 of the Bankruptcy Code setting forth the requirements for confirming a chapter 13
plan. He followed this with a listing of factors a court must consider. The brief then ended without
any application of the facts of this case to the law to meet the debtor’s burden.

A plenary hearing on the Stay Relief Motion set for March 3, 2022 was adjourned by the
court indefinitely after receiving a statement from Ms. Henriquez’s counsel that neither Tyrelle
nor Greta had complied with his subpoenas for depositions and Mr. Izzo advised this court that he
had a 341 meeting of creditors in the Trenton courthouse scheduled for the same day and time.9
The court relisted the motion on Ms. Henriquez’s request on April 18, 2022 for a hearing on April
26, 2022.

On April 26, the court received a Supplemental Certification of Tyrelle, stating that he was
filing this certification “on my own cognizance, without the assistance and/or knowledge of my
counsel in this matter.” Doc. No. 40, p. 1. There, Tyrelle denied that he and his grandmother
engaged in a civil conspiracy to defraud, but instead averred that Greta exercised a legal right to
contract as allowed by 42 U.S.C. § 1981; accused Ms. Henriquez’s attorney of falsely certifying
in an Amended Complaint filed in state court that a title search he performed prior to filing the
amended complaint had shown only Greta’s ownership, id., p. 2, n. 2; see id., ex. A, p. 910; and

9 In its March 3d docket entry adjourning the matter, the court noted “The court also puts the parties on notice that it
believes a plenary hearing scheduled by the court takes priority over a 341 meeting of creditors absent a showing to
the contrary.”

10 That attorney denied that a subsequent title search included Tyrelle’s interest. Doc. No. 28, ¶ 10. He offered to
produce the title report on request. Id. Nobody has made such a request.

Because Tyrelle’s interest was not recorded at the time of the filing of the original complaint (having not
been transferred yet), it appears he would be bound by the state court action regardless of whether named in the
amended complaint, as New Jersey law provides that:

In any action to foreclose the right of redemption in any property sold for unpaid taxes or other
municipal liens, all persons claiming an interest in . . . such property, by or through any conveyance
. . . which, by any provision of law, could be recorded . . . in any public office in this State, and
alleged that Ms. Henriquez’s attorneys cited case decisions inapplicable to this matter because they
involved foreclosure of a mortgage and the rights of an owner delinquent in property taxes.11 He
alleged that Ms. Henriquez is not a bona fide purchaser of the tax sale certificate (despite the state
court having implicitly decided her standing), that he “was bullied and harassed into being
deposed,” and, without any supporting factual allegations, that as he is a person of color, Ms.
Henriquez’s attorneys have engaged in discriminatory conduct in trying to deny him the right to
reorganize in bankruptcy, the right to contract (citing 42 U.S.C. § 1981) and the right to property
(citing 42 U.S.C. § 1983). In closing, he complained that Ms. Henriquez and her attorney were
falsely claiming that he and his grandmother were engaged in civil and criminal conspiracy while
they were “concealing their own unclean hands upon tampering with and fabricating evidence
along with perjury in the State Court Action upon [Ms. Henriquez’s attorney] annexing a false title
certification” to the Amended Complaint regarding the title search. Id., p. 4, ¶ 9.

Ms. Henriquez filed a proof of claim for $76,454, secured by the Decatur Property. Claim
No. 2-1. Mr. Izzo filed a “Motion to Reduce Claims” but did not include a certification or legal
brief with this motion, attaching only a New Jersey Supreme Court decision, the proof of claim, a
copy of N.J.S.A. 54:5-54.1 (providing that redemption of taxes may be made pursuant to federal
bankruptcy law), and a proposed order disallowing the claim, striking it from the register, but
granting 30 days to file an amended proof of claim. Doc. No. 32.12 A Notice of Motion stated that
the debtor was objecting to the allowance of Ms. Henriquez’s claim “on the grounds that the claim
is not properly calculated and overstates the amount of the Debt [sic] owed to the creditor.” Id.

In Ms. Henriquez’s response she pointed out that the “objection” could not be challenging
the amount to redeem the tax certificate since the proof of claim included a redemption statement
prepared by the Camden City Tax Collector. Doc No. 34. She then guessed that, because she had
purchased the certificate for less than the amount of taxes due, the objection concerned how much
of the $76,454 should be paid to her versus paid to the City of Camden, as discussed in the New
Jersey opinion that Mr. Izzo had attached, despite that Ms. Henriquez had acknowledged that issue
and cited the opinion in her proof of claim.

At the hearing on the Motion to Reduce Claims, counsel for Ms. Henriquez and for the
City of Camden appeared. Mr. Izzo failed to appear, while Tyrelle and Walter did. Though noting
that Mr. Izzo’s absence alone could allow the court to deny the motion for lack of prosecution, the

which shall not be so recorded . . . at the time of the filing of the complaint in such action shall be
bound by the proceedings in the action so far as such property is concerned, in the same manner as
if the person had been made a party to and appeared in such action, and the judgment therein had
been made against the person as one of the defendants therein[.]

N.J.S.A. 54:5-89.1. He apparently could, but did not have to, apply to intervene. Id.

11 The court could not find cases regarding the cram down of a property tax claim where there existed a non-debtor
co-owner either, and Mr. Izzo did not supply any.

12 If objecting to the amount of a claim as opposed to its validity, the proper relief is for the court to disallow it to that
extent, not to strike the claim and force the claimant to file a new claim. See 11 U.S.C. § 502(a), (b)(1) (deeming
proofs of claim allowed, unless an objection is made, and then allowing it “in such amount except to the extent that .
. . such claim is unenforceable against the debtor and property of the debtor . . . .”).
court entered an order clarifying that the claim would be paid according to a response letter filed
by the City of Camden explaining how the funds would be split between it and Ms. Henriquez.
Doc. No. 52.13

This bankruptcy case was also marked by litigation over Ms. Henriquez’s desire to depose
Tyrelle and Greta. Ms. Henriquez filed a Motion to Compel in January 2022 after neither appeared
for subpoenaed depositions. Doc. No. 19. Regarding Tyrelle, Ms. Henriquez’s attorney had sent
Mr. Izzo a letter dated January 6, 2022, scheduling the deposition for January 27, 2022, via Zoom.
Doc. No. 19, ex. A. He emailed Mr. Izzo the day before the deposition to confirm it. Mr. Izzo
replied that he “would prefer” another date due to his client’s work schedule, which he had only
just became aware of. Id., ex. E. Ms. Henriquez’s attorney did not agree to postpone. Id., ex. F, p.
4. At the time of the deposition, Mr. Izzo stated that he was not producing his client. Id, ex. E.
Greta did not appear for her deposition either, also scheduled that day. Id., p. 4, ¶ 22. Mr. Izzo
professed not to have a phone number or email address for her, despite having represented her in
several deed transfers. Id., ex. E.

Ms. Henriquez’s counsel expended billable hours on this and the court reporter charged
$130. Id., ex. G. No opposition being filed to the Motion to Compel, the court granted it on
February 22, 2022. Doc. No. 22.

On March 22, 2022, Greta filed a Motion to Vacate the sanctions order, arguing that she
was legally entitled to transfer the property, her grandson was legally entitled to file bankruptcy,
and that Ms. Henriquez’s attorney’s “sole intention of deposing me, [sic] is for intimidation;
harassment; and infliction of emotional distress.” Doc. No. 27, p. 2. However, she also opposed
the motion on the ground that she was not served personally and stated that she had no knowledge
of the purported deposition. Id., p. 3. Ms. Henriquez filed opposition and a Cross Motion to Enforce
and Award Fees, asserting that service was proper. Doc. No. 28.

The Motion to Vacate was heard on April 26, 2022, initially only with Ms. Henriquez’s
attorney appearing. Walter arrived later and informed the court that Mr. Izzo and Tyrelle were
delayed due to Covid restrictions. Tyrelle never appeared. Greta never appeared. Nevertheless, the
court vacated the enforcement order as to Greta as this court has previously ruled that service of a
subpoena must be on the person, not by mail, certified mail, or, as here, accepted by a member of
the person’s household. Doc. No. 42. See In re Williams, BR 17-25034-ABA, 2021 WL 1912401,
at *10 (Bankr. D.N.J. May 12, 2021).14 But the court granted Ms. Henriquez’s request for $520 in
sanctions against Tyrelle for not appearing at the originally-scheduled deposition, allowed as an
administrative priority to be paid from funds received by the chapter 13 trustee. Doc. No. 42. Mr.
Izzo confessed that he had not even discussed the Motion to Compel to Enforce and Award Fees
with Tyrelle, first stating that he thought the sanctions were only requested against Greta, then

13 Based upon the value provided by Tyrelle, it appears that Ms. Henriquez may be paid the same from the cramdown
funds as she would be if redemption were in full, thus the impact of the cramdown is really on the City of Camden.
See Doc. No. 52, p. 3.

14 It denied the Motion to Compel as it had not been served at Greta’s correct address. Doc. No. 42.
stating that there were more substantive matters in the case to discuss with his client than this
sanctions motion.

Ms. Henriquez then filed a new Motion to Compel Discovery. Doc. No. 44. Greta did not
file opposition, but appeared with Walter at the May 31, 2022 hearing. The court explained to
Greta that Ms. Henriquez had a valid reason to depose her, therefore she must submit to this. When
the court asked Greta to provide a phone number or email address, as required of all persons filing
documents with the court, see D.N.J. L.B.R 9004-1(b), so that the court had a means to contact
her, Greta glanced first at Walker for approval. She then provided a phone number. The court then
granted the motion. Doc. No. 51.

Regarding the Stay Relief Motion, at the April 26th hearing the court had directed Ms.
Henriquez’s counsel to file a brief by May 27, 2022, and Mr. Izzo to respond by June 10, 2022,
with a hearing to be held June 21, 2022. Ms. Henriquez’s attorney filed that brief timely. Doc. No.
46. Mr. Izzo did not file a brief at all. Instead, Tyrelle himself filed a certification with attachments,
again “on my own cognizance, without the assistance and/or knowledge of my counsel in this
matter. . . .” Doc. No. 50, ¶ 2.15

In her brief, Ms. Henriquez reasserted that there is no equity in the Decatur Property and it
is not necessary for an effective reorganization. Doc. No. 46. The property is vacant, taxes have
not been paid on it for more than a decade, and the tax liens are double the value of the property.
Tyrelle never visited the property before buying one-half of it and does not live there. If he lost
the property now, he would be relieved of an obligation to pay the $76,000 in taxes and be able to
pay his other creditors in three months.

Ms. Henriquez conceded that section 1322(b)(2) permits cramdown of a claim secured by
other than a debtor’s principal residence but argued that section 1325(a)(3) and (7)—requiring
good faith in proposing a plan and filing a petition—prevent confirmation of Tyrelle’s plan. She
argued that Tyrelle is not an honest but unfortunate debtor, noting all of the inconsistencies in his
statements and suggesting that “[a]t best, [he] is a real estate speculator trying to have this [c]ourt
make him money where he cannot do so on his own.” Doc. No. 46-4, p. 12. “While there are many
tools that can be used in an investor’s arsenal, abusing the Bankruptcy Code under circumstances
like these is not one of them,” id., she argued.

Finally, Ms. Henriquez argued that cramdown is improper with a non-debtor co-owner,
citing cases holding that liens avoided as to a debtor’s interest remain as to the non-debtor’s
interest. See e.g., In re Hunter, 284 B.R. 806, 813 (Bankr. E.D. Va. 2002) (“The debtor seeks to
provide her with the benefit of having filed bankruptcy without her having borne the burden.”).
Though these cases concerned mortgages rather than property tax claims, she argued they were yet
persuasive in this case involving a solely in rem lien and non-spouse co-owners. She argued that
allowing a strip down to benefit a non-debtor would set a bad precedent, as parties could transfer
title to others for no money yet receive the benefit of bankruptcy without the burden of filing

15 Tyrelle first filed this certification on May 24, 2022, but it was missing one page. See Doc. No. 47. On May 27,
2022, he filed the complete document. See Doc. No. 50.
bankruptcy. She pointed out that section 506(d) only voids a lien that secures a claim “against the
debtor.”

In Tyrelle’s “Second Supplemental Certification,” he complained again about Ms.
Henriquez’s attorney failing in state court to note the transfer of ownership to Tyrelle. He argued
that because he was not a party to the state court action, any orders there do not have claim
preclusive effect as to him in this court.16 He averred that any factual discrepancies raised by Ms.
Henriquez in her brief “were the result of innocent mistakes by and/or miscommunications
between Debtor and the latter’s counsel, along with duress, harassment, and intimidated [sic] that
Debtor suffered while being deposed. . . .” Doc. No. 50, p. 2, ¶ 3, citing ¶¶ 8, 9, 10, 11, 12, 13, 14,
20, 21, 22, 23, and 24 of Doc. No. 46. The listed paragraphs pertained to how much debt, income
and expenses the debtor disclosed; that the debtor never visited the property before the deed
transfer; debtor’s certification that he filed bankruptcy due to the impact of Covid; and the debtor’s
assertion of an exemption on the property that only applies to a debtor’s principal residence. Id.

Tyrelle admitted that his attorney “misstated” that Greta had adopted him; argued that his
not living at the property does not preclude his right to bankruptcy relief as it pertains to the
property; and asserted that he does in fact have a retainer agreement with Mr. Izzo. Tyrelle averred
that Ms. Henriquez is “knowingly charging or attempting to exact fees or charges in connection
with the redemption of [the tax sale certificate] that are more than the amounts permitted by chapter
five of Title 54 of the Revised Statutes. . .” and attached an exhibit showing the redemption figure
as of May 24, 2022. He argued that due to this, Ms. Henriquez has forfeited the tax sale certificate,
pursuant to N.J.S.A. 54:5-63.1 (The court subsequently denied Tyrelle’s objection to the claim.
See Doc. No. 52.) Finally, Tyrelle again accused Ms. Henriquez’s attorney of racial discrimination.

The court then closed the record and took the matter under advisement.

IV. DISCUSSION
A. Stay Relief
Ms. Henriquez proceeds under section 362(d)(2), which provides:

(d) On request of a party in interest and after notice and a hearing, the court shall
grant relief from the stay provided under subsection (a) of this section, such as by
terminating, annulling, modifying, or conditioning such stay—. . .
(2) with respect to a stay of an act against property under subsection
(a) of this section, if—
(A) the debtor does not have an equity in such
property; and
(B) such property is not necessary to an effective
reorganization[.]

16 As stated in footnote 9, this assertion is not necessarily correct.
11 US.C.A. § 362(d)(2) (West).
As both parties recognized, Congress allocated the burdens of proof in litigating a stay
relief motion as follows:
(g) In any hearing under subsection (d) or (e) of this section concerning relief from
the stay of any act under subsection (a) of this section—
(1) the party requesting such relief has the burden of proof on the
issue of the debtor’s equity in property; and
(2) the party opposing such relief has the burden of proof on all other
issues.
11 US.C.A. § 362(g) (West). Thus, Ms. Henriquez need only show that there is no equity in the
Decatur Property; the burden then shifts to Tyrelle as to why the property is necessary to an
effective reorganization. United Sav. Ass’n of Texas v. Timbers of Inwood Forest Associates, Ltd.,
484 U.S. 365, 375 (1988); Bartucci v. O'Neil, 64 Fed. Appx. 344, 346 (3d Cir. 2003). With an
allowed claim more than double Tyrelle’s proffered value of the Decatur Property, there is
certainly no equity in this property. Thus, Tyrelle bears the burden of showing this court why it
should not grant stay relief.
In determining whether property is necessary to an effective reorganization, the court is
guided by the Supreme Court’s 7imbers decision.
What this requires is not merely a showing that if there 1s conceivably to be an
effective reorganization, this property will be needed for it; but that the property is
essential for an effective reorganization that is in prospect. This means, as many
lower courts, including the en banc court in this case, have properly said, that there
must be ‘a reasonable possibility of a successful reorganization within a reasonable
time.”
Id., 375-76 (emphasis in original). “[L]ack of any realistic prospect of effective reorganization
will require § 362(d)(2) relief.” /d., 376 (citing Timbers Inwood Forest Associates, Ltd., 808 F.2d
363, 370-71 nn. 12-13 (Sth Cir. 1987)). In other words, not only must the property be necessary to
the debtor for him to reorganize, but he must be able to reorganize. See Thomas v. U.S. Bank Nat.
Ass'n, CIV. 11-3417 FLW, 2012 WL 646056, at *3 (D.N.J. Feb. 28, 2012) (property not necessary
to an effective reorganization because it was unlikely that the chapter 13 plan would be confirmed).
“TW |hile ‘a lift stay hearing should not be transformed into a confirmation hearing,’
‘[t]he effective reorganization requirement enunciated by the Supreme Court ...
require[s] a showing by a debtor ... that a proposed or contemplated plan is not
patently unconfirmable and has a realistic chance of being confirmed.’”
In re Fairfield Executive Associates, 161 B.R. 595, 599 (D.N.J. 1993) (quoting John Hancock Mut.
Life Ins. Co. v. Route 37 Business Park Associates, 987 F.2d 154, 157 (3d Cir.1993), which was
quoting In re 266 Washington Associates, 141 B.R. 275, 281 (Bankr. E.D.N.Y. 1992), aff'd, 147

Page 14 of 21

B.R. 827 (E.D.N.Y. 1992)). See In re Mullock, 404 B.R. 800, 806–07 (Bankr. E.D. Pa. 2009)
(same).

The court first notes that nowhere did Tyrelle address the confirmability of his plan. See In
re Askew, 312 B.R. 274, 282 (Bankr. D.N.J. 2004) (citing lack of opposition to motion for stay
relief as one reason supporting that property not necessary to any effective reorganization).
Through the various replies to the Motion for Relief from Stay, Mr. Izzo and Tyrelle raised
Malicious Abuse of Process, realty transfer fees, the CARES Act, whether Ms. Henriquez is owed
the full redemption amount, and Tyrelle’s intent to cure a default as evidencing a good faith filing.
Doc. Nos. 15, 23. They denied engaging in a conspiracy, complained that Ms. Henriquez did not
recognize Tyrelle’s ownership in the state court action, asserted lack of claim preclusion, objected
to the claim amount, accused Ms. Henriquez’s attorney of perjury in the state court matter and of
racial discrimination, and complained about being deposed. Doc. Nos. 40, 50. None of this speaks
to whether an effective reorganization is in prospect, through a plan where Tyrelle is already
behind on trustee payments. Thus, Tyrelle failed to meet his burden on this issue and the court
could grant the stay motion solely on this basis.

But in addition, the court finds the amended plan unconfirmable. Tyrelle proposes to pay
the $2,858 remaining owed to Mr. Izzo, $39,000 to Ms. Henriquez, and $0 to Bergen Square,
totaling $41,858. The trustee’s current percentage commission is 8.4%, adding $3,516 to the
amount needed to be paid, for a total of $45,374. Thus, Tyrelle’s plan is not confirmable on its
face as his proposed payments only equal $42,363, $3,011 less than needed, without even getting
to the plan’s proposal to pay unsecured creditors pro rata despite having the disposable income to
make a higher monthly payment.

Certainly, the chapter 13 trustee would object to the plan pursuant to section 1325(b),
which would require Tyrelle to either (A) pay unsecured creditors in full or (B) pay all of his
projected disposable income to be received in the applicable commitment period to pay unsecured
creditors. 11 U.S.C. § 1325(b)(1). That disposable income is calculated from subtracting from the
debtor’s current monthly income “amounts reasonably necessary to be expended . . . for the
maintenance or support of the debtor or a dependent of the debtor, . . .for charitable contributions
. . . , and if the debtor is engaged in business, for the payment of expenditures necessary for the
continuation, preservation, and operation of such business.” 11 U.S.C. § 1325(b)(2). Redemption
of a tax sale certificate on investment property fits none of these categories.

[Section] 1325(b) allows a debtor to maintain a reasonable lifestyle while
simultaneously insuring that it makes a serious effort to fulfill its obligations to
creditors, by eliminating unnecessary or unreasonable expenses. . . . If a debtor is
not willing to make this type of commitment, it must either forgo bankruptcy relief
or, subject to the limitations of § 707(b), seek relief under Chapter 7.
Matter of Jones, 119 B.R. 996, 1000–01 (Bankr. N.D. Ind. 1990) (internal citation omitted).

Tyrelle’s net disposable income is at least $1,467, resulting in a total of $88,020 to be paid
to creditors; more if the $657 in scheduled expenses that he testified he is not actually paying were
added in. Neither paying unsecured creditors in full nor paying all of his projected disposable
income over 36 months exemplifes good faith because Tyrelle either would quickly pay creditors
that have not been dunning him, or he would unfairly stretch payments over three years.

Greta’s transfer of the property during the state court foreclosure proceeding also raises the
specter of a bad faith filing by Tyrelle to stop the foreclosure, preventing confirmation pursuant to
section 1325(a)(7) (“the action of the debtor in filing the petition was in good faith”).

“Good faith is fact intensive and requires a case-by-case analysis,” determined by
the totality of the circumstances. In re Lilley, at 496. When considering the totality
of the circumstances, the court may consider

a wide range of factors, including, “the nature of the debt ...; the
timing of the petition; how the debt arose; the debtor’s motive in
filing the petition; how the debtor’s actions affected creditors; the
debtor’s treatment of creditors both before and after the petition was
filed; and whether the debtor has been forthcoming with the
bankruptcy court and the creditors.”

In re Myers, 491 F.3d 120, 125 (3d Cir. 2007) (quoting In re Lilley, at 496).

Finally, while filing bankruptcy during related state court litigation is not bad faith
per se, it can be when “the purpose of the filing is to defeat state court litigation
without a reorganization purpose.” Myers, 125 (internal citation omitted).

In re Eyde, 21-17330-ABA, 2022 WL 412096, at *5 (Bankr. D.N.J. Feb. 10, 2022).

Here, Tyrelle seeks to pay debts that are not in arrears except for the property tax debt on
a property he does not live in and only recently became a co-owner of. The bankruptcy case was
filed just before the state court ruled on a Motion for Summary Judgment in the redemption
foreclosure action. Tyrelle has stated that he filed due to financial pressures due to Covid, but later
testified that Covid had no impact on his finances. He has stated that he filed to get a fresh start
and improve his credit score, but he also testified that no creditors were pressuring him and he
never presented anything to the court regarding his credit score. Moreover, purchasing a property
with a $76,000 tax lien on it and then seeking to pay half that lien through a bankruptcy case is an
unconventional way to improve one’s credit rating, if it even would. Simple arithmetic shows that
his proposed chapter 13 plan is unconfirmable. The inconsistencies in purported reasons for filing
and the disclosure of expenses he does not have support that he has not been forthcoming with the
court. His eleventh-hour suggestion that he wishes to live at the property—mentioned only in his
deposition, not in any response filed with the court—supports that Tyrelle has no idea what he is
doing or why, possibly guided instead by Walter, the person attending all the court hearings and
paying Mr. Izzo. Tyrelle did not address any of these contradictions in his responses, despite
having ample opportunity to do so. All of this supports a lack of good faith in filing, preventing
confirmation as Tyrelle does not present as an “honest but unfortunate debtor[] that the bankruptcy
laws were enacted to protect.” Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 374,
379 (2007) (internal citation omitted).
Regarding Tyrelle’s assertion that cram down is permissible, the court notes first that
Tyrelle cited no cases finding that one co-owner can cram down a lien in bankruptcy without the
other co-owner involved. But the court need not determine this issue, as just the proposal to pay
unsecured creditors pro rata to save investment property he recently bought, already immersed in
debt, is not good faith. The discussion in In re Amos, 452 B.R. 886, 894 (Bankr. D.N.J. 2011), is
persuasive:

As outlined above, the Amoses’ proposed plan seeks discharge of over
$40,000 in unsecured debts, primarily credit card debts, without paying any
dividend to the associated creditors, all while retaining the Poconos Property and
devoting a substantial portion of their income to payments on that property. Further,
the plan seeks to strip off a second mortgage of over $35,000, converting that debt
to an unsecured claim, meaning that this creditor will also receive nothing. In sum,
the Amoses propose to obtain a chapter 13 discharge of over $75,000 of debt,
without repayment of any portion thereof, while paying more than $2,500 per
month, over 60 months, towards non-essential property. The court finds this to be
an abuse of chapter 13, which should serve as a repayment tool. Ransom, 131 S. Ct.
at 727 (referencing the disposable income test’s “overall purpose of ensuring that
debtors repay creditors to the extent they can”). The architecture of chapter 13 is
essentially a bargain, allowing debtors to keep property only by agreeing to make
some meaningful payment to creditors. . . . For the payment to be meaningful, it
should have some basis in a debtor’s ability to pay. See [Hamilton v.] Lanning, [130
S. Ct. 2464,] 2476 [(2010)] (rejecting as “senseless” a statutory interpretation that
“would deny creditors payments that the debtor could easily make”).

Here, the Amoses seek to retain a second house that they characterize as
“investment property.” Yet, by any reasonable measure, it is a poor investment. The
property is underwater—it is worth approximately $22,000 less than the amount of
the debt encumbering it. Furthermore, it produces only $170 in average monthly
rental income while imposing monthly expenses of $125 in association dues and
over $2,000 in mortgage payments, not including utilities and maintenance costs.
Even worse, the mortgage on the property is over $26,000 in arrears. This property
is simply not profitable; under normal circumstances, a prudent investor would be
happy to surrender the property in exchange for a discharge of personal liability for
the deficiency on the mortgage.

Thus, the Amoses are being disingenuous in characterizing the property as
an investment. . . . Whatever it is, it is neither an investment nor necessary to
reorganization. While chapter 13 allows a debtor to retain property, the debtor must
make a good faith attempt to repay creditors in order to justify this benefit. A plan
such as the one proposed here has no place in chapter 13, which is a tool for
reorganization and repayment of debts, not some sort of byzantine sport in which
debtors can reap benefits, at the expense of creditors, by successfully navigating a
maze of technicalities.
In re Amos, 452 B.R. 886, 894–95 (Bankr. D.N.J. 2011). See In re Hamer, 99-16601DAS, 2000
WL 1230496, at *3 (E.D. Pa. Aug. 18, 2000) (stating that to be necessary to an effective
reorganization, the debtor had the burden of showing that the if there is to be an effective
reorganization, the premises would be needed for it); In re Webster, 93-14869-T, 1994 WL
841212, at *2 (Bankr. E.D. Va. Sept. 23, 1994) (“Payment for investment property is not necessary
for the maintenance or support of debtor.”). But see In re Smith, 196 B.R. 565, 572 (Bankr. M.D.
Fla. 1996) (finding retention of investment property not indicative of bad faith where debtor
testified attempting to sell but had difficulty doing so, and all unsecured creditors were to be paid
in full).

In criticizing Tyrelle for trying to save investment property, the court acknowledges that
Ms. Henriquez’s involvement with the property is also as an investor. However, though she did
not pay the full amount of the taxes owed when purchasing the tax sale certificate, she did so
pursuant to New Jersey statute that “authorize[s] the municipality to discount its accounts
receivable in order to return the property to the paying tax rolls within a relatively short period of
time[.] Dvorkin v. Dover Twp., 29 N.J. 303, 313 (1959). Her investment actually aids the City of
Camden fund itself, while Tyrelle’s only burdened himself. The balance of equities—which
investor should benefit—leans to Ms. Henriquez, who will receive a $35,000 property for $9,000
plus her costs, as opposed to Tyrelle, who would be relieved of some $39,000 in taxes plus interest
through the cram down for a mere $1 investment.

Tyrelle also failed to address, much less prove, that the Decatur Property is “necessary” to
this reorganization.

The Bankruptcy Code’s legislative history states that this requirement is intended
to solve the problem of real property mortgage foreclosures where the bankruptcy
petition is filed on the eve of foreclosure. The requirement is not intended to apply
if the business of the debtor is managing or leasing real property, such as a hotel
operation, even though the debtor has no equity if the property is necessary to an
effective reorganization of the debtor.

§ 16:179. Requirement that property is not necessary to an effective reorganization, 2 Bankruptcy
Desk Guide § 16:179 (citing 124 Cong. Rec. H 11092, H 11093 (Sept. 28, 1978)). In other words,
the stay should stay in place if the property is income-producing, but not if the debtor filed merely
to delay foreclosure.

Examples of when property might be necessary to an effective reorganization include when
it is necessary to a debtor’s business operation, for producing income, or for personal reasons such
as a car needed for transportation. In re Patti, 98-17719DWS, 1999 WL 223505, at *3 (Bankr.
E.D. Pa. Apr. 15, 1999). See also In re Mesich, 09-24910-GLT, 2014 WL 979188, at *3 (Bankr.
W.D. Pa. Mar. 12, 2014) (finding that allowing stay relief as to debtor’s residence would “unduly
disrupt” debtor’s efforts to reorganize); In re Van Horn, 1:10-BK-07373MDF, 2011 WL 1900324,
at *7 (Bankr. M.D. Pa. May 19, 2011) (where plan funded by sale of property, property was
necessary to reorganization); In re Behanna, 381 B.R. 631, 644 (Bankr. W.D. Pa. 2008) (failing
business not necessary to reorganization); In re Alberts, 381 B.R. 171, 181 (Bankr. W.D. Pa. 2008)
(“presumption in personal bankruptcies that a chapter 13 debtor’s residence is necessary for an
effective reorganization when the purpose of filing for Chapter 13 is to retain possession of the
debtor’s home”); In re Hamer, 99-16601DAS, 2000 WL 1230496, at *3 (E.D. Pa. Aug. 18, 2000)
(to prove residence is necessary for effective reorganization, debtor must present evidence that no
comparable housing is available or that home is necessary to the debtor’s business); In re Moyer,
42 B.R. 311, 312 (Bankr. E.D. Pa. 1984) (property not necessary to effective reorganization where
debtor’s plan did not rely upon generation of any income from his business or real property).

Rather than income-producing, the Decatur Property created a $76,000 expense for Tyrelle,
with interest accruing at 18% throughout this case. See 11 U.S.C. § 551 (prohibiting cram down
of tax claim interest rate). This property is not Tyrelle’s residence. There was no suggestion that
he is currently renovating it.17 That Tyrelle might want to live at the property someday—an
assertion at odds with Greta’s certification that she transferred the property to him for estate-
planning purposes—does not make it necessary to reorganization now. In re Baratt, CIV. 14-2933
FSH, 2014 WL 3900871, at *3 (D.N.J. Aug. 11, 2014) (saving a property from foreclosure does
not make the property “necessary” to an effective reorganization). Tyrelle can get to his job to earn
money to fund a plan whether or not he owns this property.

In addition, Tyrelle’s lack of knowledge about the Decatur Property supports that the
property is not necessary to him at all. As stated above, he had no idea of the value of the property,
the taxes, or the foreclosure action before accepting the quitclaim deed Walter had Mr. Izzo
prepare.

Tyrelle having failed to meet his burden of proof, stay relief is warranted.

B. Dismissal
Ms. Henriquez requested as alternative relief dismissal of this bankruptcy case. A chapter
13 bankruptcy case may be dismissed for cause, including denial of confirmation of a plan and
denial of a request for additional time for filing another plan or modification of a plan. 11 U.S.C.
§ 1307(c)(5). It also can be dismissed for bad faith. In re Myers, 491 F.3d 120, 125 (3d Cir. 2007);
In re Lilley, 91 F.3d 491, 496 (3d Cir. 1996).

The Bankruptcy Court looks to the totality of the circumstances to determine bad faith, and
may consider a wide range of factors, including, “the nature of the debt ...; the timing of
the petition; how the debt arose; the debtor’s motive in filing the petition; how the debtor’s
actions affected creditors; the debtor’s treatment of creditors both before and after the
petition was filed; and whether the debtor has been forthcoming with the bankruptcy court
and the creditors.”
In re Myers, 491 F.3d at 125.
The totality of the circumstances of this case warrants a dismissal of the case. First, since
Tyrelle never addressed this beyond a vague averment that paying the tax claim was a proper use
of bankruptcy, the court could grant the relief as unopposed. Moreover, the filing only to frustrate
the state court foreclosure process and/or reduce the tax claim on investment property, inconsistent

17 In its boarded-up state, it might not even have a Certificate of Occupancy.
certifications, sloppy disclosures, posturing to thwart legitimate discovery efforts, and Tyrelle’s
lack of knowledge about the Decatur Property all described above, support dismissal of this case
for bad faith.

But the court also finds that dismissal is merited, rather than as an alternative to stay relief,
but because stay relief leaves just $5,000 in claims from creditors to be addressed in this case.18
No creditors were demanding payment, and Tyrelle has the income to pay them within three
months—there is no need for a bankruptcy case. Moreover, this court would neither confirm a plan
lasting only three months nor confirm one that stretched this repayment over three years, as both
being unacceptable uses of chapter 13 bankruptcy.

In the end, the court walks away with the impression from its own observations that Tyrelle
does not fully understand why he is in bankruptcy or the events that purportedly lead to it. Some
pleadings were inappropriate if not abusive. His or his attorney’s attempts to explain things in most
cases were lacking or hollow, unresponsive, irrelevant and/or unsupported by the facts or law. He
is not pursuing this case in good faith and indeed, the court is not sure Tyrelle is actually “running
the show” here. If he is, he has demonstrated nothing but a lack of good faith as set forth in all the
preceding pages of this Opinion. If he is not, then this is not a valid bankruptcy purpose. The court
will not tolerate such an abuse of the bankruptcy process.

C. Sanctions

Ms. Henriquez also requested sanctions against Tyrelle and Mr. Izzo for her attorney fees
and costs in litigating this bankruptcy case. An Order to Show Cause will be issued as a directive
to Tyrelle and Mr. Izzo to show cause why these sanctions should not be imposed for filing this
case in bad faith, to be added to the sanctions already granted for Tyrelle’s failure to appear at the
first-scheduled deposition.

V. CONCLUSION
Based on the foregoing, the Motion for Stay Relief and Dismissal of the case is granted.
To the extent that Ms. Henriquez still seeks sanctions, an Order to Show Cause will be issued to
consider any remedies.

An appropriate judgment has been entered consistent with this decision.

/s/ Andrew B. Altenburg, Jr.

18 This counters any argument that this alternative relief was not obvious from the docket entry for the Stay Relief
Motion (Doc. No. 12). Moreover, the court can raise dismissal sua sponte, 11 U.S.C. § 105(a); In re Waring, 555 B.R.
754, 758 (Bankr. D. Colo. 2016); In re Falotico, 231 B.R. 35, 42 (Bankr. D.N.J. 1999), and contrary to the 21-day
notice required in chapters 7, 11 and 12, see Fed. R. Bankr. P. 2002(a)(4), the only notice necessary here is “such
notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the
particular circumstances.” 11 U.S.C. § 102(1)(A). There being no remaining valid purpose for this bankruptcy case
due to stay relief being merited, no further notice or hearing is necessary.
Dated: July 28, 2022 United States Bankruptcy Judge

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10459670. Public record. Not legal advice.