About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Archive for October, 2009
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BAPCPA Man Pokes Fun at the Poorly-Written Bankruptcy Amendments!
Written by Craig D. Robins, Esq.
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I am pleased to post antoher cartoon strip of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall. Here is strip number 13. BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys.
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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. Please check out the Bankruptcy Bill and BAPCPA Man Website which now has references and links to other bankruptcy blogs around the country.
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The strip is posted with permission from Bankruptcy Bill.
Written by Craig D. Robins, Esq.Everyone who files for personal bankruptcy must produce identification. You are not required to produce identification at the time of filing, but at the meeting of creditors which occurs one month later. However, any experienced bankruptcy attorney will want to see that ID from the outset.
The Office of the United States Trustee adopted a policy in 2002 in which individuals are required to identify themselves with picture identification (typically a driver’s license) and proof of correct Social Security number (typically a Social Security card).
However, other forms of proof are acceptable as well. According to instructions about identification issued by the Office of the United States Trustee, Chapter 7 and Chapter 13 trustees should also accept the following items as acceptable forms of photographic identification: passport, legal resident alien card, military identification, or state-issued photo identification card.
Satisfactory proof of Social Security number can be also demonstrated with the following documents as long as they contain the full Social Security number and full name of the debtor: pay stub, health care card, any correspondence from the Social Security Administration, or a current W-2.
I’ve actually attended hearings in which I observed some local trustees in the Central Islip Courthouse being unaware that a debtor can furnish proof of Social Security number with some of the above documents. Hopefully all of the trustees have become aware of the U.S. Trustee’s policies by now.
If the debtor does not have photo identification and proof of Social Security number with them when they appear before the trustee at the meeting of creditors, the trustee can refuse to examine them.
In my practice, I require all clients to provide me with their driver’s license and Social Security card at the initial intake. I then make a legible photocopy and place it in the file. On numerous occasions these copies have saved the day when the client forgot to bring their ID to the court. Also, by reviewing the debtor’s identification early on, I have time to enable the debtor to obtain satisfactory identification there is a problem with it.
Reading the Bankruptcy Petition
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Reading the bankruptcy petition before signing it is very important!
Written by Craig D. Robins, Esq.
While waiting for my bankruptcy cases to be called, I always observe the hearings that are heard before mine. Lately I’ve seen a lot of debtors who were represented by other attorneys get into trouble because they neglected to read their bankruptcy petitions and were unaware of factual errors or omissions that they contained.
A completed bankruptcy petition is rather lengthy and probably not the most exciting material to read. However, by signing it, you are indicating that you not only read it, but that all information therein is true and correct. Each bankruptcy hearing at the meeting of creditors begins with the trustee asking the debtor if they read the bankruptcy petition before having signed it, and if everything in the petition is true and correct.
I can’t tell you how many times I’ve seen trustees getting very upset at debtors because their petitions weren’t accurate. Debtors would tell the trustee, “I don’t know how that information got in there, because it’s not correct,” only to later admit they neglected to read the petition. When important information if missing from the petition which could have been easily caught, the debtor’s credibility is greatly reduced. In a worse-case scenario, the trustee can allege that the debtor was engaging in fraudulent and deceptive conduct.
This is why I insist that my clients read every page of their petition before signing it. Clients sometimes say, “I trust you; I know you did a good job in preparing the papers; I don’t have to read them.” That doesn’t fly in my office. Every client must read their petition and understand it.
Remember, by signing the petition, you are representing to the court that you have read it and that the contents of it are true. Bankruptcy provides great benefits. Don’t squander them by being lazy or careless.
Written by Craig D. Robins, Esq.The Chief Judge of New York, Jonathon Lippman, announced today that he will be providing all New York State judges with an allowance of $10,000 in addition to their regular salary. This is a welcome addition considering that this is the 11th straight year that New York judges have not gotten a pay raise. However, this does not apply to Bankruptcy judges.
Bankruptcy judges, who are federal employees, have not gotten significant pay raises for quite some time as well. The current salary for a bankruptcy judge is $160,080, and this amount is set by Congress. The salary is actually based on 92% of the salary of a United States District Court judge, which is currently $174,000.
Incidentally, New York State Court judges in the Supreme Court currently have a salary of $136,700, and County District Court judges earn slightly less than that.
Many of the Long Island bankruptcy attorneys appearing before Judges Robert E. Grossman, Alan S. Trust, and Dorothy T. Eisenberg in the Central Islip Bankruptcy Court therefore earn more than the judge.
Although a judge’s salary, when compared to the typical salary of a Long Island resident, may seem pretty good, it is relatively less than what the judge can earn in private practice. This is the main reason why former Chief Bankruptcy Judge Melanie S. Cyganowski retired from the bench two years ago. (See the my interview of her: Chief Bankruptcy Judge Melanie Cyganowski Stepping Down )
For more information about the Central Islip Bankruptcy Court judges, please see my post: How Are Long Island Bankruptcy Judges Appointed?.
IRS Federal Tax Liens in Bankruptcy
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Written by Craig D. Robins, Esq.Last week I wrote about Eliminating Taxes in Bankruptcy . Although you can often eliminate personal liability for old income tax debt, IRS tax liens can still remain attached to assets.
What is a Federal Tax Lien?
When there are substantial tax arrears, the IRS will prepare a document called a Federal Tax Lien and then file it with the county clerk’s office. Doing so then results in the IRS obtaining a secured lien on any asset that the taxpayer may own in that county, whether it is real estate or personal property.
According to the Internal Revenue Service, three things must occur before a federal tax lien is issued: The IRS must assess the liability, send a Notice and Demand for Payment, and you must neglect to pay in full for 10 days after the notice was sent.
Can Federal Tax Liens Be Eliminated in a Personal Bankruptcy Filing?
Unfortunately, even though a debtor can bring a proceeding to discharge old tax income tax debt, this will not remove a federal tax lien.
Thus, you can prevent the IRS from going after you personally by filing for bankruptcy, but if they have a lien on your home, you will have to deal with that if you decide to sell or refinance the home.
Chapter 11 Bankruptcy on Long Island
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Craig D. Robins, a Chapter 11 bankruptcy attorney on Long Island, provides summaries of all Chapter 11 bankruptcy cases filed in the Long Island Bankruptcy Court, on his Long Island Bankruptcy Blog.
Click here to access these summaries: Chapter 11 bankruptcy cases filed on Long Island.
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Click here to see information about filing Chapter 11 bankruptcy on Long Island.
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If you have a business that is considering Chapter 11, please feel free to contact my office to arrange a free, confidential consultation.
Bankruptcy Cartoon Strip BAPCPA Man — #7
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BAPCPA Man Illustrates the Powers of Bankruptcy Against Evil Mortgage Companies!
Written by Craig D. Robins, Esq.
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I am pleased to post the seventh cartoon strip of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall. Here is strip number seven. BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys.
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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. Please check out the Bankruptcy Bill and BAPCPA Man Website which now has references and links to other bankruptcy blogs around the country.
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The strip is posted with permission from Bankruptcy Bill.
Cell Phones and Bankruptcy
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Written by Craig D. Robins, Esq. .
Filing bankruptcy can release you from a burdonsome cell phone contract and let you discharge the early termination penalty
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These days, almost everyone has a cell phone. Should a typical consumer debtor filing bankruptcy on Long Island list their cell phone provider as a creditor for bankruptcy purposes?
Consumers Who Have Old Accounts with Deficiencies. If you have an old bill on a closed account with a balance due, then there is no question. This is a debt that you must include. The entire obligation will be eliminated by the bankruptcy filing.
Consumers Who Have Active Accounts with Balances Due. Consumers filing for personal bankruptcy are required to list all outstanding debts in the bankruptcy petition. Thus, if you owe your cell phone provider a balance, even if you plan to keep the account, you must list them. Doing so will enable you to discharge the balance owed. Some cell phone companies may ask you to post a security deposit after the bankruptcy filing, but I observe that most providers are not asking for this.
What Happens to the Service Contract in Bankruptcy? Chances are you are still in a service contract which requires that you pay a penalty if you cancel it before the end of the contractual period, which is typically two years. Most consumers can benefit by canceling their cell phone contracts. This would enable the consumer to not only eliminate their balance but remove their obligation to pay any early cancellation penalty.
Here’s why: Filing a Chapter 7 bankruptcy has the effect of terminating any “executory contract” which is one in which the parties are still performing it. Cell phone contracts are executory contracts during the typical two-year contract period. By including the cell phone provider as a creditor in the bankruptcy petition, the contract is automatically terminated, and any early cancellation penalty becomes a dischargeable debt just like the credit card debts.
Consumers Who Have Accounts that Are Totally Up-to-Date. Consumers should list the cell phone provider as a potential creditor in the bankruptcy petition, even if no balance is owed. Although the bankruptcy law has the effect of automatically terminating the cell phone contract, virtually all cell phone companies will continue service if the account is current, and will not pay any attention to the bankruptcy filing.
The advantage to you, the consumer, by including the cell phone company in the petition, even if you are current, is that you can later terminate the contract before the end of the typical two-year period, and not be responsible for the early termination penalty.
Special Note About Cell Phones for Later: Since I’m talking about cell phones, please note that when you do eventually file for bankruptcy relief and later go to court for the meeting of creditors, you must leave your cell phone in the car. The Central Islip Bankruptcy Court has a policy of not permitting any cell phones into the building. If you arrive at court by public transportation, the U.S. Marshall will permit you to check your phone with them in the lobby.
Written by Craig D. Robins, Esq.
Port Jefferson Automobile Dealership Seeks Chapter 11 Bankruptcy Protection
Ramp Chevrolet, Inc., a Long Island Chevrolet and Hummer automobile dealer that was established in 1944, filed for Chapter 11 bankruptcy relief on October 5, 2009 in the Central Islip Bankruptcy Court under case number 8-09-77513. Judge Robert E. Grossman was assigned to the case as bankruptcy judge.
The dealership, which is located at 1395 Route 112 in Port Jefferson, is being represented by Eric J. Snyder, Esq. of the New York City bankruptcy law firm of Siller Wilk, LLP.
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The Chapter 11 debtor’s president is Charles Rampone, Jr.
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The debtor owes GMAC $587,201 and also owes the New York State Department of Taxation $2,082,386 in secured debt and $425,993 in priority debt. The petition also listed 144 unsecured creditors, although there were no amounts listed for each of these creditors in the initial schedules that the debtor filed.
It was unclear what necessitated the Chapter 11 bankruptcy fililng because the debtor neglected to file all of its schedules and statements as required by the local bankruptcy rules. However, as I’ve written in the past, as General Motors revamps itself under its own bankruptcy protection, effects are reverbarating around the country. GM said over the summer that it was going to cut about 1,100 dealerships immediately and another 2,600 over the next 18 months. See Chrysler Bankruptcy Will Lead to Many Long Island Personal Bankruptcy Filings and Why Did Chrysler and GM File for Bankruptcy in New York?
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Just a few weeks ago, another Long Island car dealer sought Chapter 11 bankruptcy relief: Mazda Automobiles of Great Neck Files for Chapter 11 Bankruptcy Protection .
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The debtor has already negotiated a cash collateral stipulationwith the secured creditor, which was approved by the bankruptcy court, and has also received bankruptcy court permission to pay pre-petition wages.
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The debtor filed a bare-bones bankruptcy petition and was required to file all remaining bankruptcy schedules by October 20, 2009, but failed to do so on time.
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The debtor brought an order to show cause to use cash collateral and pay pre-petition wages, and an interim order authorizing cash collateral was granted.
The Meeting of creditors will be held on November 6, 2009 at the United States Bankruptcy Court for the Eastern District of New York in Central Islip (Room 563 at 11:00 a.m.). A Status conference has been scheduled before Judge Grossman for November 9, 2009 at 1:30 p.m. in Courtroom 860.
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This post is one of a series of posts available on the Long Island Bankruptcy Blog detailing every Chapter 11 bankruptcy case filed in the Central Islip Bankruptcy Court since August 1, 2009. I will typically post a summary of each Chapter 11 case several days or weeks after it is filed as not all info is available immediately upon filing. To see a list of Chapter 11 cases profiled on this blog, click Chapter 11 Filings on Long Island or type the name of the debtor in the upper right search box.
Eliminating Taxes in Bankruptcy
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Written by Craig D. Robins, Esq.Can You Discharge Taxes in Bankruptcy?
Some taxes can be discharged in a personal bankruptcy filing. The most common type of tax that consumers owe is back income taxes. In certain circumstances, they can be discharged. Most other types of taxes cannot be eliminated in bankruptcy.
What Taxes Are Dischargeable In Chapter 7 Bankruptcy?
There is a multi-prong test for determining whether income taxes can be eliminated in a personal bankruptcy filing and this test is rather detailed and complicated.
There is a multi-prong test for determining whether income taxes can be eliminated in a personal bankruptcy filing and this test is rather detailed and complicated.
First Prong: More than three years must have elapsed from the date that the tax return was “last due”. Assuming that no extension request was filed, the income tax is “last due” on April 15th of the following year. It does not matter that you may have filed the tax return a month earlier; the three-year period starts running from the date the return was due — in this case April 15. Extension requests have to be incorporated into the “last due” calculation as well.
Second Prong: The tax return must have been actually filed at least two years prior to the date the bankruptcy petition is filed. Thus, even if more than three years elapsed from the date the return was “last due”, there must be at least two years that elapsed since the date the return was actually filed, before the bankruptcy petition can be filed.
Third Prong: More than 240 days must have elapsed since the date that the IRS “assessed” the tax obligation. Tax assessments are tricky and IRS records and transcripts should be reviewed to determine tax assessment dates.
Other Issues to Consider: The IRS has the right to object to efforts to discharge tax debts if they feel that the taxpayer filed fraudulent returns, willfully attempted to evade taxes, or engaged in a pattern of tax evasion. Also note that even if you can eliminate federal tax obligations that you ow to the Internal Revenue Service, they may still have a lien on your assets if the IRS obtained a federal tax lien. I will address this issue in a future post.
How Do You Eliminate Taxes in a Bankruptcy Proceeding?
It is generally necessary to obtain a determination from the bankruptcy court. This, unfortunately, can be more involved than the bankruptcy itself, as it often entails actually suing the IRS in an “adversary proceeding”, which is a federal lawsuit brought within the bankruptcy case, and heard before the bankruptcy court judge. However, since tax debt is often substantial, it is usually worth the investment. For more information on adversary proceedings, see A Primer on Adversary Proceedings .
What about Discharging New York State Taxes?
The same bankruptcy rules that apply to the IRS also apply to state tax obligations.
What Taxes Cannot Be Eliminated in Bankruptcy Filings?
Most other types of taxes cannot be discharged in a bankruptcy proceeding. These include withholding taxes, fiduciary taxes, excise taxes, and sales taxes. Remember, income taxes, in general, that are less than three years old, cannot be eliminated in bankruptcy.
Discharging taxes in bankruptcy can be rather complicated. Getting advice from an experienced bankruptcy attorney who has actually brought tax dischargeability proceedings is important if you have significant tax obligations.