Matter of Breuer

• Decision Date: 02 April 1980
• Docket Number: Adv. No. 80-2017.,Bankruptcy No. 80 B 20061
• Citation: 4 BR 499
• Parties: In the Matter of Herbert BREUER, a/k/a Herb Breuer, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of New York

4 B.R. 499 (1980)

In the Matter of Herbert BREUER, a/k/a Herb Breuer, Debtor.

Bankruptcy No. 80 B 20061, Adv. No. 80-2017.

United States Bankruptcy Court, S.D. New York.

April 2, 1980.

Robert B. Schindler, New York City, for debtor.

Lawrence R. Reich, P.C., White Plains, N.Y., for Provident Savings and Loan Association.

DECISION ON COMPLAINT OF PROVIDENT SAVINGS AND LOAN ASSOCIATION FOR AN ORDER LIFTING STAY.

HOWARD SCHWARTZBERG, Bankruptcy Judge.

The plaintiff, Provident Savings and Loan Association (Provident) has commenced an adversary proceeding in this case filed under Chapter 13 of the Bankruptcy Reform Act of 1978 to vacate the automatic stay under Bankruptcy Code § 362. Provident seeks to proceed in the Supreme Court of the State of New York, County of Rockland, with respect to the judgment of foreclosure and sale dated January 9, 1980. Provident holds a first mortgage on the debtor's principal residence.

Both parties appeared at the preliminary hearing which this court consolidated the same day with the final hearing in accordance with Code § 362(e).

FINDINGS OF FACT

1. On February 13, 1980, the debtor filed with this court his voluntary petition under Chapter 13 of the Bankruptcy Code for an Adjustment of Debts of an Individual with Regular Income.

2. The debtor is a professional photographer who maintains a studio and equipment in his residence located in Valley Cottage, New York. In order to supplement his income he has recently obtained a night job as a machinist, for which he is also qualified. The debtor is the sole shareholder of a corporation which owns a photography library that is mortgaged to the Small Business Administration under a $50,000 loan, and for which the debtor is liable as a guarantor. He gave a third mortgage on his residence to the Small Business Administration to secure his personal liability on the loan to his corporation. The debtor also derives regular income as a recipient of a veteran's disability pension.

3. On January 11, 1973, Provident advanced $22,500 to the debtor, secured by a first mortgage and note with respect to the debtor's residence in Valley Cottage, Rockland County, New York.

4. Thereafter the debtor defaulted in payment under the Provident mortgage, resulting in Provident's obtaining a judgment of foreclosure and sale from the New York Supreme Court, Rockland County, dated January 9, 1980, in the amount of $17,985.12, plus legal interest.

5. The portion of the debtor's default under the mortgage, together with interest and charges owed to Provident as of March 11, 1980 totals $2944.78. The debtor also owes local real estate taxes that are a lien on the property in the amount of $4733.32, plus penalties.

6. In addition to Provident's first mortgage there are four other mortgages filed against the debtor's residence as follows:

Tappan Zee Capital has filed a claim under its second mortgage for $25,812.94. A third mortgagee is held by the Small Business Administration in the sum of $50,000 as collateral security under the debtor's personal guarantee of his corporation's obligations. A claim under a fourth mortgage held by Howard Mann has been filed in the sum of $343.91. A fifth mortgage was given to the New York Department of Social Service to secure the welfare payments and food stamps advanced to the debtor approximating $2,000.

7. The uncontroverted evidence introduced by Provident's real estate expert reveals that the current market value of the debtor's residence is approximately $39,000. Accordingly, the debtor lacks equity in the property in question, although Provident has a cushion of approximately $21,000 above its first mortgage.

8. The debtor's Chapter 13 plan provides that "commencing one month after confirmation of the plan, the debtor shall make such payments from his earnings as shall pay, on a current basis, the monthly installments due to . . . (the first and second mortgagees) . . . and the debtor shall additionally pay to the 1st mortgagee (to be held in escrow by it) on a monthly basis, an amount equal to one-twelfth of the annual real property taxes on the mortgaged premises."

9. The debtor's plan also proposes to pay the first and second mortgagees the arrearages of principal and interest due and owing as of the date one month after confirmation of the plan, such payments to commence one year after confirmation of the plan and to be made in twelve equal monthly installments.

10. At the hearing the debtor's counsel amended the provision with respect to making up the arrearages by offering to pay Provident's arrearage of $2944.78, as of March 11, 1980, together with interest within ten days, exclusive of attorneys' fees which would be paid separately as allowed by the court. The tax arrearage would be paid as stated in the plan during the one year after confirmation and that mean-while, all current mortgage obligations would be paid when due, including the escrow payments for real estate taxes.

11. To demonstrate his ability to perform, the debtor...