About Me
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 January, 2013

Mafia Movie Producer in Chapter 13 Bankruptcy Liable for Corporate Business Debt

Posted on Friday (January 18, 2013) at 4:00 pm to Chapter 13 Bankruptcy
Recent Bankruptcy Court Decisions

Long Island Bankruptcy Judge pierces corporate veil of Chapter 13 consumer debtorWritten by Craig D. Robins, Esq.
Long Island bankruptcy judge pierces corporate veil to permit investor in movie about mafia member, to file claim against the individual debtor, even though the debtor had done business through a corporate entity
It is basic advice for individuals conducting business to set up a corporate entity to provide a mechanism to limit personal liability in the event the business is not successful. 
However, as was demonstrated in this Long Island Chapter 13 bankruptcy case, when the corporate entity is used for illegitimate purposes, the individual should not be permitted to insulate himself from the consequences of his fraudulent conduct.
The debtor, Georgios Stamou, in 2009, filed an individual Chapter 13 bankruptcy in the United States Bankruptcy Court for the Eastern District of New York, located in Central Islip. The debtor’s 100% plan was thereafter confirmed.
The debtor probably thought everything was going well.  It was not.  A creditor of his corporate business entity was now seeking recourse on a business debt.  Several years earlier, the debtor created a corporate entity to handle his business of producing television programs and movies.  The debtor was the sole employee.
“Easy Street” Movie — A Troubled Child Drawn Into Life of Organized Crime
The wife of a self-proclaimed former member of an organized crime family wrote a script for a movie project, tentatively titled, “Easy Street,” about a troubled child who is drawn into a life of organized crime, based on her husband’s life.
She hired the debtor’s corporate entity to produce the movie and paid him more than $400,000.  When the project failed, she sued him in state court, alleging that the debtor improperly diverted $343,000 for unrelated business and personal expenses.
The debtor did not even schedule the potential claim in the bankruptcy.  The creditor learned of the bankruptcy filing during post-petition state court litigation against the corporate entity.  The matter soon landed before Bankruptcy Judge Robert E. Grossman who had presided over the Chapter 13 case.
After an evidentiary hearing, Judge Grossman concluded that the corporate veil should be lifted and that the debtor should be responsible for the harm to the creditor.  He then permitted the creditor to file a proof of claim in the individual case, although the decision did not address the amount of the claim or whether it should be dischargeable.
Corporate Veil Pierced by Bankruptcy Court
In a twenty-page decision that Judge Grossman issued on January 17, 2013, the Judge provided a detailed discussion with regard to piercing the corporate veil and stated that in order to succeed in piercing the corporate veil, the creditor must show that 1) the owner “exercised complete domination of the corporation in respect to the transaction attacked” and 2) “such domination was used to commit a fraud or wrong against the plaintiff which resulted in injury.”   In re Georgios Stamou  (8-09-78895,  Bankr.E.D.N.Y.).
Here, the debtor disclosed that he used the funds to pay for groceries, hotels, pet supplies, doctor bills, meals and entertainment, income tax, and 100% of the costs of operating the corporate office, even though the corporate entity simultaneously had other ongoing projects with other clients.
He also used the money for travel, flying to three European countries, claiming that he was scouting movie locations for the film.  Judge Grossman did not find the debtor to be credible with some of his explanations and determined that the corporate entity did not satisfy its implied duty of good faith and fair dealing under an oral agreement with the creditor. 
Once the creditor files the proof of claim, the debtor will have to decide whether to object to it.  In any event, he will need to modify his plan if he still has a feasible financial situation to cover the additional payments needed to satisfy the new claim.
Print This Post Print This Post
Be Sociable, Share!

Why Some People Are Hounded by Bill Collectors More Than Others

Posted on Wednesday (January 16, 2013) at 1:00 am to Benefits of Bankruptcy
Consumer Advice

Long Island Debt Collectors Are Stopped by Bankruptcy FilingsWritten by Craig D. Robins, Esq.
What drives many clients to my Long Island Bankruptcy office is the constant harassment of debt collectors — daily phone calls, collection letters, contact at work and home, etc. 
Some delinquent consumers are actually hounded more than others.  This is because large collection companies pay for research on which credit card customers are more likely to pay an outstanding bill. 
Armed with such valuable data, the debt collectors can then use their resources more efficiently.  That means that some unlucky people will be harassed much more than others.
Collection Scores Are Often the Reason for Aggressive Bill Collecting Harassment 
The three main credit reporting agencies (Experian, TransUnion and Equifax), as well as FICO, offer credit scores which most consumers are pretty familiar with.  The higher the score, the easier it is to obtain new credit.
However, what most people do not know is that these agencies also offer “collection scores.”  These are analytics based on a statistical analysis that they claim will help collection companies prioritize accounts to determine who they should concentrate their resources on to collect.
The Higher the Collection Score, the More Aggressive the Debt Collector Will Be
All large collection companies use highly specialized computer software that essentially determines what consumers to call (by using an account prioritization system that relies on these collection scores).  These debt collection mills actually have the software automatically dial the calls.  Debt collectors sitting in cubicles then take one call after another, all day long.
One company that sells these scores touts them as a great collection tool, stating that “collection scoring facilitates debt management decisions.  Used in debt collection systems, collection scoring helps improve collection and recovery efficiency, reduce write-offs and decrease staff costs.”
Of course, bill collectors can manually enter info into their debt collection system to increase the priority of going after a particular person.
Other Ways Collection Companies Become More Aggressive
Some of the credit reporting bureaus also offer services which alert debt collection companies to become more aggressive with an older delinquent account if there has been recent activity reflected in the consumer’s credit report that might indicate that the consumer may now have a greater ability to pay something.
The credit bureaus also offer “bankruptcy risk scores.”  Although these are most often used by lenders at the time they are processing a request for credit to ascertain the likelihood of default and subsequent bankruptcy, they can also be used by creditors to ascertain the likelihood of bankruptcy filing — which would mean that the creditor will not get anything.
Here’s some reasons why debt collectors are being forced to be more aggressive:  Six Reasons Why It’s a Tough Time for Debt Collection Attorneys
Filing for Bankruptcy Stops Debt Collectors Cold

Of course, filing for bankruptcy will enable a consumer to immediately stop all collection calls.  Usually, consumers can totally discharge all credit card debt through bankruptcy.

How Quick Will Creditors Stop Calling Me If I File Bankruptcy?  The minute a bankruptcy petition is filed, the automatic stay goes into effect, making it illegal for any creditor to continue to collect a debt.
Print This Post Print This Post
Be Sociable, Share!

What is a Notice of Appearance in a Bankruptcy Case?

Posted on Tuesday (January 15, 2013) at 10:00 pm to Uncategorized

Bankruptcy Court Notice of Appearance -long-island-bankruptcy-blogWritten by Craig D. Robins, Esq.
There are a number of different documents that various parties may file with the bankruptcy court in a typical bankruptcy case.  One of them is a “Notice of Appearance.”
This is basically a document, usually filed by an attorney for a creditor, indicating that the attorney is representing the creditor in the bankruptcy case, and that the attorney, on behalf of his client, would like to be served with copies of all documents that the debtor and other parties may be required to serve in the case.  A notice of appearance usually contains language requesting service of papers.
A notice of appearance is a very standard and routine type of filing, and is very common in all bankruptcy cases.  In consumer cases, they are most often filed by secured creditors, especially mortgagees, who have a vested interest to follow the events in a bankruptcy proceeding.
Bankruptcy Rule 2002 creates certain statutory requirements for how counsel should serve notice, and this section provides that creditors may designate certain addresses by providing notice.
Bankruptcy Rule 9010(b) provides that an attorney appearing for a party in a case shall file a notice of appearance with the attorney’s contact information unless the attorney previously filed a document containing that information.
A creditor will often file a notice of appearance at the same time it files a motion or proof of claim.  Frequently, attorneys who file motions for relief from the bankruptcy stay will also contemporaneously file a notice of appearance if they didn’t do so previously.
Generally, if you are an individual consumer debtor in a Chapter 7 or Chapter 13 bankruptcy case, you do not need to take any action if a creditor files a notice of appearance in your case.  However, if you serve a motion, you must serve it on all parties in interest (typically the trustee, U.S. Trustee, and all creditors listed in the petition) including those who filed a notice of appearance.
If you are a creditor, and you want to be assured of receiving notices in a bankruptcy case, you should file a notice of appearance and demand for service of papers.
Print This Post Print This Post
Be Sociable, Share!

Can You Pay Bankruptcy Attorney’s Fees with a Payment Plan?

Posted on Monday (January 14, 2013) at 2:00 pm to Chapter 13 Bankruptcy
Chapter 7 Bankruptcy

Bankruptcy Attorney's fees on Long Island for Chapter 7 Bankruptcy and Chapter 13 BankruptcyWritten by Craig D. Robins, Esq.
Bankruptcy fees practically doubled when Congress drastically changed the bankruptcy laws eight years ago, making bankruptcy more complex by creating a new means test and imposing a much greater burden on the attorney to verify information and prepare the bankruptcy petition correctly and accurately.
Most of our Long Island bankruptcy clients are able to pay the fees as they are working, but we are always asked if the fees can be paid over time. 
With the most common type of bankruptcy, which is Chapter 7, the Bankruptcy Code requires the attorney’s fee to be paid in full before the petition is filed. 
Otherwise, any balance owed on the fee is technically discharged and the attorney is prohibited from collecting it.  In addition, if the client still owes any funds to his or her attorney, there is a conflict of interest, as the attorney is now a creditor of the debtor as well. 
The bankruptcy laws were designed to give the debtor an absolute fresh, new financial start with no prior debts still outstanding, even those owed to bankruptcy counsel.  Chapter 7 bankruptcy law does not contain any provision that provides for payment of part of the fee after the petition is filed.
Bankruptcy fees on Long Island — When we have a Chapter 7 bankruptcy client who doesn’t have the full bankruptcy legal fee easily available, we are very amenable to working out an informal payment plan over a reasonable period of time.  We just need to make sure the full legal fee is paid before the petition is filed with the bankruptcy court.
With Chapter 13, a payment plan for legal fees can be entered into, as the essence of this type of case is having a payment plan to pay creditors.  A Chapter 13 plan, in addition to providing for the distribution of payments to creditors, can also provide for the payment of part of the bankruptcy attorney’s legal fees.
Such payment plans are typically over a period of three to five years.  One of the reasons such payments are permitted is that the court and trustee have the ability to review the balance owed for reasonableness.
Keep in mind that once you decide to seek bankruptcy relief, you will no longer be paying any of your credit card bills, so additional funds often become available.
Print This Post Print This Post
Be Sociable, Share!

Discharging Christmas Gift Purchases in Bankruptcy – An Unusual Case

Posted on Wednesday (January 9, 2013) at 2:00 am to Bankruptcy Practice
Chapter 7 Bankruptcy
Recent Bankruptcy Court Decisions
Suffolk Lawyer

Bankruptcy adversary proceeding over Barbie doll purchases.  Will same result happen on Long Island?Written by Craig D. Robins, Esq.

An Unusually Entertaining Decision from Several Years Back Teaches Valuable Lesson
Bankruptcy attorneys often get busy towards the end of January each year as consumers, having just finished their family holiday obligations, receive a new round of ever-increasing credit card bills, compelling them to seek bankruptcy advice.
Of course, many of these bills contain charges for holiday gift purchases made just weeks before.  An interesting and most unusual opinion from 1992, which I found most entertaining for a bankruptcy court decision, addressed this very issue.   In re Johannsen, 160 B.R. 328 (Bkrtcy. W.D.Wis. 1992).
However, as unusual as this decision is, its importance to us today really has nothing to do with the atypical subject matter.  To me, the real lesson to be learned from this case is that no matter how sure you are of being successful with litigation, you can still end up losing what appears to be a slam-dunk case. 
To further pique your interest, let me quote some of the wording from the published opinion:
“[s]he’s short and buxom with a tiny waist and remarkably long legs which — despite her age (34) — are cellulite free.”
This is not the typical verbiage we usually see in judicial decisions.  But here, the judge is talking about Barbie, the iconic plastic doll manufactured by Mattel, and a perennially favorite gift to young girls everywhere.
Can You Discharge $1,100 of Barbie Dolls Purchased Just Before Filing for Bankruptcy?
The debtor in this case, a woman who filed Chapter 7 jointly with her husband even though they were in the process of divorce, bought some Barbie dolls from Sears for her seven-year-old daughter, intending them to be Christmas presents.  Shortly thereafter, the debtor filed for Chapter 7 relief, seeking to discharge various debts including her Sears credit card debt. 
The debtor had made several purchases including Barbie and Ken items, a Barbie case, a Barbie armoire, and an extensive wardrobe of Barbie clothes.  The purchases totaled $1,100.  That’s a lot of Barbie toys! 
All of these purchases were made in the five weeks prior to filing the bankruptcy petition, including one purchase of $178 which was made a mere two days before the petition was filed.
Sears Brings Adversary Proceeding
Sears then filed an adversary proceeding pursuant to Bankruptcy Code § 523(a)(2)(C), claiming that the debt for these Barbie doll purchases, which the debtor charged on her Sears credit card, should be declared non-dischargeable.
An adversary proceeding contesting dischargeability is essentially a federal lawsuit brought within a bankruptcy.  Sears commenced this with a federal summons and complaint, leading to a full-blown trial in which both the debtor and a Sears employee testified.
In bankruptcy proceedings, creditors have a few grounds to challenge the dischargeability of a debt, and they must do so by adversary proceeding.
Sears argued that the debts for these purchases should be non-dischargeable under several theories including § 523(a)(2)(A), which prevents discharging a debt if was incurred by false pretenses, and § 523(a)(2)(C), which prevents a debtor from discharging a debt of more than $500 for “luxury goods or services” incurred within 40 days prior to filing.  (Note: the dollar amount and number of days in the statute has since changed.)
Sears contended that the Barbie dolls and accessories were not reasonably necessary for the debtor or her daughter’s support or maintenance.  The Sears employee testified that the Barbie dolls of the type purchased were at the higher end of the price scale of toys sold by Sears.
The Parties Introduce Evidence at Adversary Proceeding Trial
The debtor testified that some of these purchases consisted of “collector” Barbie dolls.  She even introduced the Sears Christmas Catalog as an exhibit.  But on cross-examination, the debtor testified that she was just a waitress earning minimum wage and that she had been separated from her husband, and was receiving support and maintenance.
Sears brought to the court’s attention that the debtor could have purchased a much less-expensive Barbie doll for just $9.99, but the debtor responded that the collector Barbies were investments which would appreciate in value.
The debtor also testified that her daughter owned a collection of 25 Barbie dolls, to which Sears argued was proof that the additional Barbies were clearly luxury expenses, as they were not necessary for the daughter’s welfare.  After all, how many Barbies does a seven-year-old need?
Just gleaning these facts would probably lead any bankruptcy attorney to conclude that the Barbie purchases would certainly be non-dischargeable.  The judge even pointed out that these purchases may have been foolish and irresponsible in light of the debtor’s financial condition.
Bankruptcy Judge Issues Surprise Decision
However, the judge held that the debt was indeed dischargeable!  He stated: “Although this case at first glance appeared to be a classic case for § 523(a)(2)(C)’s luxury goods exception, subsequent investigation and testimony revealed no evidence of such intent in making the relevant purchases.”
The judge pointed out that the discharge exception for luxury goods provided a presumption that the debt ought not to be discharged, basically a conclusion that the debtor did not have the intent to pay the debt.  However that presumption can be rebutted and the debtor did just that.
Apparently, the debtor was only added to the petition at the last minute, and at the request of divorce counsel.  In addition, the judge determined that the debtor, at the time she made the various purchases, had the intent to pay for them, despite her precarious financial circumstances.
Lessons to Be Learned from this Case
Imagine the surprise to Sears’ counsel of this highly unexpected result!  But that’s the lesson.  You never know how the court will rule, and being sure of the merits of your case is no guarantee for success.
Although we have some fine trustees in this district, I’ve found some of them to suffer from myopic vision when evaluating the cases they litigate against consumer debtors.  A review of the written decisions from the Eastern District of New York shows numerous instances in which trustees have vigorously litigated, only to lose. 
I would suggest a more pragmatic approach involving settlement would have better served both trustee and debtor, alike.  This may be especially true when considering the extent that some bankruptcy courts will go, as is the case here, to favorably enable debtors to get a fresh financial start. 
Hopefully all litigants will become more open-minded to pragmatic approaches towards case resolution.
Also please note that the Johannsen case does not necessarily mean that another judge would rule similarly or that another debtor today, who is in a similar situation, would fare as well as the debtor in this case.  I think Mrs. Johannsen was incredibly lucky with the result she obtained.
Click here to see a full copy of the Johannsen decision
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 February  2013 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 Mastic, Patchogue, Commack, West Babylon, Coram, Woodbury and Valley Stream.      Call  (516) 496-0800 . For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.  
Print This Post Print This Post
Be Sociable, Share!

What Does the $8.5 Billion Mortgage Settlement Mean For You

Posted on Monday (January 7, 2013) at 11:45 pm to Foreclosure Defense
Mortgages & Sub-Prime Mortgage Meltdown

$8.5 Billion Mortgage Settlement for Mortgage and Foreclosure Abuse Will Help Many Long Island HomeownersWritten by Craig D. Robins, Esq.
It was big news today as the government reached an $8.5 billion settlement to resolve foreclosure abuse issues involving ten major mortgage banks including Bank of America, JPMorgan Chase, Wells Fargo and Citibank.
The settlement is broken down to give $3.3 billion to homeowners who went through foreclosure in 2009 and 2010, and $5.2 billion to troubled homeowners.  This settlement resolves a complex independent foreclosure review process that had been previously mandated by banking regulators.
There was another settlement last year involving the attorneys general in most states, in which mortgage bankers agreed to pay $25 billion.  However, some commentators have complained that the banks aren’t assisting homeowners fast enough with that settlement.  It is hoped that today’s settlement will provide more immediate relief to struggling homeowners. 
If You Were In Foreclosure in 2009 or 2010
Although the specifics of the settlement have not yet been fully disclosed, it appears that all homeowners who were in any stage of foreclosure during this period and suffered mortgage abuse will be entitled to compensation although those homeowners who previously sought financial reviews under the earlier 2011 federal directive may end up receiving more.
Even those homeowners who did not suffer any foreclosure abuse will be entitled to a small payment.
The settlement will not prevent homeowners from suing the lender if the homeowner feels the settlement payment does not adequately compensate the injuries.
One of the key objectives of the settlement is to get homeowners benefits as soon as possible and in as direct a manner as possible. 
A payment agent or claims administrator for the settlement will attempt to contact all eligible homeowners by the end of March 2013.
The guidelines for determining the amount of compensation will likely be based on guidelines released last summer which provide for increasing benefits based on the severity of the mortgage abuse.
It appears that there will be 11 categories of potential harm, based on the severity of the mortgage abuse. 
For example, failing to offer a homeowner a loan modification would be considered a lighter offense that may be worth $1,000; whereas as unfairly seizing and selling a person’s home would result in the biggest payment — as much as $125,000. 
Other Relief You May Be Entitled to As a Troubled Homeowner
Pursuant to the terms of the settlement, the banks must also provide $5.2 billion in mortgage relief.
The banks will do this by one or more of the following means:  reducing principal, forgiving debt, reducing interest rates, and permitting short sales.  There will be other types of relief as well, which is still in the process of being worked out.
I personally think the banks are getting away with murder for having engaged in so much grossly fraudulent and improper activity.  On the other hand, the conduct was so rampant, involving millions of homeowners, that from a practical perspective, settlements such as this may be the only way to obtain a resolution, to enable the country to move forward.
The best way a homeowner in foreclosure can preserve their rights and obtain the maximum amount of benefits under the settlement is to consult with an experienced foreclosure defense attorney.  Our office regularly assists clients with these matters.
Newsday Quotes Me In Story About Settlement
In its January 8, 2013 edition, Newsday quoted me about my thoughts on the settlement.  See Foreclosed to Get $8.5B From Settlement.


Print This Post Print This Post
Be Sociable, Share!

About Us

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 »


Subsribe via RSS Feed Reader

Contact Us

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

Tel : 516 - 496 - 0800