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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.

Archive for August, 2009

Can Debtors Deduct College Expenses of their Children on the Means Test?

Posted on Monday (August 31, 2009) at 3:00 am to Bankruptcy Means Test
Issues Involving New Bankruptcy Laws
Recent Bankruptcy Court Decisions

student-loans-hat-andy-giarnellaWritten by Craig D. Robins, Esq.

Several times in the past month this issue has arisen with my Long Island bankruptcy clients:  Can they deduct their children’s college tuition expenses on the means test?  The means test does not provide any specific category for doing so. 

I previously addressed this issue a few months ago:  Can You File For Bankruptcy and Still Pay Your Child’s College Tuition?    I will now expand upon that prior post.

Unfortunately, those bankruptcy courts which have addressed this issue have found no statutory support for such deductions.

Certain educational expenses can be deducted on the means test.  These include deductions for elementary and secondary education expenses, although the amount is limited.

The means test also permits debtors to deduct expenses for contributions to family members, but this category is also limited to elderly, chronically ill or disabled family members.

Accordingly, at this time, there does not appear to be any way to include a debtor’s contributions to their children’s college expenses on the means test.

The following are some recent cases involving college expense deductions.

In re Baker, No. 08-13987, 2009 Bankr. LEXIS 193 (Bankr. N.D. Ohio Jan. 30, 2009): Recognized that special circumstances might justify allowance of college expenses for adult children, but found that this case does not rise to that level because it is not apparent that the debtor has made a reasonable effort to mitigate her expenses as her adult child could live with the debtor rather than on her own.

In re Saffrin, 380 B.R. 191 (Bankr. N.D. Ill 2007): Held that a debtor may not deduct his daughter’s college expenses because the Code only allows education expenses related to elementary or secondary education.

In re Boyd, 378 B.R. 81 (Bankr. M.D. Pa. 2007): Found that a debtor may not expense her adult daughter’s college education because the Code does not expressly provide such deduction and it does not qualify as another necessary expense.

In re Hess, No. 07-31689, 2007 Bankr. LEXIS 3553 (Bankr. N.D. Ohio Oct. 15, 2007): Found that “[w]hile a parent’s desire to assist a child…pursuing a college degree is laudable, a debtor is not free to do so at the expense of her unsecured creditors.”

In re Featherston, No. 07-60296, 2007 Bankr. LEXIS 4578 (Bankr. D. Mont. Sept. 28, 2007): Held that a debtor may not deduct college expenses for adult children because children are not elderly, chronically ill or disabled as required by the Code to qualify as an acceptable contribution to family members.

In re Goins, 372 B.R. 824 (Bankr. D. S.C. 2007): Held that the Code limits education expenses to those related to elementary and secondary school.

In re Hicks, 370 B.R. 919 (Bankr. E.D. Mo. 2007): Found that a debtor paying college expenses of an adult child is a luxury, not a necessity, and that the Code does not provide any support for allowance of such deduction.

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Are Pensions Protected in New York Bankruptcy Cases?

Posted on Saturday (August 29, 2009) at 12:15 pm to Bankruptcy Exemptions
Bankruptcy Tips Consumers Should Know
Chapter 7 Bankruptcy
Tax and Bankruptcy Issues

Pension plans that are ERISA-qualified are protected in bankruptcy proceedingsWritten by Craig D. Robins, Esq.
Almost all pensions are protected in bankruptcy proceedings, whether the debtor files here in New York or in any other state
Here’s why:  In a 1992 United States Supreme Court case, the court ruled that any pension plan that is “ERISA qualified” is excluded from the bankruptcy estate. 
“ERISA” is the Federal Employee Retirement Income Security Act of 1974.  Under this act, pension plans, 401-K plans, and other “ERISA-qualified plans” are specifically protected from creditors because of a prohibition from being assigned or alienated. 
This means that the pension never even becomes part of the bankruptcy estate.  (The bankruptcy estate consists of  those assets owned by the debtor which the trustee can go after if the assets are not exempt).  When an asset like a pension plan is excluded from the bankruptcy estate, it remains the property of the debtor and the trustee cannot touch it.
Also, since pension plans are not part of the bankruptcy estate, you don’t even have to ascertain whether there is an exemption statute to protect it.  It is already protected.
So, simply put, an ERISA-qualified plan cannot be used to satisfy the claims of creditors in a bankruptcy proceeding and should therefore be totally protected.
How can you tell if a pension plan is ERISA-qualified?
Pension plans usually have a pamphlet of information about the plan which contains information about the plan’s tax status.  Most employers give a copy of the pamphlet at some point, but if misplaced, additional copies can usually be obtained easily.
The best assurance that a plan is ERISA-qualified is when the plan contains a copy of a favorable ruling letter from the IRS indicating that the IRS has determined that the pension plan is in compliance with the tax code and meets tax qualification requirements.  Incidentally, a plan could conceivably be considered tax-qualified even if it has not received a favorable ruling letter from the IRS, and even if it is not in compliance with the tax code, as long as the debtor is not materially responsible for its noncompliance. 
One important note:  Although the pension plan may be protected, recent contributions, if very large, may not be.
Of course, making sure a pension or retirement account is ERISA-qualified and protected is extremely important.  This is one of the many things an experienced bankruptcy attorney should do, and we do this regularly with our Long Island bankruptcy clients. 
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What State’s Bankruptcy Exemption Laws Apply If You Recently Moved?

Posted on Friday (August 28, 2009) at 7:30 am to Bankruptcy Exemptions
Issues Involving New Bankruptcy Laws

What State's Bankruptcy Exemption Laws Apply If You Recently Moved?Written by Craig D. Robins, Esq.

The 2005 Bankruptcy Amendment Act changed how a debtor determines which state’s exemptions statutes to use.  If you’ve lived in the same state for the two years prior to filing then you have nothing to worry about.  You use the exemptions from that state.

However, if you moved from state to state during the prior two years, then some important rules apply.

The 730-day Rule

If you resided in the same state for at least 730 calendar days continuously (two years) prior to the filing of your bankruptcy petition, then you can use that state’s exemptions.

The 180-day Rule

If you did not live in your current state continuously for at least 730 days, then you must pick the state in which you lived most of the time during the 180 days prior to the 730 days. In other words, the state that must be selected is where you lived most of the time between 2 and 2 ½ years before filing.

The Default Rule

If no state qualifies using the above rules (i.e., you lived in abroad) or if the 180-day state requires current residency or domiciliary to use its exemptions (a tricky issue), then you must use the federal exemptions. The default rule will only apply if you did not live in any state during the 180 day period that began 730 days before filing, or if the state requires current residency or domiciliary.

If You Moved, Seek Advice From an Experienced Bankruptcy Attorney

The above rules can be somewhat confusing.  If you moved between different states in the past two or three years, then you should consult with a knowledgeable bankruptcy attorney.

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I’m Serious: BAPCPA Man Is Here Again

Posted on Tuesday (August 25, 2009) at 11:30 pm to Bankruptcy Humour
Issues Involving New Bankruptcy Laws

BAPCPA Man appears in his third comic strip, poking fun at the new bankruptcy lawsWritten by Craig D. Robins, Esq.

 Bankruptcy Can Be Humorous!
In the past two weeks I posted the two debut strips of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall.   Here is stip number three.   BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys. 
Steve and Gideon originally came up with the well-received Bankruptcy Bill cartoon strips, about a hapless New York City bankruptcy attorney associate at a large bankruptcy firm.
“BAPCPA”, an acronym universally known to all bankruptcy attorneys, stands for The Bankruptcy Abuse Prevention and Consumer Protection Act.  This is the new bankruptcy law that went into effect in 2005.
The strips seek to educate consumers, humor attorneys, and will also try to poke fun at some of the more ridiculous requirements of the new bankruptcy law.
The strip is posted with permission from Bankruptcy Bill.
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Many Long Island Seniors Suffering From Debt

Posted on Tuesday (August 25, 2009) at 3:00 am to Bankruptcy and Society
Benefits of Bankruptcy

Bankruptcy is helping many Long Island Seniors suffering from debtWritten by Craig D. Robins, Esq.
Senior citizens can be prone to debt problems
With fixed incomes and unexpected expenses, senior citizens are at high risk for getting into debt – and they have less time to pick up the pieces.
In my Long Island bankruptcy practice, we are seeing more and more seniors utilizing bankruptcy to deal with their debts.
A recent Newsday cover story focused on the problems affecting many of Long Island’s senior citizens which are driving them into debt.  A common situation occurs when one spouse dies, eliminating one-half of the golden couple’s income.  Often receiving limited funds from Social Security or modest pensions, a surviving spouse is driven to using credit cards just to pay for day-to-day living expenses.
Bankruptcy can be a lifesaver for the elderly
The Newsday article told the story of an unfortunate 77-year-old woman who needed to place her sick husband in a nursing home.  But fortunately for her, she was able to eliminate all of her debts by filing bankruptcy.
According to Harvard professor Elizabeth Warren, who I’ve quoted frequently in the past, older Americans are under increasing financial pressure and are carrying more debt into retirement than ever before in history, which leaves them financially weakened.
Today’s economy is bad enough for younger folks, but it can be particularly troubling for those in their 50’s or older who have less time to recuperate and more at stake.
Accordingly to Long Island economist Irwin Kellner, some seniors started getting into debt when they used their homes as a piggy bank and an ATM.  This encouraged people to spend far more than they earned, and they didn’t save enough in the process.
I previously wrote several posts about how more and more seniors are seeking bankruptcy relief – Senior Citizens Are Filing Bankruptcy In Record Numbers .
Many seniors have no choice but to rely on their credit cards to pay for the increasing costs of health care.  A serious illness can drive one into debt in the many tens of thousands of dollars.
Unfortunately, one of the difficulties many seniors face is embarrassment from debt.  Consequently, senior citizens are sometimes reluctant to get advice for dealing with their debt situation.
Many seniors are able to discharge all of their credit card debt and medical bills with a bankruptcy filing, and most seniors with significant debt qualify for Chapter 7 bankruptcy.
My office offers free consultations to senior citizens with overwhelming debt problems.
Here are some other resources for seniors on Long Island who are struggling with debt problems:
Legal Aid Society of Suffolk County, Senior Citizen Division
(631) 854-0401
Legal Aid Society of Nassau County
(516) 560-6400
Nassau Suffolk Law Services – Suffolk
Pro Bono Project
(631) 232-2400
Nassau Suffolk Law Services – Nassau
Volunteers Lawyers Project
(516) 292-8299
Suffolk County Department of Aging
(631) 853-8200
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Sometimes Bankruptcy Exemptions Can Be Doubled

Posted on Monday (August 24, 2009) at 3:00 pm to Bankruptcy Exemptions
Bankruptcy Tips Consumers Should Know
Chapter 7 Bankruptcy

Sometimes bankruptcy exemptions can be doubled when a husband and wife file a joint bankruptcy petition in New YorkWritten by Craig D. Robins, Esq.
Exemption statutes are the laws that enable debtors to keep and protect certain assets.  There are set values for most exemptions.
Some of the most important exemption categories can be doubled if a husband and wife file a joint bankruptcy petition in the state of New York.
For example, the homestead exemption in New York is $50,000.  If a husband and wife file a joint bankruptcy petition, and they own the house together, they can pool their homestead exemptions for a total of $100,000 of bankruptcy protection.
With jointly-held bank accounts, married debtors filing a joint bankruptcy petition can exempt a total of $5,000, rather than the exemption amount of $2,500 per person.
The exemption for cars, however, cannot be doubled, as the exemption amount is per car, and not per person.
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Beware of Faulty Bankruptcy Information on the Internet

Posted on Monday (August 24, 2009) at 2:30 am to Info on Bankruptcy and the Court

Beware of the quality of bankruptcy information on the internetWritten by Craig D. Robins, Esq.
As someone who spends a great deal of time writing bankruptcy articles, it is quite upsetting to see so much incorrect and erroneous information about New York bankruptcy law on the Internet.  Consumers need to be aware of this.
I frequently do Internet searches on various bankruptcy topics and I am constantly amazed and disappointed at the extremely poor quality of the information on some websites. 
There are three main reasons why some online bankruptcy information is bad
1.    Various websites are designed for the sole purpose of persuading those who land on their site to “click through” to another sight that advertises on their site.  These “click through” sites often manipulate search engines to appear at the top part of a search.  In addition, they are run by out-of-state companies who basically make similar websites for each state.
2.    Some websites appear to contain data about New York bankruptcy law, but these sites are really owned by out-of-state companies and are designed to steer consumers into providing information about themselves that will be used for “sales leads.”  These companies then sell this information to others and promise that a local bankruptcy attorney will contact them.  Notice how these sites never give any information about the local bankruptcy attorney.
3.    Many websites actually belonging to local New York bankruptcy attorneys have content on them that the attorneys, themselves, do not write.  The bankruptcy articles and material is actually written by someone else in a distant part of the country.  The New York bankruptcy attorneys who engage in this conduct merely purchase content written by others, and place it on there site, as if they wrote it themselves.
I observed some bad bankruptcy information online today
In the above situations, there are sometimes egregious errors and misstatements.  They are not written by a New York bankruptcy lawyer, and the authors do not necessarily have your best interests in mind.
For example, earlier today I observed a site that indicated that consumers filing bankruptcy in New York can use both the federal exemptions and the state exemptions.  This is absolutely not true (you can only use New York State exemptions).  I then found another site that provided downright incorrect exemptions for New York bankruptcy cases.
I am proud to say that all of the posts, articles and information on my blog is written by me (or in some cases, by other attorneys in my office or student interns).  All information is well-researched and contains a by-line by the author. 
After practicing 25 years, most of which I devoted to bankruptcy law, you can rest assured that the information contained in my blog is current, accurate, and hopefully helpful.
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You Can Bring Your Own Security Guard to the Meeting of Creditors

Posted on Saturday (August 22, 2009) at 10:15 am to Bankruptcy Procedure
Chapter 11 Bankruptcy

Security at Bankruptcy HearingsWritten by Craig D. Robins, Esq.
The United States Trustee Manual has some unusual and interesting provisions buried in its many pages.  One concerns bringing your own security guards to the meeting of creditors in Chapter 11 bankruptcy cases.  This is somewhat unusual considering that bankruptcy proceedings tend to be non-controversial and non-violent.
Section 3-5.14 of the Manual concerns security at section 341 meetings.  It provides that if the debtor believes that there may be security problems at a particular meeting, it should notify the United States Marshal’s Service in advance. 
In addition, the provision further states that the debtor may hire security guards to be present at the meeting to deter potential security problems.
I can’t imagine a situation where this would be necessary, but if a Chapter 11 debtor has plenty of enemies, this provision can provide some additional protection.
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If a Creditor Shows Up at the Meeting of Creditors in Bankruptcy Court, What Questions Can They Ask?

Posted on Friday (August 21, 2009) at 5:45 am to Bankruptcy Procedure
Bankruptcy Tips Consumers Should Know
Chapter 7 Bankruptcy

If a Creditor Shows Up at the Meeting of Creditors in Bankruptcy Court, What Questions Can They Ask?Written by Craig D. Robins, Esq.
I previously wrote that it is highly unlikely that creditors will show up at the meeting of creditors, which is also known as the section 341 hearing.  See Will Creditors Show Up For My Hearing In Bankruptcy Court? .
However, in the unusual instance that a creditor does attend, what questions can they ask the debtor?
Creditors are entitled to ask the debtor questions about the debtor’s assets and liabilities. However, they are not permitted to cross-examine the debtor as if the trustee was a judge.
Sometimes creditors will ask improper questions or become argumentative.  In such instances, any experienced bankruptcy attorney will direct his or her client not to respond to the question, and will also admonish the creditor as to the proper scope of questioning. The trustee will probably do so as well.
Also, a creditor cannot use the meeting as a fishing expedition to ask the debtor very general questions. Although a creditor has the right to ask numerous relevant questions, there is not enough time to ask many questions at a meeting of creditors, and trustees will not permit it. 
If a creditor wants to ask a lot of questions, they must request an additional examination hearing just for them, which is called a “section 2004 exam” because it is done pursuant to a Bankruptcy Rule 2004.  Section 2004 exams are extremely rare and occur in less than one percent of all consumer cases.
In the unlikely event there is a section 2004 exam, it would either be held at the Long Island Bankruptcy Court in Central Islip, or more likely, at the attorney’s office of the creditor or trustee requesting it.
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Celebrities File Bankruptcy, Too

Posted on Thursday (August 20, 2009) at 3:30 pm to Bankruptcy and Society

Written by Craig D. Robins, Esq.
Stephen Baldwin sought bankruptcy protection in July 2009Bankruptcy debt relief helps many typical consumers, but sometimes celebrities have debt problems also.  Last month movie actor Stephen Baldwin,  a Massapequa native, filed for bankruptcy after his mortgage company began foreclosure proceedings against him.
Lenny Dykstra sought Chapter 11 bankruptcy protection in July 2009A famous sports star also filed bankruptcy last month.  Former Major League Baseball All-Star Lenny Dykstra, a fixture of the New York Mets, filed a bankruptcy petition which indicated his debts were between $10 million and $50 million.  Dykstra had  built a financial empire of various businesses which unfortunately did not work out.
Reader's Digest Magazine sought Chapter 11 bankruptcy protection in August 2009Last week, the venerable magazine and publishing phenomenon, Readers Digest, also sought Chapter 11 bankruptcy relief to restructure $2.2 billion in debt.
Celebrity photographer Annie Leibovitz has been rumored to be considering bankruptcy now that a lender is suing her over a $24 million loan.
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Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »


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Craig D. Robins, Esq.
35 Pinelawn Road, Suite 218E, Melville, NY 11747.

Tel : 516 - 496 - 0800