MEMORANDUM AND ORDER
WEXLER, District Judge.
Debtor-appellant Joseph A. Corio appeals from an order of the United States Bankruptcy Court for the Eastern District of New York, Robert J. Hall, Bankruptcy Judge, dated February 1, 1995, denying his motion pursuant to 11 U.S.C. § 522(f)(1) to avoid
On December 21, 1993, Debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code. By motion, Debtor sought to avoid certain judicial liens pursuant to Bankruptcy Code § 522(f)(1), 11 U.S.C. § 522(f)(1), as impairing his New York homestead exemption to which he claimed he was entitled under New York's Civil Practice Law & Rules ("CPLR") § 5206(a)(1) by Bankruptcy Code § 522(b) and New York's Debtor & Creditor Law ("D & CL") § 282. Debtor's motion indicated that he owns a residence located in West Hempstead, New York, valued at no more than approximately $160,000 (the "Property"). The Property at the time was encumbered by consensual first and second mortgage liens totalling more than $177,000. Consequently, Debtor held no equity in the Property, as the consensual liens exceeded the Property's approximate value. The following judicial liens, junior to the consensual mortgage liens, also encumbered the Property, having resulted from judgments against Debtor that were entered in the Nassau County Clerk's Office:
Star Video Entertainment, Inc. $7,971.68 Household Retail Service Inc. $5,707.38 Fidelity New York $7,435.37 Artel Distributing, Inc. $5,439.60
The bankruptcy court denied Debtor's motion, basing its decision entirely on an earlier decision of that court, In re Giordano, 177 B.R. 451 (Bankr.E.D.N.Y.1995), without further explanation. Under the Giordano decision, it would appear that the bankruptcy court denied the motion because: (1) Debtor was not entitled to the New York homestead exemption, since he had no equity in the Property, and, therefore, there was no exemption that could be impaired by the judicial liens; and (2) judicial liens do not impair the New York homestead exemption under CPLR § 5206(a)(1).
Bankruptcy Code § 522(b)(1) provides a debtor with the option of choosing the federal exemptions of § 522(d) or state exemptions, unless the state law that is applicable to the debtor denies this choice. See 11 U.S.C. § 522(b)(1). In 1982, the New York State legislature enacted such a prohibition. See D & CL § 284.
Recognizing that prebankruptcy judicial liens, if not avoided by the debtor or trustee, may continue to encumber the debtor's exempt property if the property passes through bankruptcy, Congress enacted Bankruptcy Code § 522(f)(1). Section 522(f)(1) allows a debtor to avoid a judicial lien "to the extent that such lien impairs an exemption to which the debtor would have been entitled."
Even assuming that a judicial lien may impair the New York homestead exemption under CPLR § 5206(a), that exemption is not available to Debtor. The plain language of the statute indicates that the exemption applies to a debtor's "equity" in the property, i.e., "value above liens and encumbrances," although not exceeding $10,000. Id. (emphasis added); see also Practice Commentary to CPLR § 5206, C5206:2 (McKinney 1978) ("In calculating the exemption of $10,000 to which the judgment debtor is entitled for a principal residence, it is the debtor's equity which is looked to. This is of course what CPLR § 5206(a) means when it excludes `liens and encumbrances' from the measure."). Thus, if the debtor has no equity in the property, he is not entitled to the homestead exemption under CPLR § 5206(a), made applicable to a New York debtor's bankruptcy by Bankruptcy Code § 522(b) and D & CL § 282. See, e.g., In re Seltzer, 185 B.R. 116, 119 (Bankr.E.D.N.Y. 1995) ("if there is no equity in debtor's property, it is not entitled to enjoy the New York State homestead exemption under NYCPLR section 5206(a)"); In re Bovay, 112 B.R. 503, 505 (Bankr.N.D.N.Y.1989) (same). Because Debtor has no equity in the Property, he has no homestead exemption that could be impaired by the judicial liens he seeks to avoid; consequently, the judicial liens cannot be avoided under Bankruptcy Code § 522(f). See In re Seltzer, 185 B.R. at 119; In re Bovay, 112 B.R. at 505.
Debtor relies on the Second Circuit's decision in In re Brown, 734 F.2d 119 (2d Cir.1984), which held that "a judicial lien is avoidable even where the debtor lacks equity in the property." Id. at 125. Brown, however, decided before New York "opted out" of the federal exemption scheme, involved a New York debtor who was permitted to void a judicial lien on surplus funds (resulting from a prebankruptcy foreclosure sale of his residence) to allow him to enjoy a federal exemption, not the New York homestead exemption.
Id. (citations omitted). It is apparent from this passage that, under Brown, the federal exemption may lie even in the absence of an equity in the property where the property could have been exempt in the absence of the "judicial lien" — the lien asserted in that case against the surplus funds by a judgment creditor.
In any event, based on this Court's decision in Alu v. New York Dep't of Taxation & Finance, 41 B.R. 955 (E.D.N.Y.1984), this Court believes that the judicial liens asserted by Debtor do not impair any exemption which would otherwise exist.
Because the Debtor was not entitled to the homestead exemption, since he had no equity in the Property, and because the judicial liens do not impair any exemption which would otherwise exist, the bankruptcy court's order is affirmed.
For the above reasons, the bankruptcy court's order is affirmed. The Clerk of the Court is directed to close the file in this matter.
1. a lot of land with a dwelling thereon. . . . N.Y.Civ.Prac.L. & R. § 5206(a)(1) (McKinney Supp.1995).
(f) Notwithstanding any waiver of exemptions, the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is —
(1) a judicial lien. . . .
11 U.S.C. § 522(f)(1). Section 303 of the Bankruptcy Reform Act of 1994 amended § 522(f). However, pursuant to § 702 thereof, the amendment to this subsection applies to cases under Title 11 commenced on or after October 22, 1994, the Act's effective date, not to cases filed before, as here.
Id. at 312-13, 111 S.Ct. at 1837.