About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Archive for December, 2009
Yesterday I wrote Bankruptcy Season Is Approaching – Part One and discussed bankruptcy season for consumers. Today, I address the effect of the new year on businesses.
Bankruptcy Season for Businesses
Retailers also keep bankruptcy attorneys busy after the holidays. The holiday season should be a joyous time for retailers. However, when the economy is suffering, which is certainly the case now, some of those retailers who held out for the Christmas rush unfortunately will not make it without bankruptcy assistance.
Sometimes the wait-till-January tactic works if a spike in holiday sales provides sufficient cash to tend the coffers.
Harvard bankruptcy professor Lynn LoPucki studied the January bankruptcy phenomenon. From 1980 to 2008, 105 large public retailers that filed for bankruptcy with assets of more then $100 million, only seven did so in December, giving up the full benefit of a holiday cash infusion.
That was less than half the 18 that did so in January – the most popular filing month for large retailers — and slightly less than the 10 that filed in February after January clearance sales.
It’s a fact that 70 to 80 percent of retail sector bankruptcy filings traditionally take place at the end of the high selling season.
Accountants have tax season. Bankruptcy attorneys have bankruptcy season. With Christmas behind us, it is just a question of a few more weeks before bankruptcy season begins.
Bankruptcy attorneys typically see a seasonal trend of creditors seeking redress, pushing individuals and companies over the edge, keeping bankruptcy professionals busy.
Bankruptcy Season for Consumers
After being a Long Island bankruptcy lawyer for 25 years, I’ve observed that the December holidays lead most people who are troubled with serious debt problems to put off getting help. However, the advent of a new year, combined with the added pressure of bills from holiday purchases, causes many consumers with overwhelming debt to make that appointment to see a bankruptcy lawyer.
From a psychological perspective, there are even those in debt who realize that bankruptcy is inevitable, but take a last fling around the holidays, trying to go out in style and deal with the consequences later. Doing so is not consistent with the good faith that is necessary to go into a bankruptcy filing, but, to the dismay of creditors, the small minority of consumers who engage in such frivolity usually get away with it.
Perhaps another reason for bankruptcy season is the concept of getting a new start for the new year, or making resolutions to find out how bankruptcy can eliminate bills and debts. But whatever the reason, my Long Island bankruptcy law practice always starts picking up in mid-January.
Written by Craig D. Robins, Esq.
This post is part of a series of biographies and profiles of Long Island bankruptcy trustees and judges.
Long Island Chapter 7 Trustee Kenneth P. Silverman enjoys a great deal of respect from the bankruptcy bar who recognize him as a bankruptcy attorney who is not only savvy with large-scale corporate restructuring and Chapter 11 cases, but one who is also familiar with the finer legal issues surrounding consumer cases.
Ken has been a panel trustee in the Eastern District of New York since 1989, where he is assigned cases filed in the Central Islip Bankruptcy Court. He is also a Chapter 7 trustee in the Southern District of New York, where he is assigned cases filed in the New York City Bankruptcy Court in Bowling Green.
Ken is the founding partner of the bankruptcy and commercial litigation firm, Silverman Perlstein & Acampora, in Jericho, New York. He began that firm in 1999 when he broke away from the Garden City firm of Jaspan Schlesinger Hoffman. The firm is currently known as SilvermanAcampora LLP.
Ken obtained his bachelors degree from Syracuse University in 1974, and his law degree from New York Law School in 1980.
He is very active in the bankruptcy bar and frequently lectures on a variety of issues. He previously served as an Adjunct Professor of Law at the St. John’s University School of Law in its Bankruptcy LL.M. Program.
Ken has been appointed to liquidate a number of prominent Chapter 11 cases after they were converted to cases under Chapter 11. He has also been a mediator on the Register of Mediators for the United States Bankruptcy Court for the Southern District of New York.
Ken is currently administering the high profile case of Agape World involving disgraced financier and alleged ponzi schemer Nicholas Cosmo. See my earlier post about that case: Ken Silverman Appointed Chapter 7 Trustee in Agape World Case .
Ken has a reputation of being a highly knowledgeable Chapter 7 trustee who tends to be fair and realistic, and who is usually guided by sound business judgment.
I took the photo of Ken at a recent Bar Association event.
Here’s Ken’s contact info:
Kenneth P. Silverman, Esq.
SilvermanAcampora LLP
100 Jericho Quadrangle
Jericho, NY 11753-3302
Phone: (516) 479-6300
SilvermanAcampora LLP
100 Jericho Quadrangle
Jericho, NY 11753-3302
Phone: (516) 479-6300
Written by Craig D. Robins, Esq.Judges Have Had It with Foreclosing Mortgage Companies Who Skirt the Rules
When I discussed Judge Spinner’s recent case in the Suffolk County Supreme Court in which he canceled the IndyMac mortgage of a Long Island family, I indicated my opinion that the tides had changed in the way judges look at banks. See Judge Cancels Mortgage Due to Mortgagee’s Shocking Behavior in Long Island Foreclosure Action.
A Wall Street Journal article on December 24, 2009, provided great support for this proposition. The article mentioned the Judge Spinner decision and concluded that such cases demonstrate a new phase in the judiciary’s battle to stem the rising tide of foreclosures by punishing mortgage companies for paperwork mistakes and alleged mistreatment of borrowers.
The article highlighted a handful of cases in which state and federal judges presiding over foreclosures are going to the extraordinary lengths of wiping away borrowers’ mortgage debt, invalidating foreclosure sales and even barring some foreclosures outright.
The Current Economic Climate Is Adding to Judges’ Desires to Help the Homeowner, Thus Creating a New Breed of Activist Judges
Todd Zywicki, a law professor at George Mason University, who was interviewed for the article, questioned whether judges are changing the rules in the middle of the game . . . just because there is a financial crisis.
Apparently, about a year and a half ago, judges in foreclosure cases would routinely dismiss foreclosure cases if they could find reason to do so. But those judges usually permitted the banks and mortgage companies to refile their foreclosure proceedings after correcting any paperwork mistakes that they previously made.
Apparently, about a year and a half ago, judges in foreclosure cases would routinely dismiss foreclosure cases if they could find reason to do so. But those judges usually permitted the banks and mortgage companies to refile their foreclosure proceedings after correcting any paperwork mistakes that they previously made.
However, the times have changed. Now, after the country has been mired in a housing crisis for several years, more and more judges are penalizing lenders on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.
It seems that the national housing problem has actually propelled some jurists to become activist judges who seek to protect the underdog homeowner from the evils of indifferent, careless and sloppy mortgage companies.
In my own Long Island foreclosure defense practice, this has become evident as we have been able to successfully persuade the court to dismiss foreclosure suits because we called attention to the lender’s defective paperwork. For example, in a recent case, the lender failed to demonstrate that they had legal standing. This is because the lender neglected to properly perfect some mortgage assignment documents with the County Clerk.
Mortgage Companies Have Not Been Filing Proper Documents and Are Now Paying the Price
The Wall Street Journal article commented that many of the recent foreclosure case decisions that punished the lender highlighted what became a common practice among mortgage companies: filing a foreclosure lawsuit without showing proof that they actually own the mortgage and have the right to foreclose. This occurs in large part because mortgages often change hands multiple times after the original mortgage loan is made; yet the mortgage transfer documents are never revised to reflect those changes. Consequently, years later, it can be difficult to verify who is the owner of the mortgage.
The article quoted Raymond Brescia, an assistant professor at Albany Law School, who said that it makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court.
Massachusetts Judge Invalidates Foreclosure Sale Held Two Years Ago
There was another controversial ruling in October by Keith Long, a state-court judge in Massachusetts. Judge Long invalidated two foreclosure sales that had occurred more than two years ago because the mortgagees, U.S. Bancorp and Wells Fargo & Co., never had the right to sell the homes.
Judge Long ruled that even though the mortgage companies physically held the relevant mortgage documents, the mortgages were never legally assigned to them and recorded with the state. As such, they were selling something they don’t own, despite the fact that the mortgagees may have been operating in the same way they have done so for the past decade or two.
Most mortgage foreclosures continue to be routinely processed by the courts because the homeowners neglect to take steps to protect their rights. The proceedings go unchallenged. However, any Long Island homeowner who has fallen behind with their mortgage payments, and who has been served with foreclosure papers, should consider consulting with a Long Island foreclosure defense attorney to learn how to protect their rights.
Most mortgage foreclosures continue to be routinely processed by the courts because the homeowners neglect to take steps to protect their rights. The proceedings go unchallenged. However, any Long Island homeowner who has fallen behind with their mortgage payments, and who has been served with foreclosure papers, should consider consulting with a Long Island foreclosure defense attorney to learn how to protect their rights.
Written by Craig D. Robins, Esq.The Debtors Filed 10 Bankruptcy Cases to Delay the Foreclosure
A decision issued Monday by Judge Alan S. Trust, sitting in the Central Islip Bankruptcy Court for Eastern District of New York, outlined the excessive measures taken by two Long Island debtors who filed a total of ten bankruptcy petitions over a 12 year period in an effort to stop the foreclosure of their jointly-owned home.
Most of these bankruptcy filings were Chapter 13 cases filed over a four-year period between 2005 and 2009. Almost all of them were filed on the eve of a scheduled foreclosure sale.
Judge Trust issued the decision in each of two separate cases: In re Janet Blair (Case No. 09-76150-ast) and In re Allen Gary Smith (Case No. 09-77562-ast).
The decision was precipitated by a motion brought by Barbara Dunleavy, Esq. of the Nassau County foreclosure law firm, Rosicki, Rosicki & Associates, in which she sought in rem relief against the premises, located in Wyandanch, New York.
“In Rem” Relief in Bankruptcy Proceedings
“In rem” relief is when a mortgagee seeks a court order indicating that the bankruptcy stay that arises in any further bankruptcy cases will not affect a particular piece of property. At the conclusion of the hearing on the mortgage company’s motion, which occured on November 24, 2009, Judge trust lifted the stay to enable the mortgagee to proceed, but reserved decision on the issue of granting in rem relief.
At that bankruptcy court hearing , Mr. Smith conceded that he was really looking to stay in the house for as long as he could. That did not bode to well for the the debtors, as the judge concluded that the serial filings were evidence of the debtors’ bad faith, and also evidendce of the fact that the debtors were abusing the bankruptcy process for several years.
The decision issued yesterday, which granted in rem relief, will now make any further bankruptcy filings by these debtors or any others useless, as far as staying the pending foreclosure proceeding.
It was interesting that Judge Trust did not sanction the debtors for their conduct.
More Posts and Articles About In Rem Bankruptcy Relief to Follow
In his decision, Judge Trust provided an interesting and detailed discussion about the law which enables a bankruptcy court to grant in rem relief. I will likely make that the topic of my January 2010 article which will be published in the Suffolk Lawyer, and I will discuss the new statutory aspects set forth in BAPCPA as well as case authorities for granting in rem relief.
Written by Craig D. Robins, Esq.
This post is part of a series of biographies and profiles of Long Island bankruptcy trustees and judges.
Long Island Chapter 7 Trustee Marc A. Pergament has been a panel trustee in the Eastern District of New York since 1990, where he is assigned cases filed in the Central Islip Bankruptcy Court.Marc graduated from Brooklyn College in 1977 with a B.A. cum laude. He attended Rutgers University Law school, graduating in 1980.
Marc tends to be quite busy with both cases that he administers as trustee, and bankruptcy and commercial litigation cases in private practice. He is a founding partner of the Garden City law firm, Weinberg, Gross & Pergament LLP which was created in 1987.
Prior to that, Marc was a trial attorney for the United States Department of Justice, in their Antitrust Division, from 1980 to 1983.
He was previously involved as a coordinator and treasurer for 13 years with the Notre Dame Catholic Youth Organization in Nassau County.
Marc speaks frequently at various bankruptcy seminars and bar association events and is well-regarded for his expertise with bankruptcy law and procedure, especially matters pertaining to litigation.
As a trustee, he has a reputation of being an aggressive and demanding litigator who is not afraid of taking chances.
Here’s Marc’s contact info:
Marc A. Pergament, Esq.
Weinberg, Gross & Pergament LLP
400 Garden City Plaza, Suite 403
Garden City, NY 11530
Phone: (516) 877-2424
Weinberg, Gross & Pergament LLP
400 Garden City Plaza, Suite 403
Garden City, NY 11530
Phone: (516) 877-2424
Written by Craig D. Robins, Esq.Income is a very important factor in determining whether a consumer can file for Chapter 7 bankruptcy. However there is no ceiling or cut-off point for any particular salary level.
That is because the bankruptcy means test determines Chapter 7 eligibility, involving a number of different variables and calculations, income being only one of them. A high amount of income, by itself, is not determinative of precluding one from filing for Chapter 7 relief.
The means test not only looks at salary, but also looks at a debtor’s various expenses and other variables. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case .
Some debtors who have family incomes below a certain amount automatically qualify for Chapter 7 bankruptcy filing. See my post: Bankruptcy Means Test Figures To Be Updated for New York Consumers.
I regularly represent many debtor’s who earn over $100,000 a year. This year we’ve filed a great number of Chapter 7 cases in which the family income ranged from the 130,000 level to close to $200,000. Earlier this year I wrote a post entitled, Can You File Chapter 7 Bankruptcy on Long Island With a Family Income of $200,000 a Year?
Individuals with high incomes frequently pass the means test when they have several of the following situations:
• large family size
• one or more elderly relatives who are dependants
• large mortgages
• two car loans or leases with significant payments and many months remaining
• significant contributions towards health or life insurance
• significant child-care expense
• large amounts of non-dischargeable income tax debt
All of the above variables act as means test deductions that enable consumers with high incomes to reduce the amount of their disposable income, which is the key factor in ascertaining Chapter 7 eligibility.
For those with high income, preparing the means test and evaluating the results is the only way to determine if they are eligible to file for Chapter 7 bankruptcy. Also see my post: If I Make Over $100,000 a Year, Can I Eliminate Credit Cards Debts in Bankruptcy?
Finally, even if a consumer does not initially pass the means test, there is still hope for filing a bankruptcy petition: Options If You Fail the Bankruptcy Means Test .
Written by Craig D. Robins, Esq.Most clients who we represent do indeed pass the means test in Chapter 7 bankruptcy cases. I would say that at least seven out of eight people who desire to file for Chapter 7 bankruptcy on Long Island are eligible to do so because they pass the means test.
The means test is a formula and bunch of calculations designed to ascertain whether someone has too much income to be eligible to file for Chapter 7 bankruptcy. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case.
So What Are Your Options If You Do Not Pass the Means Test, and You Hope to File for Chapter 7 Bankruptcy?
Fortunately, there are several possibilities, and disposing of debt through a bankruptcy proceeding usually remains an option in one form or another.
Waiting to Become Eligible for the Bankruptcy Means Test Later
Sometimes, someone does not pass the means test because they received a large amount of money in the prior six-month means test period. The means test requires that you include all income that you received in the six full-calendar month period prior to filing. (You don’t include income that you received in the month that you file).
The most common example of a large amount of non-recurring income is a tax refund. Suppose you received the tax refund in May. Then you must count the tax refund in the means test calculation as long if you file your petition between June and November of that year. If you have to include the tax refund, it will have the effect of artificially boosting your income for that period.
However, if you just wait until December or later, then you will not have to include the tax refund as part of the six-month income for the means test calculation.
There are other reasons why waiting to file bankruptcy can help. Some people previously earned a larger amount of income several months ago, but no longer have the ability to earn at the same level for various reasons.
It might be that they were laid off (or their spouse was laid off); or they can no longer earn overtime; or their income will be reduced for other reasons like a new job that doesn’t pay as much.
In such instances, waiting a few months can mean the difference between passing the bankruptcy means test or not.
Engaging in Financial Transactions That May Make You Eligible Under the Bankruptcy Means Test
An experienced bankruptcy attorney is also familiar with all of the intricacies of the means test, and can often recommend other possible ways that may enable a consumer to become eligible.
For example, there is currently an issue as to whether an attorney can recommend to a client that he or she incur debt in contemplation of filing for bankruptcy (This issue is actually before the United States Supreme Court right now).
In any event, if a debtor obtains a new car loan or lease just before filing, the amount of the new monthly car payment can be included as a means test deduction, and this can possibly make the difference between passing the means test or not.
This is just one of several financial transactions that one can do that may make have the effect of qualifying you for Chapter 7 bankruptcy filing under the means test. A good bankruptcy attorney may also suggest other possibilities.
Filing Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy
Most people who do not qualify for a Chapter 7 bankruptcy filing because they did not pass the means test can still file for Chapter 13.
If they do, they still get immediate debt relief through the same automatic bankruptcy stay that stops all creditor action in Chapter 7 cases. However, they will have to pay something to their creditors, usually over a five-year period of time. This is done by making monthly payments to a Chapter 13 trustee.
The good news, though, is that frequently, the amount paid back is a small fraction of the amount owed — sometimes as little as ten percent.
When No Bankruptcy Offers a Feasible Solution, Debt Settlement Can Be the Answer
Very few of our clients who desire to file bankruptcy do not qualify for one chapter or another. However, there is always an option for those who can’t file bankruptcy or do not want to file. That is debt settlement.
Debt settlement, which is not to be confused with debt consolidation, is when we negotiate settlements with the credit card companies (or their collection attorneys), often for less than 50%, and frequently for as little as 25%.
Doing so, however, requires the ability to fund lump-sum settlements, as the best credit card settlements are only available when the settlement amount is paid in full.
No One Ever Said that the Means Test in Bankruptcy Was Fair
To the contrary, the means test was the most controversial aspect of bankruptcy reform when the laws were changed about four years ago.
The means test tends to actually reward those with significant secured debt by making it easier to qualify for Chapter 7 filing. Thus, if you have a high mortgage and several car loans or car leases, it is easier to pass the means test and be eligible to file for Chapter 7 bankruptcy.
An Experienced Long Island Bankruptcy Attorney Can Evaluate Your Means Test Eligibility
The means test is rather complex and complicated. Retaining an experience bankruptcy attorney is your best way to ascertain whether you qualify for Chapter 7 bankruptcy filing, and if not, to learn what your other options are.
To see a bunch of other posts that I’ve written about the means test, please click : Information about the bankruptcy means test.
Written by Craig D. Robins, Esq.After reading a recent New York Times article about stock market jitters caused by worried consumers, I wondered if the stock market indexes could be used as a barometer to predict future personal bankruptcy filings.
After all, we have often heard that the fear on Wall Street is that nervous consumers can short-circuit the country’s economic recovery, which is just starting to pick up, despite the fact that consumer bankruptcy filings continue in very high numbers.
When consumer sentiment falls significantly short of expectations, which is what happened towards the end of the summer (before a slight rebound), it was a sign that consumers were cutting back on their spending as they worried about layoffs. With unemployment approaching ten percent, many consumers are growing increasingly concerned about losing their jobs, assuming they still have them.
Job loss is one of the major reasons why consumers file for bankruptcy help. I see this daily in my Long Island bankruptcy practice, meeting one person or another who has lost a job, lost the ability to work overtime, or has a family member who was laid off.
Although the stock market is indeed rebounding, I would conclude that the ebbs in the stock market have a rebound effect and lead to increased consumer bankruptcy filings several months (or even years) later, as consumers face job loss or the effects of reduced income.
Written by Craig D. Robins, Esq.This post is part of a series of biographies and profiles of Long Island bankruptcy trustees and judges.
Few trustees are as involved with Bar Association activities, pro bono work, and giving back to the legal profession as Andy, who has been a Chapter 7 trustee since 1990 on cases in the Central Islip Bankruptcy Court, which is in the Eastern District of New York.
As a trustee, Andy is widely respected by the bench and bar for his knowledge and easy-going, yet authoritative demeanor.
For ten years, Andy’s office was directly one floor above mine when we both had offices in the same building in Westbury, during a time when the Bankruptcy Court was located half a block away from us.
He has been very involved in the Nassau County Bar Association and he served as Dean of the Nassau Academy of Law in 2001 to 2002, and also served on the Bar Association’s Board of Directors from 2002 to 2005. He is a former chairman of the Nassau County Bar Association Bankruptcy Law Committee.
In addition, Andy and I co-founded the Nassau County Pro Bono legal services project for bankruptcy in 1991. That year, the Bar Association honored him as Pro Bono Attorney of the Year. Later, in 2003, he was co-recipient of the Partners in Justice Award from Nassau/Suffolk Law Services for his pro bono work, along with Chapter 7 trustee Richard L. Stern. He was named Pro Bono Attorney of the Month by the Nassau County Bar Association in September 2007.
Andy and I both serve on the Board of Directors for the Theodore Roosevelt American Inn of Court. Since 2002 he has been the Inn’s Continuing Legal Education Program Coordinator. Andy and I have also served together as panelists for several bankruptcy seminars over the years. We gave a presentation at the Bar Association in October, and we are also giving another presentation scheduled for February.
In addition to bankruptcy matters, Andy also represents clients with commercial litigation. He is a founding partner of the East Meadow law firm, Thaler & Gertler, LLP, and currently serves as its managing partner.
Andy is also a mediator and serves on the Mediation Panel for the Bankruptcy Court (Eastern District of New York).
Andy graduated Magna Cum Laude from State University of New York at Albany in 1979 where he majored in sociology. He attended SUNY Buffalo Law School, graduating in 1983. He was admitted to the New York bar in 1984.
Despite a very busy schedule, Andy finds time for tennis, gardening, the beach, and his family. He has two children in college and recently took up the guitar so that he could play with his son.
If you have a case with Andy, you can be assured of being treated fairly and with respect.
Here’s Andy’s contact info:
Andrew M. Thaler, Esq.
Thaler & Gertler, LLP
90 Merrick Avenue, Suite 400
East Meadow, NY 11554
Phone: (516) 228-3553
Thaler & Gertler, LLP
90 Merrick Avenue, Suite 400
East Meadow, NY 11554
Phone: (516) 228-3553