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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 December, 2009

Long Island Country Club Files for Bankruptcy — The Woodcrest Club

Posted on Friday (December 18, 2009) at 1:00 am to Chapter 11 Filings on Long Island
Current Events
Long Island Economy

Long Island Chapter 11 bankruptcy for Woodcrest Country Club in Syosset, New YorkWritten by Craig D. Robins, Esq.
 
The economy is affecting country clubs, too.  After last year’s Wall Street meltdown, country clubs have been hard hit. 
 
Long Island country clubs have been dealt an especially hard blow as many of Bernie Madoff’s investors reside here, and after they have lost big bucks, they no longer have the necessary funds to pay for luxuries like five-figure country club membership fees.
 
The Woodcrest Club, Inc., located in Syosset, New York, filed for Chapter 11 relief on December 10, 2009 in the United States Bankruptcy Court for the Eastern District of New York, in Central Islip.
 
The club’s membership dropped down to just 125 members, from about 300 this past summer.  The Club, which is on 107 prime acres on Long Island’s North Shore, has more than $1 million in unpaid vendor bills and employee wages.
 
The club also incurred large debt from a recent multi-million renovation of its facilities.  To compound the club’s problems, its mortgage contains covenants that are cost prohibitive to incurring subordinated debt or re-financing outside of bankruptcy.
 
Club Member is a White Knight in this Chapter 11 Bankruptcy
 
One of the members came through as a white knight to try to rescue the club.  John Bennardo, a general contractor and resident of Cold Spring Harbor, who’s been a member since 2002, agreed to lend the club, as a debtor-in-possession, about $2 million.  In doing so, he would also become the Woodcrest Club’s general manager and run it for at least five years.    Bennardo is the owner of Manhattan-based Legacy builders.
 
The case is pending under Case No. 09-79481 before Judge Dorothy T. Eisenberg.  The debtor’s attorney is Gerard R. Luckman of the SilvermanAcampora LLP firm in Jericho, New York.  This is the firm of Long Island Chapter 7 trustee Kenneth Silverman.
 
Technically, the debtor is a non-profit, member-owned corporation.  The debtor currently employs twenty-seven employees and has five officers.
 
The Debtor holds title to approximately 107 very desirable acres of real property in the exclusive Village of Muttontown, with a current approximate value of $18,000,000.
 
The Debtor’s Liabilities Include Taxes Owed to Uncle Sam From a Hole-in-One Contest
 
The Debtor’s liabilities total approximately $9,787,000, of which approximately $57,341 is for priority unsecured vacation pay, and approximately $12,900 of withholding taxes owed to the Internal Revenue Service from a hole-in-one contest winner — perhaps the most unusual debt I’ve come across in a bankruptcy proceeding in quite some time.
 
There is approximately $6,624,000 owed to secured creditors. The balance is owed to general trade creditors, arrears on equipment leases, and members that have already paid toward 2010 dues.
 
At the time of filing, there were four pending actions against the debtor, with the following parties as plaintiffs: (i) Wheatley Bakery 2 Inc.; (ii) Sigis Pastry Shop; (iii) Encore Events; and (iv) Big Z. Beverage.
 
The Meeting of Creditors is being held on January 5, 2010 in Room 561 at the Central Islip Bankruptcy Court.  Hearings on post-petition financing and first-day orders occurred earlier this week.  An order authorizing the payment of pre-petition employee wages was signed today.  A status conference before Judge Eisenberg is scheduled for January 14, 2009 in Courtroom 760.
 
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Foreclosure Law Discussed by Four Suffolk County Supreme Court Judges

Posted on Thursday (December 17, 2009) at 1:15 pm to Current Events
Foreclosure Defense
Lawyer to Lawyer
Mortgages & Sub-Prime Mortgage Meltdown
Suffolk Lawyer

Suffolk County Supreme Court Judges Hon. Jeffrey Spinner, Hon. Peter Mayer, Hon. Ralph Costello, and Hon. Thomas Whelan

Suffolk County Supreme Court Judges Hon. Jeffrey Spinner, Hon. Peter Mayer, Hon. Ralph Costello, and Hon. Thomas Whelan

Written by Craig D. Robins, Esq.

 

Four Suffolk County Supreme Court judges presented a views-from-the-bench program on December 9, 2009 about Mortgage foreclosure.  The well-attended seminar at the Suffolk County Bar Association had over 100 participants.  Cheryl Mintz was the moderator.
 
The program enabled the judges to provide some important insight into the rapidly-growing area of foreclosure litigation, especially considering a flurry of new legislation dealing with foreclosure procedural law and practice.
 
Foreclosure Caseloads Putting Strain on Court
 
Judge Ralph F. Costello commented on the lack of a sufficient number of Supreme Court judges that are necessary to adjudicate the ever-increasing number of foreclosure cases.  He acknowledged the difficulty that the Office of Court Administration would have to provide additional judgeships, but felt that it was entirely reasonable to find budgeting to enable each judge to hire a second full-time law clerk. Doing so, he believed, would enable each judge to double their caseload.
 
There was an in-depth discussion about Governor Patterson’s new comprehensive foreclosure legislation which was just passed last month.  The bill will greatly strengthen protections for homeowners, tenants and even neighborhoods, which can be plagued by blight.
 
Issue of Mortgagee’s Standing Is Becoming Increasingly Litigated
 
Judge Peter H. Mayer discussed the concept of standing and assignment, which is becoming an increasing source of consternation for mortgage companies.  Apparently, there are many problems resulting from the sale of mortgages on the secondary mortgage market.  Many foreclosing plaintiffs lack standing to bring the foreclosure suit, which can result in the dismissal of the case.
 
What a Foreclosure Judge Looks For
 
Judge Thomas F. Whelan broke his discussion into two sections, dealing with how the Court responds to foreclosure matters if an answer is filed, and if no answer is filed.  He discussed the importance of asserting affirmative defenses if available, and also addressed the new Request for Judicial Form that is now used in foreclosure actions.
 
He also discussed how the law clerks review cases to make sure that certain prerequisites have been met, such as adherence to the relatively-new 90-day foreclosure notice rule, whether parties appeared at mandatory settlement conferences, whether the subject property is owner-occupied (if so, special protections under the new statute exist), and whether additional default notices as required by the CPLR have been provided.
 
Mandatory Foreclosure Settlement Conferences
 
Judge Jeffrey Arlen Spinner, who is in charge of the Mortgage Foreclosure Conference Part, discussed the relatively new requirement of mandatory settlement conferences for all foreclosure proceedings involving sub-prime mortgages.
 
“My role as a judge is to be impartial.  I try to broker a settlement, if that’s at all possible,” said the judge.  He commented on the high number of these conferences, now numbering between 100 and 120 each Tuesday, saying “we’re buried in cases; we’re buried in motions.”
 
Ray Vorhees, Law Secretary to Judge Mayer, also addressed the audience to highlight the fact that the legislative intent of these various statutes is to protect homeowners, and that the court must and will honor the import of such legislative intent.
 
Judge Spinner’s Controversial Horoski Decision Which Canceled Mortgage
 
Towards the end of the evening, Cheryl Mintz asked Judge Spinner to comment on the case everyone wanted to hear about – Horoski – and the audience expressed their excitement.  This was the very recent case in which the Judge totally cancelled the mortgage in a foreclosure proceeding citing the bank’s egregious conduct. [See Judge Cancels Mortgage Due to Mortgagee’s Shocking Behavior in Long Island Foreclosure Action ].
 
Judge Spinner, however, mentioned a prohibition on commenting publicly on any case that is pending.  He did mention that a new issue had arisen in the case which will result in the matter appearing before him on his calendar in the next few weeks.
 
In response to some pressing commentss about the case from one rather-insistent attendee, Judge Spinner did mention that his decision was one that is based in equity, rather than one based on law.
 
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 December 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 Patchogue, 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.
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Bankruptcy Song: “Debt-Free Girl”

Posted on Wednesday (December 16, 2009) at 12:15 pm to Bankruptcy Humour
Chapter 7 Bankruptcy
In The News
Lawyer to Lawyer

Long Island bankruptcy attorney Craig D. Robins enters Bankruptcy Song Contest wtih Written by Craig D. Robins, Esq.
 
Yours Truly Enters the National Bankruptcy Song Contest
 
Well the deadline for the Bankruptcy Bill Bankruptcy Song Contest has arrived and nine songs are competing for awards and recognition — including my song, “Debt-Free Girl,” and two other surprises.
 
The first surprise is that my wife, Arlene, submitted a song.  Since she is especially witty (she writes song parodies for my birthday almost every year, and also for lots of her friends), I challenged her to submit something.  So she surprised me by submitting “Bankruptcy Wife’s Lament” which is about a bankruptcy attorney who neglects his wife and son because he is so busy.  That apparently is me.
 
The second surprise is that our very own Central Islip Bankruptcy Court Judge, Alan S. Trust, also submitted an entry, “Debts in Wrong Places.”  Hailing from Texas for the past 24 years, it was no wonder that Judge Trust submitted a country music song based on Garth Brook’s “Friends in Low Places.”  His song pokes fun at the ridiculous aspects of the bankruptcy means test.
 
There are other songs from other bankruptcy attorneys and a bankruptcy judge in California, Sheri Bluebond.
 
My song, “Debt-Free Girl” is based on Billy Joel’s “Uptown Girl” and is about a girl who becomes debt-free through bankruptcy, thanks to her bankruptcy man.
 
A Shameless Request for Votes – Please Vote for My Bankruptcy Song
 
The winner of the bankruptcy song is the one with the most votes.  To vote, you must send an e-mail to Bill@BankruptcyBill.us.  You can include your choice for first, second and third place.
 

“DEBT-FREE GIRL”


(To the tune of Billy Joel’s “Uptown Girl“)

Oh wo oh oh oh oh oh oh. . . . .
Debt-free girl
She’s now living in a whole new world
No more bills or late-night collection calls
It is because – she finally got the balls

To become – a real debt-free girl
No more living in a creditor world
As long as anyone with bad debts can
Make an appointment with the bankruptcy man
That’s what I am

And when she learns that
She won’t have to pay
And then she can wake up
Stress free – there’s a stay

She’ll see it’s not so tough
Just because
I’ve made her into a debt-free girl
Filed her petition; no more creditor world
She got tired of the collection calls
Perhaps she overspent at stores and malls
She’s got a choice

Oh wo oh oh oh oh oh oh. . . . .
Debt-free girl
She filed a seven; now it’s her turn
She kept her assets – they were all exempt
Trustee overlooked the money she spent
It’s what she dreamt

She passed the means test
It’s really no big deal
Her lawyer knew best
Assisted with credit counseling

It’s really not so tough
To discharge
Lots of bills
Of a debt-filled girl
She’s been living in a bill-collecting world
As long as anyone with big debt can
And now she’s looking for a bankruptcy man
That’s what I am
[Oh wo oh oh oh oh oh oh. . . . .]

Debt-free girl
She’s my debt-free girl
You know I love to see
A real debt-free girl

My debt-free girl
Did you know I love to see
A real debt-free girl

My debt-free girl
Did you know I love to see
A real debt-free girl

 

 

*******************************************************

 
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Bankruptcy Song: “A Bankruptcy Wife’s Lament”

Posted on Wednesday (December 16, 2009) at 12:00 pm to Bankruptcy Humour
Current Events
Lawyer to Lawyer

Craig D. Robins' wife wrote a bankruptcy song about the laments of being the wife of a busy bankruptcy attorneyWritten by Craig D. Robins, Esq.
 
I am quite proud to post the song my wife, Arlene Gross Robins, wrote for the Bankruptcy Bill song contest.
 
Arlene, a full-time newspaper reporter, is especially witty and regularly writes song parodies and satire for her family and friends.
 
Her song is one of nine in the song competition which also includes songs by my Long Island Bankruptcy Judge Alan S. Trust (Debts in Wrong Places), which pokes fun at the bankruptcy means test, and by me (Debt-Free Girl) about a debt-free girl whose bankruptcy man has eliminated her debts.
 
Click on this link to see the original version of Sunrise Sunset on Youtube.
 
 
  

“A BANKRUPTCY WIFE’S LAMENT”

(To the tune of “Sunrise, Sunset” from “Fiddler on the Roof”)

Once I had a hubby who’d come home nights
We’d have our dinner; share a song
Life was so happy – filled with de-lights
What went wrong?

[REFRAIN]
Chapter seven
Chapter thirteen
Filing is his life
Rescuing clients from their huge debts
At the expense of his son and wife

When the BAPCPA laws were changed in ‘05
I thought we’d have a nice reprieve
Debtors would no longer discharge their debts
Or so, I did believe

Chapter seven
Chapter thirteen
Filing is his life
Rescuing clients from their huge debts
At the expense of his son and wife

But now there were hurdles one must jump through
Credit counseling and a means test: de rigeur
Lawyers learned laws like they were brand new
And, thus, charged more

Chapter seven
Chapter thirteen
Filing is his life
Rescuing clients from their huge debts
At the expense of his son and wife

For a few years our son got to know his poppa
Then the economy went bad
Now dad works 24/7, non-stopp-a
And we’re so sad

Chapter seven
Chapter thirteen
Filing is his life
Rescuing clients from their huge debts
At the expense of his son and wife

As the recession slowly recedes
We’re hoping our attorney will come home
If not there’s divorce settlement proceeds
Either way, I’m raising our son alone

Chapter seven
Chapter thirteen
Filing is his life
Rescuing clients from their huge debt
At the expense of his son and wife

 

**************************************************************

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Bankruptcy Song by Judge Alan S. Trust: “Debts in Wrong Places”

Posted on Wednesday (December 16, 2009) at 11:45 am to Bankruptcy Humour
Central Islip Bankruptcy Court & Judges
Current Events
Lawyer to Lawyer

Long Island Bankruptcy Court Judge Alan S. Trust enters bankruptcy song contestWritten by Craig D. Robins, Esq.
  
Our very own bankruptcy judge from Long Island, Alan S. Trust, sitting in the Central Islip Bankruptcy Courthouse in the Eastern District of New York, has entered the Bankruptcy Bill Song Contest
 
His song is one of nine in the song competition which also includes songs by my wife, Arlene, about being neglected by a hard-working bankruptcy attorney (A Bankruptcy Wife’s Lament), and by me (Debt-Free Girl) about a debt-free girl whose bankruptcy man has eliminated her debts.
 
Judge Trust, who usually tries to inflect his courtroom proceedings with subtle humour, poked great fun at the means test.  
 
To get the tune in your head, click on this link to see a version of Friends in Low Places on Youtube.
 
 
 

“DEBTS IN WRONG PLACES”


(To the tune of “Friends in Low Places,” with apologies to Garth Brooks)

To see the actual lyrics, please visit the Bankruptcy Bill site by clicking this link:   “Debts in Wrong Places

************************************************************** 

 

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Kenneth I. Kirschenbaum, Long Island Chapter 7 Bankruptcy Trustee

Posted on Friday (December 11, 2009) at 10:30 pm to Bankruptcy Trustee Profiles

Long Island Chapter 7 bankruptcy trustee Kenneth I. Kirschenbaum, handles cases in the Eastern District of New York, Central Islip Bankruptcy CourtWritten by Craig D. Robins, Esq.
 
 
Long Island Chapter 7 bankruptcy Trustee Kenneth Kirschenbaum has the distinction of being the senior-most member of the panel of Chapter 7 trustees for the Eastern District of New York for cases assigned to the Long Island Bankruptcy Court in Central Islip.  He has been on the panel since 1978.
 
For a few years in the early 1980s, Ken also served as a Chapter13 trustee in the Brooklyn Bankruptcy Court.
 
The Early Years
 
Ken grew up in Nassau County and attended Herricks High School.  He then graduated from Adelphi University with a major in psychology in 1970.  This led to jobs at Creedmoor Psychiatric Center and the Maimonides Institute in Far Rockaway where he taught emotionally disturbed students for a year as he attended a graduate program for a Masters Degree in Clinical Psychology at St. Johns University.
 
After one year there he attended Brooklyn Law School – his father’s alma matter – and the law school where he much later sent his daughter, Jennifer, to get her law degree.  He received his law degree in 1974.
 
In 1977 he formed a partnership with his father, who Ken says was a role model.  Their firm, Kirschenbaum and Kirschenbaum P.C., is located in Garden City.
 
His law firm has developed a national reputation for representing companies in the burglar and fire alarm industry, and a significant portion of his practice is devoted to that.
 
Ken Kirchenbaum as a Bankruptcy Trustee
 
As a trustee, Ken has a reputation for actively and vigorously pursuing assets large and small, even those that may have a relatively low non-exempt value, especially cars.  He is known to rely heavily on his associates.
 
He is also the only trustee on the panel of Chapter 7 trustees in the Central Islip Bankruptcy Court who has a long laundry list of items that he requires debtors to produce before he will meet with them at the meeting of creditors.  These include bank statements, credit card statements, certificates of title to cars, copies of deeds, and homeowners insurance policies.
 
 
He was also the trustee in another interesting case that I wrote about for the Suffolk Lawyer:  Dying Octogenarian’s Secret Drives Spouse Into Bankruptcy .
 
 Mr. Kirschenbaum’s wife, Lois Kirschenbaum, is a well-known real estate broker.  They have  two grown children including Jennifer Kirschenbaum, who is an attorney in her father’s firm. 
 
Ken is a former board member at his temple and director of the Old Westbury Horseman’s Foundation. Once an avid horseback rider, he now spends his recreational time pursuing golf.
 
Ken is the only person I know who drives a Rolls Royce.  He lives in Nassau County.
 
Here’s Ken’s contact info:
 
Kenneth I. Kirschenbaum, Esq.
200 Garden City Plaza
Garden City, NY 11530
Phone: (516) 747-6700
 
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Profiles of All Long Island Bankruptcy Trustees, Judges and Key Players in the Long Island Bankruptcy Court (Eastern District of New York)

Posted on Friday (December 11, 2009) at 4:30 pm to Bankruptcy Trustee Profiles
Central Islip Bankruptcy Court & Judges
Info on Bankruptcy and the Court
Lawyer to Lawyer

Information about each Chapter 7 bankrutpcy trustee and bankruptcy judge in the Long Island Bankruptcy Court, Eastern District of New York (Central Islip)Written by Craig D. Robins, Esq.
 
Everyone these days is Googling everyone else.  Many of my Long Island bankruptcy clients have commented to me that they have searched the internet for information about their bankruptcy judge and trustee.
 
People want to know about the judges and trustees they have to appear before.  Often a debtor wants to know more about their trustee after having interacted with him or her for the first time at the meeting of creditors.  Sometimes colleagues who do not regularly practice in the Central Islip Bankruptcy Court contact me to inquire about what I know of a certain judge or trustee.
 
And even those who regularly practice in our court are curious about the backgrounds of those they regularly appear before.  Some of my readers have suggested that I provide something along the line of biographies of those affiliated with the bankruptcy court.
 
I have therefore decided to post profiles of all of the key players in Central Islip Bankruptcy Matters — the trustees, the judges, and eventually, perhaps, some others. 
 
The Central Islip Bankruptcy Court, which is one of the two bankruptcy courts in the Eastern District of New York, currently has a panel of nine chapter 7 trustees, two standing Chapter 13 trustees, and three bankruptcy judges.
 
I previously posted an article about Long Island Chapter 7 Bankruptcy Trustees  which contained a list of all of the Chapter 7 trustees that are currently on the Chapter 7 panel for the Eastern District of New York and assigned to the Central Islip Bankruptcy Court, as well as those who are no longer on the Chapter 7 panel.
 
Most of the information I’ll be providing is public information and readily accessible to anyone willing to spend the time to do so.  Obviously I don’t want to provide any sensitive personal information.  However, I will try to offer some of my own opinions about each trustee I profile.
 
In addition, with each trustee, I will also post contact info such as their office address and phone number.
 
The first post will be about our senior-most Chapter 7 trustee, Ken Kirschenbaum, who has a particularly colorful background.  All trustee profiles will be accessable on the page, Long Island Bankruptcy Trustee Profiles , which you can get to by clicking the link.
 
One final thing:  lots of people Google me, too.  So here’s the link to my bio — information about Craig D. Robins, Esq., Long Island Bankruptcy Attorney.
 
 
 
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Chapter 7 Cram-Down of Second Mortgages

Posted on Monday (December 7, 2009) at 11:55 pm to Benefits of Bankruptcy
Chapter 7 Bankruptcy
Mortgages & Sub-Prime Mortgage Meltdown
Recent Bankruptcy Court Decisions
Suffolk Lawyer

Lien Stripping and Cram-Downs now possible in Chapter 7 bankruptcy cases on Long IslandWritten by Craig D. Robins, Esq.
 
New Long Island case now permits lien-stripping that was previously impossible
 
One of the biggest problems that homeowners face in today’s recessionary economy is the loss in value to their homes.  It is not uncommon to see houses that have dropped 50% in value over the past few years, leaving many to wonder if it is even worthwhile to keep their home.
 
As such, many homes are “under water” or “upside down” meaning that the homes are worth less than the balance due on the mortgage.  In many cases, there are two mortgages and the home is worth less than the first mortgage, making the second mortgage totally unsecured.
 
Up until recently, there was little recourse available to consumer bankruptcy filers to eliminate mortgages that were underwater.  However, a new decision released last month has now changed all that, permitting cram-down of second mortgages in Chapter 7 bankruptcy cases.
 
What is a Cram-down in Bankruptcy?  Also known as a “strip-off”, a cram-down is when a debtor modifies the rights of a mortgagee, who is a secured creditor, by having the bankruptcy court strip off the secured status of the mortgage because there is insufficient value in the property to secure any part of it.
 
A cram-down removes the mortgage as a lien on the premises.
 
Cram-downs in Chapter 13 Bankruptcy Cases
 
The existing state of the law has been that only Chapter 13 debtors had the unique ability to cram-down mortgages, and then, only the second mortgage.  Chapter 7 debtors did not have any ability to cram down any mortgage.
 
The reason for this is that the provision for cram-down is § 1322(b)(2), located in Chapter 13 of the Bankruptcy Code, which limits debtors from cramming down first mortgages.
 
The Lavelle Case Changes the Law
 
On November 25, 2009, Central Islip Bankruptcy Judge Dorothy T. Eisenberg issued a decision permitting Chapter 7 debtors to cram-down second mortgages.  In re:  Mark T. Lavelle, et. al (09-72389-478, Eastern District of New York).
 
An unusual aspect of this case is that the debtors did not even file an application seeking to cram-down their mortgage – it fell in their lap.  The debtors are typical consumers residing in Levittown who sought Chapter 7 relief in April 2009.   They were represented by Long Island bankruptcy attorney Norman M. Mendelson, Esq.
 
The home was in the name of the husband and it was worth $400,000.  The balance owed on the first mortgage was $411,000 and the balance on the second mortgage was $9,900.  Both mortgages were held by Bank of America.
 
In May 2009, the mortgagee, represented by Steven J. Baum, P.C. filed a motion seeking relief from the stay on the second mortgage based on the fact that the debtor had no equity in the property.
 
However, the debtor defended that motion by filing opposition in the form of a cross-motion seeking to avoid the mortgagee’s lien on the second mortgage under Bankruptcy Code § 506(a), arguing that the creditor only had a secured claim to the extent of the value of its collateral, and an unsecured claim for the balance.
 
The debtor argued that even though this was a Chapter 7 case, the ability of the Court to modify wholly unsecured liens against a debtor’s residence in a Chapter 13 case under § 1322(b)(2) should be extended to Chapter 7 cases.
 
Judge Eisenberg, in a very complicated and complex, technically-worded decision which discussed two Supreme Court cases, first noted that the debtor’s motion should have been brought by adversary proceeding, but nevertheless permitted the debtor to proceed by motion, which she pointed out was “technically incorrect.”
 
The Distinction Between ‘Strip-Down” and “Strip-Off”
 
The Court addressed the 1992 Dewsnup Supreme Court decision which held that a Chapter 7 debtor may not “strip down” a first mortgage to the fair market value of the property.   However, there is a difference between “stripping down” a mortgage and “stripping off” a mortgage.
 
Stripping-down refers to removing that portion of a mortgage that is unsecured, which is done pursuant to § 506.   On the other hand, “stripping off” is essentially cramming down a mortgage, which means removing its lien status altogether.
 
The Judge observed that since Dewsnup, the issue of whether wholly unsecured liens may be “stripped off”, as opposed to “stripped down”, has been a contentious issue between various bankruptcy and district courts and their respective Courts of Appeals.
 
Judge Eisenberg then discussed the 1993 Supreme Court case of Nobelman which barred Chapter 13 debtors from relying on § 506 to bifurcate an undersecured mortgage to secured and unsecured components.  (I wrote an article about Nobelman for the Suffolk Lawyer 16 years ago).
 
However, the Nobelman case only applies to situations where a portion of the mortgage remains secured, and the Supreme Court did not address situations where the mortgage is totally unsecured.   Consequently, debtors have been able to cram-down totally unsecured second mortgages in Chapter 13 cases.
 
Cramming-Down Mortgages in Chapter 7 Cases
 
Judge Eisenberg, after utilizing a rather complex analysis, determined that the second mortgage was wholly unsecured (which means that § 506(a) does not apply), and that the plain meaning of § 506(d) required the lien to be voided.  The Judge went on to say that there was no logical reason that this result should be any different in a Chapter 7 context as opposed to a Chapter 13 situation.
 
Thus, the Judge voided the lien on the second mortgage.  Since this was a Chapter 7 case, the debt, now considered an unsecured debt, became totally discharged.  A big win for the consumer.
 
What Does This Bankruptcy Decision Mean for Consumers and Society?
 
There is a record number of homeowners facing foreclosure, and there appears to be a groundswell of support by politicians, bankruptcy attorneys and consumer groups for a change to the Bankruptcy Code to deal with this.  As such, perhaps some judges, like Judge Eisenberg, are taking a position rooted in public policy that recognizes the existing problem.
 
Many provisions in bankruptcy law have favored the mortgagee and secured lender over the past two decades.  It now looks like the tides may be shifting in the other direction.
 
This case will likely result in a number of Chapter 7 cram-down proceedings being brought.  As the Judge put it:
 
“Arguments that debtors will benefit from possible windfalls, are not persuasive. Markets are uncertain, and it is not certain such a scenario will ever occur. Secondly, the creditors’ right to foreclose will not result in any present monetary gain for the creditor since there is no value in the property for them.”
 
“Bankruptcy is not intended to benefit either the creditor in securing a potential increase in property value, or the debtor. However, where the future is unknown, bankruptcy principles of giving the debtor a fresh start should apply.” 
 
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 December 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 Patchogue, 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.
 
IMPORTANT UPDATE ABOUT CHAPTER 7 CRAM-DOWN (April 2009):  Judge Eisenberg is one of three bankruptcy judges in the Central Islip Bankruptcy Court, in the Eastern District of New York.  The other two judges, in the past month, have reached a different conclusion as to a debtor’s ability to cram-down a second mortgage in a Chapter 7 case.  Please see this post for full info:   Judges Differ with Chapter 7 Bankruptcy Cram-Down.
 
 
 
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Bankruptcy Issues Facing Same-Sex Couples

Posted on Tuesday (December 1, 2009) at 12:30 am to Bankruptcy and Society
Bankruptcy Procedure
Matrimonial Issues & Bankruptcy
Suffolk Lawyer

There are many bankruptcy issues facing gay and lesbian couples in same-sex marriagesWritten by Craig D. Robins, Esq.
  
Same-sex couples have many more issues to contend with than heterosexual  married ones — especially when it comes to filing bankruptcy in New York.  Everything about the federal bankruptcy law is geared towards the conventional family.
  
Alas, nowhere in the bankruptcy statutes is there sufficient guidance for dealing with non-conventional family units, let alone same-sex couples who were married in other states.
 
That does not mean that gay or lesbian consumers in committed relationships can’t file for bankruptcy; it just means that they have to approach the bankruptcy petition and means test more carefully.
 
Having represented a number of gay and lesbian individuals and couples, the following issues routinely come up in providing bankruptcy advice.  Unfortunately, some of the answers are not necessarily so clear.
 
Can a same-sex unmarried couple file a joint bankruptcy? 
 
There is no difference between gay or straight non-married couples.  Only married couples can file a joint bankruptcy petitions.
 
Can a same-sex couple that is legally married in another state file a joint bankruptcy petition in a New York Bankruptcy Court?
 
Recently, a handful of states adopted legislation recognizing same-sex marriage.  They include Massachusetts, Connecticut, Iowa, Vermont, Maine, and for a short time, California.
  
Consequently, many New York residents in same-sex committed relationships eagerly went to these state to tie the knot.  What if one of these gay or lesbian married couples now wants to file a joint bankruptcy petition in a New York bankruptcy court:  can they?
 
Here we have a conundrum.  According to the Defense against Marriage Act, a federal law dating back to 1996, a state is not required to recognize a same-sex marriage in their state even if the couple was legitimately married in another state.  However, Governor Paterson did not feel that this produced a fair result and issued a directive in May 2009 requiring all state agencies to recognize same-sex marriages performed out-of-state.
 
Bankruptcy is a federal procedure based on federal laws.  When these laws fail to address certain issues, such as legitimacy of marriage, then state law can be used to amplify the federal law.  Since New York does not currently have any law that explicitly recognizes such marriages (Governor Paterson’s directive only applies to state agencies), then it appears that the a New York bankruptcy court would not be able to recognize an out-of-state same-sex marriage.
 
I have not yet had the opportunity to file a joint case involving a same-sex married couple, but given that opportunity, I certainly would give it a try.  The Office of the United States Trustee would then have the difficult decision on whether they should seek to dismiss the case.
  
Even if they raised such objections, a sympathetic judge could nevertheless rule in favor of the debtors and come up with some legal justification for permitting the joint bankruptcy filing.  It is just a question of time before we see such a filing in a New York bankruptcy court.  Earlier this year I even placed a post on my bankruptcy blog offering to do such a filing on a pro bono basis, just to set a precedent.
 
How do you calculate the size of the household for means test purposes when you have a same-sex couple with a domestic partnerships?  
 
The real issue here is essentially no different for any two partners or roommates living together, whether they may be straight or gay.  Simply calculate all of the people who occupy the household, whether they are related or unrelated.
 
Do you include a same-sex partner’s income on the means test? 
 
The means test only requires a debtor to include the income of the spouse.  If you are representing an individual debtor who is in a same-sex unmarried relationship in which the parties share their finances, the best approach is to come up with a specific monthly contribution amount from the non-filing partner.
 
If the individual debtor is in a same-sex marriage, the debtor can conceivably argue that the spouse’s income and finances should be included in the means test, or, alternatively, argue that the spouse is merely a roommate, considering that New York has yet to make the arrangement legal, and that the income does not need to be included.
 
Does the United States Trustee look any differently at bankruptcy petitions filed by debtors who have same-sex partners?
 
My experience has been that the United States Trustee’s office does not treat debtors in same-sex relationships any differently than debtors in straight relationships.  However, I do get the feeling that they may want to avoid any politically-charged controversy involving gay rights issues.
 
What’s down the road? 
 
Eventually, Congress may recognize the existence of same-sex marriages and domestic civil unions in bankruptcy proceedings and provide statutory authority for dealing with such issues.  Until that happens, we can only look towards the time when New York legalizes same-sex marriage. 
 
In October, Governor Patterson called same-sex marriage a civil right and announced that he wanted the legislature to take quick action and adopt such legislation.
 
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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 November 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 Patchogue, 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.
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