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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Archive for March, 2009
Written by Craig D. Robins, Esq.
A few weeks ago I wrote that bankruptcy filings across the country rose 31 percent in 2008. (Bankruptcy Filings Surged in 2008).
The number of bankruptcies filed in the twelve-month period ending December 31, 2008, totaled 1,117,771, up from 850,912 bankruptcies filed in 2007.
Filings are now averaging well over one million per year. Here we have a chart that shows how the numbers are steadily increasing.
Written by Craig D. Robins, Esq.
The gleaming white architecture housing the Long Island Bankruptcy Court has been controversial since the building was opened in the fall of 2000.
Designed by renowned architect Richard Meier, the Central Islip building looks like a large, stark, white rectangular monolith with a missile silo in the middle. The $190 million, 850,000-square-foot-building, at 11-stories tall, is the tallest building in Suffolk County.
After some members of the public complained that the building lacked a warm and fuzzy feeling, Michael Harris Spector, a co-architect of the building, announced that the building was designed to express the “dignity and the authority of the federal government.”
However, some attorneys called the building a “monstrosity,” “ugly and totally out of context,” and “sterile and completely inappropriate,” according to a New York Times article published when the building had just opened.
From the upper floors, looking to the north, you can see a good amount of Long Island. Looking to the south, you can see Fire Island, the Great South Bay, Robert Moses bridge, the lighthouse and the ocean.
The building contains 23 courtrooms, one special proceedings courtroom, 13 District courts, four Magistrate and five Bankruptcy courtrooms. In addition there are spaces for 25 judges chambers, a law library, offices for Federal agencies and a cafeteria. The building is 235 ft. tall and is one of the tallest structures on Long Island.
Entry to the courthouse is via a raised stone podium, with landscaping and reflecting pools, to a conical drum (the so-called missile silo) that leads to an 11-story atrium.
This entrance rotunda is 175 feet tall and devoid of floors, having tapered round walls that are structured out of a huge steel space frame.
According to a description from architectural magazine Archidose, the atrium acts as a focal point and a means of orientation. Public corridors extend from the atrium along the south curtain wall, overlooking the plaza below and the Great South Bay and the Atlantic Ocean beyond. The north side houses the offices and the judge’s chamber: the elevation articulated accordingly with narrow ribbon windows. These two distinct facades are separated by a pair of walls that peak above the adjacent parapets, intersecting the atrium. The distinction between the two sides of the building is both formal and programmatic, acting as a separation between public and judicial circulation.
U.S. Consumers Can’t Pay Their Bills
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U.S. credit card defaults rise to 20 year-high
Credit card defaults rose last month to their highest level in at least 20 years according to a report just issued by Reuters. This is just one additional indicator of the deepening recession.
American Express, the largest U.S. charge card company by sales volume, reported that its net charge-off rate rose to 8.70 percent in February from 8.30 percent in January. A “charge-off” means the company has written the debt off as a loss for accounting purposes.
Meanwhile, Citigroup — one of the largest issuers of MasterCard cards — reported that its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier.
Some experts believe that there will be a continued deterioration. Trends in credit cards will get worse before they start getting better. Some analysts estimate credit card charge-offs could climb to between 9 and 10 percent this year from 6 to 7 percent at the end of 2008.
With so many consumers unable to pay their credit card debt, it is no surprise that bankruptcy filings have increased dramatically on Long Island. Bankruptcy permits consumers to discharge and eliminate credit card bills.
Credit card lenders are trying to protect themselves by tightening credit limits, raising standards, and closing accounts. They have also been slashing rewards, raising interest rates and increasing fees to cushion further losses.
Recession Hitting Long Island Job Market HardHow to Eliminate Medical Bills
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Written by Craig D. Robins, Esq.
There is a cure for handling medical debt
The three most common reason consumers file for bankruptcy on Long Island are divorce, loss of a job, and illness.
Un-reimbursed medical debts caused by serious health issues can be overwhelming. Even the medical insurance co-pays can become incredibly costly. And many Long Islanders do not even have sufficient health insurance.
The financial burden of health care on Long Island can definitely challenge your finances. Fortunately, consumers have some options.
Working Out a Payment Arrangement with the Hospital
Many hospitals have special payment arrangements for qualifying low-income individuals. In some cases, hospitals may even consider waiving some of the bill. Hospitals will often give special reductions to anyone who is below 300% of the federal poverty level.
Charitable Hospitals Often Have Special Programs
Many hospitals on Long Island are affiliated with charities. These nonprofit religious and charity-oriented hospitals have special care programs that pick up all or part of the cost of care for indigent or special needs families. Sometimes all it takes is simple phone call to the hospital administrator to find out about these programs.
Negotiating Medical Debt
Law firms such as ours that specialize in debt relief can negotiate on your behalf to reduce the balance. Frequently, you can reduce medical debts substantially.
Eliminating Medical Debt with Bankruptcy
Even when medical insurance covers most medical expenses, the loss of income from dealing with family illness can strain a person’s finances. When you or a loved one have suffered from an illness, that has left you with medical bills, doctor bills, hospital charges, or any other type of medical debt, you often have the option to resolve those bills in bankruptcy.
Depending on whether you file a Chapter 7 bankruptcy or Chapter 13 bankruptcy, medical bills can either eliminated or reduced to pennies on the dollar.
In bankruptcy proceedings, medical debt is the same type of unsecured debt as credit card debt. For those who are eligible to file for Chapter 7 bankruptcy, all unsecured debt can be totally eliminated.
In those cases where Chapter 7 is not a possibility, Chapter 13 Bankruptcy often forces unsecured creditors like medical providers, hospitals, and doctors to accept pennies on the dollar.
Last month, I wrote a post about a new bill that was introduced into Congress which is designed to provide a special safety net for individuals who are in a financial crisis due to a personal or family medical debts. See my post about the Medical Bankruptcy Fairness Act.
Don’t Ignore Medical Bills
Medical debt is still debt that doctors and hospitals will aggressively seek to collect by suing you. If you ignore medical bills, then it is often a question of time before you will be sued.
However, just like there are cures for illness, there are cures for overwhelming medical debt. Our Long Island bankruptcy lawyers and debt negotiation attorneys help many Long Islanders resolve their medical debts.
If you have hospital bills, medical bills, doctor bills, medical collections, or any other debt problems, don’t wait until you lose everything before you get financial help. Feel free to contact our office for a free consultation.
Website that prepared bankruptcy petitions engaged in unauthorized practice of law
by Craig D. Robins, Esq.
Many consumer debtors learn the hard way that they get what they pay for when hiring someone to prepare their bankruptcy petition.
The law is very clear that only an attorney can give legal advice, and this is to protect the public. Yet there are many non-attorneys who offer to prepare bankruptcy petitions for a fee, and many horror stories that go along with this.
There are strict rules about offering bankruptcy legal advice
When Congress gave the Bankruptcy Code a minor overhaul in 1994, it added several consumer protection requirements aimed at non-attorneys who prepare bankruptcy petitions.
The code labels a non-attorney who receives compensation to prepare a bankruptcy petition as “bankruptcy petition preparer” (BPP) and forbids BPPs from offering legal advice, defined as advising the debtor:
• Whether to file bankruptcy
• Which chapter to file
• Whether the debtor will able to keep his or her home
• How to characterize the debtor’s assets or debts
• About bankruptcy procedures and rights
My first experience with a non-attorney bankruptcy petition preparer
In the early 1990’s, a Long Island bankruptcy debtor came to me, literally crying, that he had filed a bankruptcy petition on his own, and the Chapter 7 trustee was about to take his house.
The client had used a “bankruptcy paralegal” to prepare his bankruptcy petition after seeing an ad in a local PennySaver. The paralegal incorrectly advised the debtor about New York bankruptcy law, and as a result, the debtor did not realize that his home was not totally protected by the New York homestead exemption.
As a result of that situation, I brought a class action proceeding against this paralegal who had prepared several hundred bankruptcy petitions on Long Island. When I filed the class action suit in bankruptcy court, the clerk’s office at first did not know what to do with it as they had never encountered a class action suit in bankruptcy court before.
As a result of that litigation, the paralegal was assessed fines exceeding $100,000 and was permanently enjoined from ever preparing petitions again.
Web-based Bankruptcy Petition Preparer Punished
St. John’s law student Thomas Szaniawski, in an American Bankruptcy Institute Case Blog article that was just published last week, discussed a case of first impression that addressed the intersection of cyberspace and bankruptcy.
The United States Court of Appeals for Ninth Circuit, in Reynoso v. United (Frankfort Digital Services v. Kistler) held that a provider of web-based bankruptcy software was a BPP under the Bankruptcy Code and that, under state law, the features of the petition preparation software constituted the unauthorized practice of law.
The defendant had a website that offered to prepare bankruptcy petitions for consumers. A consumer could use the browser-based software to prepare a bankruptcy petition based on information the consumer provided. The product’s website explained that the software would choose which bankruptcy exemptions to apply for and remove any need for the petitioner to individually select which schedule to use for the various pieces of information involved.
The court reasoned that providing personalized guidance in selecting specific exemptions or schedules constituted the unauthorized practice of law. Thus, the owner of the website, by providing software that held itself out as offering legal advice, projected an aura of expertise, and provided specific advice tailored to each customer’s situation. This led the court to conclude that the defendant had, in fact, engaged in the unauthorized practice of law.
This case is significant because it established that the mere act of providing software may qualify an individual as a BPP. This means that such software providers are subject to the strictures of the Bankruptcy Code and must obey the strict limitations on permissible BPP conduct. Thus, any conduct beyond mere typesetting can result in liability for the unauthorized practice of law. The fact that such conduct occurs by way of a software application, instead of traditional interpersonal interaction, is not a defense.
One jurisdiction is warning the public about BPP’s
The problem with bankruptcy paralegals rendering bad and incompetent legal advice became especially acute in the Southern District of California, one of the busiest in the nation. There, the U.S. Trustee, who has since become a judge, took the extraordinary step of warning consumers about the perils of discount advice by issuing a report about the dangers of using bankruptcy petition preparers.
Bankruptcy practice is involved and should not be done by non-attorneys
Although courts have expressed sympathy with indigent debtors who may have difficulty paying legal fees, numerous judicial opinions clearly state that this is no justification to turn a blind eye to the unauthorized practice of law by bankruptcy petition preparers, especially as they often tend to cause far more harm than good.
An experienced bankruptcy attorney has years of legal training; is bound by professional ethics requirements; is licensed by the state; and is familiar with local rules and procedure. That is no comparison to a street-corner paralegal who thinks that whatever a lawyer can do, he can do. When that happens, there will ultimately be unfortunate consequences and their clients will pay the price.
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 March 2009 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 Medford, Commack, 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.
Are You Considering Bankruptcy?
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A Little Advice for Long Island Consumers Thinking of Wiping Out Debts with Bankruptcy
Written by Craig D. Robins, Esq.
Many Long Island consumers are able to eliminate debts and get a fresh new financial start with bankruptcy. If you are thinking about filing, here are some important points.
Do not wait too long
The purpose of bankruptcy is to help individuals and families protect their remaining assets in the face of overwhelming financial problems. If you think you may need bankruptcy protection, try to do so before you lose those precious assets.
For example, I see too many consumers invade their pensions and individual retirement accounts before filing. However, if they sought our bankruptcy advice before doing so, they would have learned that these types of assets are totally protected in a New York bankruptcy proceeding.
Also, the sooner you file, the sooner you get debt relief. Once a bankruptcy petition is filed, it becomes against federal law for creditors to harass you any further.
Save a little money to file bankruptcy
Unfortunately for consumers, the 2005 Bankruptcy Amendment Act made the bankruptcy process much more complicated and consequently more expensive. In addition to the attorney’s fee, there is a court filing fee of $299, and costs for mandatory credit counseling of about $50 before filing.
Then, once your bankruptcy case is filed, you will no longer be responsible to your creditors and you will be in a position to start saving again.
Do not try to go it alone
The new bankruptcy laws are extremely complex and complicated. The prudent choice for the consumer is to retain an experienced Long Island bankruptcy lawyer. At my bankruptcy law firm, we provide a free, confidential bankruptcy consultation and explain how bankruptcy works.
Many consumers who try to file bankruptcy without an attorney are unsuccessful, and their cases get dismissed without a discharge. At every Chapter 13 Meeting of Creditors at the Central Islip Bankruptcy Court, I hear my colleague, Long Island Chapter 13 trustee Michael Macco, make an announcement that in his 26 years as a trustee, he has never seen a Chapter 13 debtor successfully get a case confirmed by the bankruptcy court.
Know your options about handling debt
If you are overwhelmed by debt, or think that you may be in the future, learn what your rights and options are now. In addition to three different chapters of bankruptcy, there is also debt negotiation, debt consolidation, credit counseling, and foreclosure defense.
An knowledgeable bankruptcy attorney can guide you towards the best choice. Many of these options are discussed on my website, www.BankruptcyCanHelp.com
Bankruptcy on Long Island in 2009
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