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Craig D. Robins, Esq. New York Bankruptcy Attorney, Longisland bankruptcy attorney

“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”

Craig D. Robins, Esq.

Nationally, Bankruptcy Filings Are Up, Up, Up

Posted onThursday (November 11, 2010) at 8:30 pm to Bankruptcy Statistics

Bankruptcy Filings Have Increased in 2010Written by Craig D. Robins, Esq
 
Consumer bankruptcy filings are heading to record levels since the bankruptcy laws were changed five years ago.
 
According to recent nationwide data, about 1.3 million bankruptcy cases have been filed in the fist ten months of this year. 
 
Last year, there were 1.2 million bankruptcy filings in the same period.
 
At this rate, we will likely see about 1.6 million filings by the end of the year. 
 
The year with the highest number of filings was 2005 when consumers rushed to file their bankruptcy petitions before the new bankruptcy laws went into effect.  In that year there were about 2.0 million filings.
 
The recession and difficult financial times are the main contributors to the large number of filings.
  
The trend is also continuing that a larger percentage of consumers ar filing for Chapter 7 bankruptcy relief, rather than Chapter 13.  Currently, about 30% of nationwide filings are Chapter 7.  See my post:  More Chapter 7 Cases Being Filed Nationally — New Trend
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Official Bankruptcy Court Website for Eastern District of New York Has Been Updated

Posted onWednesday (November 10, 2010) at 7:30 pm to Bankruptcy Practice
Central Islip Bankruptcy Court & Judges
Info on Bankruptcy and the Court
Resources

Bankruptcy Court -- Eastern District of New YorkWritten by Craig D. Robins, Esq.
 
The website for the Bankruptcy Court for the E.D.N.Y. has been updated again.  This website covers the bankruptcy courts in Central Islip and Brooklyn.
 
According to a release from the Court, the goal of redesign was to provide Court information to visitors in a more accessible format.  Maybe I was more used to it, but I liked the general look and feel of the old website.
 
Once I become more acustomed to the new site, however, it should be more efficient to use.  The new Bankruptcy Court website now has separate sections for the various types of individuals who will be visiting the site.  There is an attorney section, a pro se section, a trustee section and a creditor section.
 
The Court has indicated a desire to further customize the attorney section to make it more user friendly for bankruptcy counsel.
 
To Access Bankruptcy Court Website for Central Islip and Brooklyn, Click This Link:
 
 
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Suggestions to Improve the Bankruptcy Court

Posted onMonday (November 8, 2010) at 1:00 am to Bankruptcy Practice
Central Islip Bankruptcy Court & Judges

Improving Bankruptcy Court EfficiencyWritten by Craig D. Robins, Esq.
 
Some Recommendations for the “Strategic Planning Program” of the Bankruptcy Court for the Eastern District of New York
 
I write this while attending the National Association of Consumer Bankruptcy Attorneys Annual Workshop in Puerto Rico.  I flew down here with my associate, Jason Leibowitz, and my good friend, Kerie Stone, who is the Chairperson of the Bankruptcy Committee of the Suffolk County Bar Association.
 
In between attending workshop sessions, Kerie and I chatted about her participation in a Strategic Planning Program which is designed to improve the efficiency of our bankruptcy courts in Central Islip and Brooklyn.
 
She said that upon her return to New York, she will be attending meetings with a committee of our bankruptcy judges, an efficiency expert being flown in from Washington, some of the court clerks, and some of the trustees — all in an effort to make our court run better.
 
Since I am an active and proactive Long Island bankruptcy attorney, Kerie asked me to come up with my own suggestions that she can relay to the Committee.  I quickly came up with two.  Here they are:
 
The Judges Should Unify Courtroom Practices and Procedures
 
We currently have seven different bankruptcy judges.  Unfortunately, that means we have seven different sets of chambers rules, seven different sets of calendar procedures, and seven different sets of protocols.
 
For example, for the same type of court application, some judges permit counsel to submit notices of presentment whereas other judges require motions accompanied by court appearances.  Also, different judges have different requirements (or permit their trustees to have different requirements) for the provisions they want contained in a Chapter 13 plan.  It simply does not make sense that we do not have a uniform Chapter 13 plan for our district.
 
It would therefore be great if the judges could work together to unify their chamber rules and procedures.
 
Judges Should Improve Communications with the Bankruptcy Bar as to Expectations from Counsel
 
Attorneys would be able to practice much more efficiently if they knew what the judges expect from them.   In addition, court practice would be much smoother if a larger percentage of attorneys handled matters in the manner the court would prefer.
 
As such, perhaps the judges can hold annual presentations to the bankruptcy bar during which time they can review how they would like counsel to handle or address various matters.
 
Many of our judges periodically provide presentations at continuing legal education seminars where attorneys can attend for a fee.  However, my experience has been that most judges concentrate their discussions on substantive law issues, as opposed to procedural aspects that would make court practice more efficient.
 
What we need are periodic presentations at no cost where the sole purpose would be for the judges to discuss the court’s policies and procedures with the bankruptcy bar in an effort to make bankruptcy court practice more efficient.  The judges could also consider other methods to educate the bar as to their expectations for bankruptcy practice. 
 
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Problems with HAMP — Too Many to Count?

Posted onSaturday (November 6, 2010) at 4:49 pm to Mortgages & Sub-Prime Mortgage Meltdown

Problems with HAMPWritten by Craig D. Robins, Esq.
 
HAMP is quite the conundrum.  It offers to save a homeowner’s home by enabling homeowners to modify the mortgage and make the monthly payments more affordable; yet it appears to be quite a failure in terms living up to expectations as to what the program is supposed to do.
 
I am currently in Puerto Rico attending a symposium of the National Association of Consumer Bankruptcy Attorneys.  I participated in a program today which addressed various HAMP issues as they relate to Chapter 13 bankruptcy.  The program began with HAMP bashing.
 
This is something I’ve written about extensively over the past several months in posts such as: Problems Continue with HAMP and Federal Mortgage Programs — Is HAMP Dying?  and WARNING: HAMP Can Drive Homeowners Into Bankruptcy
 
The workshop certainly confirmed the negative opinions that I previously formed about the HAMP program.
 
For one, “it’s more complex than the federal debt,” said Henry Hildebrand, III, Esq., one of the speakers who happens to be a Chapter 13 bankruptcy trustee from Tennessee. 
 
Problems with HAMP
 
HAMP, which is the acronym for the Homes Affordable Mortgage Program, was supposed to be one of President Obama’s solutions to the mortgage meltdown our country experienced during the time he ran for office.  Unfortunately, the HAMP program is plagued by numerous problems.  Here are some of them:
 
Lenders Have Minimal Incentive to Cooperate.  HAMP is not a law.  It is a contractual deal that the U.S. Treasury Department has made with mortgage servicers and their investors to voluntary modify a mortgage for a homeowner. 
 
If the mortgage is modified in a certain way, the lender gets paid a fee by the government.  This fee is in essence the carrot supposedly dangled in front of the mortgagee to get them to participate.  However, the fees are relatively minimal.
 
Homeowners Can’t Enforce HAMP.  The problem here is that this “contract” does not directly involve the homeowner.  It is a contract between the mortgage servicer and the federal government.  As such, the homeowner has relatively few legal rights to enforce the provisions of the statute.
 
In other words, if the mortgage servicer does not convert the trial period into a permanent modification, can the homeowner enforce the servicer to do so?  Perhaps this can be pursued under a breach of contract legal theory, but there does not seem to be much case law right now on this.
 
No One Can Enforce HAMP.  The dilemma continues:  who is supposed to enforce HAMP provisions?  The difficulty here is that HAMP is a contract and not a law – there is no regulatory control.
 
In response to this concern, the government at least recently set up an enforcement mechanism by threatening to take away $100 or $300 per case.  Big deal.
 
Setting Up a HAMP Application Takes an Eternity.  A major problem is how long it takes for the mortgage servicer to set up the HAMP trial period. 
 
Who hasn’t been on hold for over an hour with a servicer?   Who hasn’t had documents lost or misplaced by the servicer?  Who has had incredible difficulty communicating with the servicer?  These are all common problems that seem to cause extensive delays before the trial period can commence.
 
Hamp Forms Are Sub-Standard.  Norma Hammes, another speaker and a former NACBA president, complained that the forms for calculating the homeowner’s expenses are so deficient that she had to create her own forms.
 
The HAMP Application Website is Sub-Standard.  Ms. Hammes also voiced frustration about the application framework.  “It’s really a nightmare” she said about the HAMP website portal for submitting information.
 
Program Will End Relatively Soon.  At this time, the HAMP probram is slated to end in 2012.
 
HAMP Does Not Stop the Foreclosure Process.  I think this is just incredible.  Many clients have come to me for bankruptcy assistance, complaining that they applied for HAMP relief, yet, at the same time, the mortgage lender continued a foreclosure proceeding.
 
Said Ms. Hammes, “I’ve never seen my clients so discouraged about the legal system and lose faith on the rule of law.  This is all because of their experience with the HAMP program. They know they’ve submitted everything.  It appears the government does not care.  They are devastated.”
 
The HAMP Trial Plan Can Go On and On.  The so-called three-month trial plan is never three months.  The lenders cannot get their acts together enough to do what they need to do within three months.  The trial periods are frequently longer, even though they are supposed to be just three months.
 
HAMP is a Gamble.  It is a almost like a lottery.  If you are lucky, you win the HAMP gamble and save your home.  HAMP  really does work for some people, but not for most.  However, this gamble contains big risks — read on.
 
Most People in HAMP Eventually Default.  The sad fact is that most people who go into the HAMP modification trial program default with their monthly obligations.
 
The HAMP Paperwork Is Written In Code.  This may be a minor issue, but you have to learn code to fill out a HAMP application.  That is because the HAMP paperwork is replete with acronyms.  BN is the Borrower Notice.  EB is hte Eligible Borrower.  FA is the Foreclosure Attorney.  FD is the Foreclosure Deadline.  FPED is the Forbearance Plan Effective Date.  FPN is the Forbearance Plan Notice. 
 
There are a dozen additional acronyms!!!  Henry Hildebrand commented (only half-jokingly) that he thought this was intentional to scare away homowners.
 
And For the Biggest Problem with HAMP. . . . . .
 
Most Homeowners Are Worse-Off After Applying Than Before.  For those who apply for HAMP relief, mortgage arrears build up.  That means that for those who are not approved ( and these homeowners constitute the vast majority of people who apply), they will owe substantial amounts upon receiving their denials.
 
The mortgage payments are contractual obligations.  Thus, if the homeowner pays a reduced monthly mortgage payment during the trial period, and the homeowner is not approved, then the homeowner will owe the original contractual amount — which is substantially more than the amount they paid during the trial period.
 
In addition, the homeowner’s credit is destroyed.  The homeowner’s FICO score is destroyed.  The homeowner is much worse off now than before! 
 
In essence, the mortgage lender is saying, “Sorry you don’t qualify after you applied to us — and PS – now you owe us all of the missed payments.  We are going to foreclose on your home.”
 
So is that enough problems with HAMP?
 
More Info About HAMP
 
Here are some other posts that I’ve written about the HAMP process.
 
 
Norma Hammas and Henry Hildebrand answering questions at NACBA Bankruptcy Symposium

Norma Hammas and Henry Hildebrand answering questions at NACBA Bankruptcy Symposium

 
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Meeting of Creditors: Duty to Provide Bank Statements

Posted onFriday (November 5, 2010) at 11:00 am to Bankruptcy Practice
Bankruptcy Tips Consumers Should Know
Chapter 13 Bankruptcy
Chapter 7 Bankruptcy

Bank Statements in Bankruptcy Cases at the Meeting of CreditorsWritten by Craig D. Robins
 
Debtors in Chapter 7 and Chapter 13 Bankruptcy cases are required to provide certain documents to the trustee prior to the Meeting of Creditors. 
 
Bankruptcy attorneys generally make sure that all of the required documents are collected in advance and furnished to the trustee in a timely fashion.
 
These items include, as specified in Bankruptcy Rule 4002, sixty days of pay stubs and the most recent tax return.  In addition, debtors who own real estate that they intend on keeping must provide the trustee with some kind of valuation or appraisal.
 
Do Trustees Require Bank Statements?
 
Bankruptcy Rule 4002 requires the debtor to bring to the Meeting of Creditors all bank and other financial account statements showing the balances in the accounts on the date the bankruptcy petition was filed.
 
However, not every trustee requires debtors to strictly adhere to this rule.  For those cases in the Central Islip Bankruptcy Court, which is in the Eastern District of New York, there is only one Chapter 7 trustee who requires debtors to bring this information to the Meeting of Creditors — Kenneth I. Kirschenbaum.   
 
Mr. Kirschenbaum is actually one of only two Chapter 7 trustees in our district who requires debtors to provide a laundry list of documents prior to going to court.  He is the only one who requires debtors to bring bank statements and he sometimes threatens to refuse to examine those debtors who do not.
 
Even if your trustee is someone else, it is nevertheless a wise idea to bring copies of these statements, especially if there are large amounts in the account, or if you are claiming your homestead exemption, or if you are entitled to a tax refund.  In many cases involving these situations, the trustee will ask you to provide the account statements.  Turning them over at the meeting of creditors will save you some time and bother.
 
Incidentally, in many Chapter 13 cases, the trustee will require the debtor to provide copies of the past 12 months of bank account statements.
 
What Happens If You Don’t Have the Account Statements?
 
Bankruptcy Rule 4002 provides a solution for those debtors who do not have these documents in their possession.  Simply providing a verified statement to that effect will suffice.
 
So as long as you do not have the documents in your possession, and you state so in writing, you do not have to provide them at the Meeting of Creditors.  Be mindful that the trustee may likely require you to obtain and provide copies later on.
 
For More Information About the Meeting of Creditors
 
I wrote a very comprehensive post about almost everything you should know about the Meeting of Creditors.  Click here to see Going to Your Bankruptcy Court Hearing — The Meeting of Creditors.  
 
 
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Professional Civility Has Been Ordered in the Bankruptcy Court for the Eastern District of New York

Posted onTuesday (November 2, 2010) at 11:30 pm to Bankruptcy Practice
Info on Bankruptcy and the Court
Lawyer to Lawyer

Civility in the Bankruptcy CourtWritten by Craig D. Robins, Esq.
 
Last week, on October 28, 2010, Bankruptcy Judge Carla E. Craig, who is the Chief Judge of the Bankruptcy Court for the Eastern District of New York, issued an administrative order adopting guidelines for standards of civility for the legal profession.
 
These guidelines were originally developed by the New York State Bar Association and incorporated into the New York State Rules of the Code of Professional Responsibility.
 
In adopting these guidelines, the Bankruptcy Court seeks to set a standard of practice in the Court that will promote the professional, civil, efficient and effective practice of bankruptcy cases.
 
The rules are essentially a list of common sense manners and protocols that all lawyers should be following in any event.  It is unfortunate that some lawyers fail to act in a civil and professional manner, but having a set of standards will certainly make clear what is expected of the bar.  The guidelines are aimed at maintaining the status of the legal profession as honorable and respected.
 
For the past 20 years I have been actively involved as a board member of the Theodore Roosevelt Chapter of the American Inns of Court, which is an organization of attorneys, judges and law students dedicated to the enhancement of civility, ethics and legal excellence in the practice of law.  The recently-adopted guidelines are nothing new to our organization.
 
 
Click here to see the administrative order providing for the Adoption of New York State Standards of Civility
 
What Does Civility in the Bankruptcy Court Mean?
 
In a nutshell, here are some of the basic principals espoused by the guidelines.
 
1.    Attorneys should be courteous and civil.  “Lawyers can disagree without being disagreeable.” 
 
2.   Lawyers should cooperate with opposing counsel in an effort to avoid litigation and to resolve litigation that has already commenced.  As a pragmatic attorney, that echos my sentiments in all litigated matters.  I feel that most litigation emanates from matters in which the parties cannot work together to reach a reasonable disposition.
 
3.    A lawyer should respect the schedule and commitments of opposing counsel, consistent with protection of the client’s interests.
 
4.    A lawyer should promptly return telephone calls and answer correspondence reasonably requiring a response. 
 
5.    The timing and manner of service of papers should not be designed to cause disadvantage to the party receiving the papers.
 
6.    A lawyer should not use any aspect of the litigation process, including discovery and motion practice, as a means of harassment or for the purpose of unnecessarily prolonging litigation or increasing litigation expenses.
 
7    In depositions and other proceedings, and in negotiations, lawyers should conduct themselves with dignity and refrain from engaging in acts of rudeness and disrespect.
 
8.    A lawyer should adhere to all express promises and agreements with other counsel, whether oral or in writing, and to agreements implied by the circumstances or by local customs.
 
9.    Lawyers should not mislead other persons involved in the litigation process.
 
10.    Lawyers should be mindful of the need to protect the standing of the legal profession in the eyes of the public. Accordingly, lawyers should bring the New York State Standards of Civility to the attention of other lawyers when appropriate.
 
11.    A Judge should be patient, courteous and civil to lawyers, parties and witnesses.
      
 
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Some Debtors in Bankruptcy Have Higher Duty to Keep Records

Posted onSaturday (October 30, 2010) at 6:30 pm to Bankruptcy Tips Consumers Should Know
Chapter 7 Bankruptcy
Suffolk Lawyer
Uncategorized

Businessman debtor denied bankruptcy discharge for failing to keep business recordsWritten by Craig D. Robins, Esq.
   
Businessman debtor denied bankruptcy discharge for failing to keep business records

As a consumer bankruptcy practitioner, I am often concerned with clients who fail to have sufficient paperwork to document their past finances.  This often leads to the question: At what point can a consumer debtor be in jeopardy because he or she failed to keep financial documents?
 
I discussed this issue exactly four years ago in my monthly column in the Suffolk Lawyer when I reviewed an opinion by Judge Stong (sitting in the Brooklyn Bankruptcy Court in the Eastern District of New York), who held in that particular case that the debtor was entitled to a discharge even though she failed to keep a number of important financial documents.  See:  Recent Decision Summarizes Consumer Debtor’s Obligation to Retain Documents and Explain Pre-Petition Loss of Assets
 
In that case the debtor had a good excuse for not being able to produce copies of bank and credit card statements.
 
However, a judge from the Bankruptcy Court for the Northern District of Ohio just addressed the same issue, although this time for a consumer with business debts, and determined that the debtor in that case was not entitled to a discharge.
 
In this month’s column I’ll discuss the recent Ohio decision and provide some insight as to when a consumer debtor can face difficulty for not having financial documents.
 
Businessman Fails to Keep Documents
 
In the Ohio case, In Re: Kim Wesley Michael, no. 09-3258, (Bankr. N.D.Ohio 2010), the debtor, a businessman, had been involved in at least a dozen different business enterprises over a thirty-year period, six of which he operated in the five-year pre-petition period.
 
Two of the businesses enabled the debtor to draw compensation in excess of $100,000 per year.  The debtor had various roles in these business ventures including sales manager, freelance graphic designer, insurance salesman and concert promoter.
 
When the debtor ultimately defaulted on some business obligations, he sought Chapter 7 relief.
 
At the time the debtor filed for bankruptcy relief, he was not employed, no longer involved in any part of his business venture, and had no income.
 
One particular creditor, who the debtor borrowed $60,000 from for the purpose of financing his most recent business venture, filed an adversary proceeding objecting to discharge pursuant to Bankruptcy Code section 727(a)(3) for failure to keep adequate records.
 
As it turned out, the debtor failed to maintain any kind of records regarding his most recent business ventures, including the one for which the objecting creditor lent money.  As such, the debtor had no check registers, accounting ledgers of any kind, or any other kind of financial records.  In addition, the debtor hadn’t filed tax returns for several years.
 
The bankruptcy court held the debtor to a much higher standard than the average consumer debtor because of his business experience.  Thus, the judge determined that the debtor’s inability to explain his financial affairs because he had not kept sufficient records warranted a denial of discharge.
 
In his decision, the judge explained some basic, but important principles.  A bankruptcy discharge is an extraordinary remedy, and carries with it certain duties and obligations.
 
Only those debtors who are fully cooperative and honest are entitled to a discharge.  In that way, a debtor who receives benefits under the Bankruptcy Code must also accept its burdens, and one of them is to be fully transparent with all matters regarding financial affairs.
 
The Bankruptcy Code Requires Debtors to Maintain Financial Documents
 
Bankruptcy Code Section 727(a)(3) provides that the court can deny a debtor his discharge if the debtor failed to keep or preserve any recorded information, including books, documents, records and papers.  If a party objecting to discharge under this provision can establish that the debtor failed to keep or preserve the necessary information, and can also demonstrate that the lack of financial records makes it impossible to ascertain the debtor’s financial condition, then the objecting party has met its evidentiary burden.
 
The burden then shifts to the debtor who can still prevail and get a discharge if he can demonstrate that his failure to keep documents was justified under all circumstances of the case.
 
Some Debtors Are Held to Higher Standards than Others
 
The court pointed out that a debtor with primarily consumer debts should not generally be held to the same standard as a debtor with mostly business debts.  As such, issues of this sort must be reviewed on a case-by-case basis
 
In this case, the court determined that it should examine the size, complexity and volume of a debtor’s business to ascertain the sufficiency of the debtor’s records.  In addition, the court can consider the debtor’s expertise, experience, sophistication and any other circumstances.
 
Here, the court observed that the debtor had considerable business experience and earned substantial sums of money from the business.  Thus, the court inferred that the debtor’s failure to produce any financial documents was because he was attempting to obfuscate his financial dealings.
 
The court also pointed out that the debtor’s intent to hide or conceal information was irrelevant, nor was it necessary to show that the debtor intended to defraud a particular creditor or the trustee.  Instead, the test for determining whether a debtor has adequately justified the lack of financial records is an objective one, focusing on whether others in like circumstances would ordinarily keep financial records.
 
Practical Tips for Bankruptcy Attorneys When Their Clients Don’t Have Prior Financial Documents
 
If a client comes to you and presents a problematic scenario because of a lack of prior financial documents, does that mean you should turn down the case or advise against filing?  Not necessarily.
 
As long as you have sufficient documents to enable you to do your BAPCPA due diligence, then no one can fault you for filing the case.  However, if the debtor does not even have sufficient written information to enable you to answer the mandatory questions in the petition, then perhaps you should turn down the case.
 
If a debtor with deficient past financial documents does file, then he can only get into trouble if the trustee or a creditor makes an issue of it.  Then, even in a worse-case scenario, if the debtor’s discharge is denied, he would likely be in the same position he was in prior to filing.
 
About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the OCTOBER 2010 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Mastic, Patchogue, Commack, West Babylon, Coram, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com
 
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