Justice Giacobbe of the Supreme Court of the State of New York, County of Richmond, allows foreclosure to proceed despite bankruptcy filing

By:  Nicholas M. Moccia, Esq.
       Law Offices of Robert E. Brown, P.C.

Justice Giacobbe of the Supreme Court of the State of New York, County of Richmond, rendered an informative decision which should serve as a warning to homeowner's who seek to game the system by making multiple filings for bankruptcy.

In brief, three different family members of the same household made multiple filings for bankruptcy, each in succession during a single sixteen month period, in order to delay a foreclosure action.  Justice Giacobbe notes that  it is well settled that upon the filing of a debtor's bankruptcy petition, an automatic stay is triggered preventing the commencement or continuance of any lawsuit to recover claims against the debtor.  11 U.S.C. 362(a)(1).  The stay is mandatory in nature and is intended to give the debtor "breathing room" by putting a stop on all collection efforts.  Soars v. Brockton Credit Union, 107 F3d 969 (1st Cir. 1979).  However, where family members or other individuals with a "unity of interest" are found to act in collusion to avoid their just debts by abusing the relief afforded by bankruptcy, the courts may vacate the bankruptcy stay and allow inter alia foreclosure actions to proceed.  In the instant matter, Justice Giacobbe found that the defendants and a third non-party family member, each acted in collusion to improperly delay a foreclosure action with multiple bankruptcy filings.  Justice Giacobbe vacated all temporary restraints and allowed the foreclosure to proceed notwithstanding the bankruptcy stay.  Justice Giacobbe cites the following federal authority in support of his holding:  In re Wong, 30 BR 87, 89 (U.S. Bank. Ct. C.D. Cal. 1983); In re Thirtieth Place, Inc., 30 BR 503 (U.S. Bank. A.P. 9th Cir 1983); see also, In re Kinney, 51 BR 840 (U.S. Bank. Ct. C.D. Cal 1985).

For full text of decision, follow link:

Washington Mut. Bank v Phillips, 2010 NY Slip Op 32139(U) (Sup. Ct.  Richmond County, July 28, 2010)

For a bio on Justice Giacobbe, follow link:

http://www.richmondcountybar.org/newsletter/pdf/winter2001.pdf