About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Archive for April, 2009
Written by Craig D. Robins, Esq.
Scott is the former Senior Trial Attorney in the Office of the United States Trustee here on Long Island. He and I had a number of matters together in the 1990’s when I represented various debtors in Chapter 11 proceedings and he represented the U.S. Trustee. We also served on some panels together, explaining bankruptcy law to fellow attorneys and judges. He then went on to become department chair of Rivkin Radler’s insolvency department. Now he is a partner with Donlin Recano & Company, Inc., a prominent claims, noticing, balloting and distribution agent for complex Chapter 11 reorganization cases.
Written by Craig D. Robins, Esq.
Written by Craig D. Robins, Esq.
Written by Craig D. Robins, Esq.
Written by Craig D. Robins, EsqWritten by Craig D. Robins, Esq.
My staff and I have been working hard these past few months helping an increasing number of Long Island consumers file for bankruptcy relief
I’ve reported several times recently that bankruptcy filings have zoomed up over the past year.
(See my post from last month: Rate of National Bankruptcy Filings Now Over One Million a Year and my post: Bankruptcy Filings Surged in 2008 ).
Consequently, my Long Island bankruptcy attorney colleagues and I have been quite busy helping Long Island consumers who need to eliminate debts and stop foreclosure.
For me, that has meant finishing up client appointments as late as 11:00 p.m. on some nights, skipping many a dinner, and spending less time with family. However, during these difficult economic times, many clients need urgent help.
My two full-time associate attorneys, Jason Leibowitz, Esq. and Dean Weber, Esq., have also been burning the midnight oil with me on many an occasion and I am grateful for their contributions to my firm and their dedication to helping our clients file for bankruptcy on Long Island.
My Personal Observations about Bankruptcy Cases on Long Island So Far this Year
From the types of bankruptcy cases we have been getting this year, I have observed that although job loss has affected some Long Island consumers, I have not yet seen a big bump in bankruptcy filings that are strictly the result of massive layoffs.
Instead, we are filing bankruptcy petitions for a steady but greatly increasing influx of typical Long Island consumers who are suffering from overwhelming credit card bills that are the result of some financial calamity – a failed business, loss of work as the result of illness, massive medical bills, unemployment, inability to work overtime, or divorce and separation.
There is no doubt that many of these clients have debt problems that are the result of the current recession.
However, in the coming months I anticipate seeing the impact of layoffs in the greater New York metropolitan area which will likely have a trickle-down effect on Long Island in which event there will be even more Nassau County bankruptcy filings and Suffolk County bankruptcy filings. Last month I wrote about how the recession is affecting everyone on Long Island (Long Island Economist Provides More Grave Commentary About the Long Island Economy ).
In addition, there are a much greater number of Chapter 13 filings from Long Island homeowners who are seeking to save their homes from foreclosure. This is directly attributable to the great number of sub-prime mortgages that were issued between two and four years ago.
Typical Bankruptcy Debt Levels Have Increased Substantially
Another observation is that the average amount of family debt is now much greater than ever before. Where many families would have filed for Chapter 7 bankruptcy a few years ago with $20,000 to 40,000 in typical credit card debt, the figures now routinely approach $100,000 and sometimes more.
I find many consumers are consulting with us in order to learn what their options are if their financial situation does not improve, in which case they will likely need bankruptcy relief down the road.
Many Long Islanders are Suffering from the Emotional Burden of Overwhelming Debt
I also regularly witness first hand the emotional toll my bankruptcy clients have suffered from overwhelming financial obligation.
The emotional cost of reckoning for people drowning in debt is high. However, so many clients have commented to me at the end of the initial bankruptcy consultation that they feel so relieved that there is an available debt relief solution, that they will now be able to sleep at night. This is a shame because many of them have been holding off calling a bankruptcy attorney for months.
Written by Craig D. Robins, Esq.
$40,000 Sanction Against Local Bankruptcy Attorney Who Tried to Bypass Rules
This happened last year when a consumer debtor in a pending Chapter 7 bankruptcy proceeding contacted me to take over his case from his existing attorney. As it turned out, the attorney tried to pull a fast one and paid dearly for it by being sanctioned and losing his ability to practice in the bankruptcy court.
I Persuaded the Prior Attorney to Refund Fees
The U.S. Trustee Aggressively Pursues Debtor’s Prior Attorney
Written by Craig D. Robins, Esq.
Last Week Top Federal and State Officials Announced a Broad Crackdown on Mortgage Modification Scams
It almost seems too good to be true. You respond to a fancy-looking ad promising to substantially reduce your monthly mortgage payment. All you have to do is pay a few thousand dollars up front to a mortgage modification company. If you fell for this you were probably scammed.
Homeowners who have fallen behind with their mortgage payments are in a very vulnerable position, desperate to find a way out of their financial predicament. They become easy prey for scammers trying to take advantage of them.
A number of disreputable mortgage modification consultants have sprung up. These illegitimate companies often have official-sounding names to make homeowners think that they are taking advantage of President Obama’s efforts to help borrowers modify or refinance their mortgages. See my post: “President Obama Announces Foreclosure Remedy”
Most Loan Modification Companies are Fraudulent
However, such operations are often fraudulent, and help is available for free from government-approved housing counselors. The loan modification companies usually charge excessive amounts of money for assistance that they promise but do not deliver.
“These predatory scams callously rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said last week. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”
The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.
Homeowners Are More Vulnerable During a Recession
Con artists will always take advantage of vulnerable people, and the recession has certainly created its share of vulnerable consumers who are barely coping with making their mortgage payments.
During most of the past decade the con artist du jour was frequently one who promised to reduce credit card debts, by making unsubstantiated promises that could not be kept. Today, the con artist du jour is often a “loan modification consultant” who makes unsubstantiated promises about lowering mortgage payments.
Over the past year, homeowners have been flooding state attorneys general with complaints about loan modification consultants. While some may be legitimate, authorities say many are con artists.
With Long Island and the nation facing a harsh real estate slump, many brokers and others who were in the real estate business are out of work. Some of the more unscrupulous ones have quickly become supposed loan modification experts, virtually overnight.
In my Long Island bankruptcy practice, I frequently represent homeowners in Chapter 13 bankruptcy cases who had been taken advantage of by a loan modification company prior to coming to my office. These clients usually tell me that they were promised the moon, but after they paid the loan modification company several thousand dollars, they hardly heard from them again.
Homeowners relying on the advice of a loan modification consultant must be extremely careful as they can end up losing their homes if they get so far behind that it becomes impossible to resolve the mortgage arrears.
Lenders Are to Blame for Part of the Problem
The Obama administration, during the past two months, in an effort to alleviate the nation’s mortgage crisis, urged mortgage companies to renegotiate loan payments, and many of them have offered to do so. However, this strategy is failing.
The unfortunate truth is that most mortgage lenders are not cooperating with providing loan modifications. I, myself, have long given up trying to help clients with mortgage modifications. Lenders simply will not take responsibility for cutting loan payments. Efforts to do so are frustrating and fruitless. It is very rare that a lender will agree to a loan modification.
As a result, using a loan modification firm often means paying several thousand dollars for them to make a simple phone call, to which the answer will predictably be “no.”
Thus, a large part of the problem is caused by uncooperative mortgage lenders who would rather foreclose on consumers’ homesw, than take responsibility for lowering interest rates, forgiving principal or reducing monthly payments.
On Long Island, Chapter 13 Bankruptcy is Often the Most Viable Solution
Homeowners have to be realistic about the slim prospects for successfully obtaining a loan modification. If the homeowner has fallen behind with their mortgage payments, a Chapter 13 payment plan bankruptcy will usually enable a family with sufficient income to stop foreclosure and pay back their arrears over a five year period.
What Else Should Consumers Do?
Homeowners should NEVER pay any up-front fees to loan modification companies and should avoid any high-pressure sales tactics. New York law provides that fees may only be collected AFTER services are completed. However, this does not stop many scammers from trying to take your money in violation of the law.
Homeowners should first try talking to their lenders or a lawyer before contracting with any third-party company for rescue or modification services.
If a homeowner believes that he or she has been taken advantage of by a disreputable mortgage modification company, he or she should contact the New York State Attorney General’s Office.
When you have to fight off creditors who have just sued you, sometimes bankruptcy is your best option, rather than litigating
Writtten by Craig D. Robins, Esq.
When you owe a substantial amount on a credit card and fall many months behind, it is almost inevitable that the credit card company will sue you. Most suits are brought by local high-volume collection law firms on Long island that bring such lawsuits by the thousands.
Many of my Long Island bankruptcy clients tend to contact me for the first time right after they are sued, as they are uncertain about what to do.
The Credit Card Lawsuit
The suit is commenced when a process server personally serves you with papers called a “summons and complaint.” Sometimes the papers will be left at your door and mailed to you. Commencement of a lawsuit often prompts consumers to consider bankruptcy as the best way to deal with the lawsuit.
Should I Answer the Complaint?
New York law gives you 20 days to answer the complaint if it is served on you personally, or 30 days if it is left for you.
Once you are served, it is important to take action. If you do not do anything, the creditor will be entitled to get a default judgment against you.
If a creditor gets a judgment, it can freeze your bank account, garnish your wages and put a lien on any real estate that you own. The judgment can also be reported on your credit report as a public record, even if you later file for bankruptcy.
Answering the complaint involves filing a document with the court called an “answer” and serving a copy of it on the attorney for the creditor. In the answer you can dispute any of the allegations in the complaint. If you file an answer, the creditor cannot get a default judgment, but it will still proceed with the case and seek a judgment later on.
Sometimes filing an answer is the best way to get additional time to determine your best debt solution.
Filing for Bankruptcy as a Remedy
If you qualify for bankruptcy, the lawsuit will be immediately stopped by the filing of the bankruptcy petition.
If the creditor has already gotten a judgment, you can negotiate with the creditor for the payment of the judgment. Sometime it is possible to engage in debt negotiation and pay a very discounted amount.
Even if the creditor obtains a judgment against you, it is just as dischargeable as the same debt prior to entry of judgment. However, the judgment can be reported on your credit report.
Also, if the creditor obtains a lien against your real estate, the bankruptcy will not, by itself, remove the judgment lien. In many cases, however, you can bring a special motion in the bankruptcy proceeding to remove the judgment lien.
Will Bankruptcy Stop Wage Garnishments and Frozen Bank Accounts?
Yes. As soon as a bankruptcy petition is filed, wage garnishments will come to a halt and frozen bank accounts can be unfrozen.
Is Bankruptcy the Best Debt Solution?
The decision to file bankruptcy should be based on an overall assessment of your entire financial situation, after analyzing all of your debts and assets. This is best done by a qualified bankruptcy attorney. Other debt relief options include debt negotiation.
Written by Craig D. Robins, Esq.
I previously wrote a number of posts about proposed legislation to “cram-down” or “strip-down” mortgages in Chapter 13 bankruptcy cases. (Will the Senate Approve Cram-Down Legislation to Enable Mortgage Modification in Chapter 13 Bankruptcy Cases?).
If passed, this new law will enable bankruptcy court judges to modify mortgages of Chapter 13 debtors and reduce monthly mortgage payments.
Unfortunately, the mortgage cram-down legislation is faltering because there may not be enough votes for the pending bills to pass. This is the result of fierce Republican opposition and possibly even some opposition from moderate Democrats.
Senate Majority Leader Harry Reid (D-Nev.) has said previously that he is prepared to drop the cram-down language provision from a broader housing bill if the votes are not there.