About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Long Island Economy
Written by Craig D. Robins, Esq.Newsday calls on Congress to permit bankruptcy cram-down and bankruptcy modification of mortgages
An editorial in today’s Newsday commented that foreclosures on Long Island are still rising, pointing out that voluntary programs are not doing the job, and Congress needs to get more involved with stubborn lenders.
“Underwhelming” was the word Newsday used to describe federal efforts to help homeowners avoid foreclosure.
The problem is that the two major initiatives — “Making Home Affordable” and “Hope for Homeowners” — both rely on lenders to voluntarily modify or refinance loans. However this has not worked, especially on Long Island.
Congress needs to revisit proposed legislation to authorize bankruptcy judges to modify or “cram down” mortgages. See my post, Chapter 13 Mortgage Cram-down Still a Possibility . Newsday believes that if mortgage lenders knew that homeowners had this ability, they would have greater incentive to work with the homeowners, rather than let the homeowners cram down the mortgage in bankruptcy court.
There have been 6,274 foreclosure filings so far this year on Long Island.
Written by Craig D. Robins, Esq.Yesterday’s Businessweek Magazine contained an insightful article, “Bankruptcies: The Next Wave.”
The author analyzed the current economy and stated that even though credit markets have improved somewhat as of late, and the American economy may be on the road to recovery, that won’t prevent a new run of corporate bankruptcies in the next year.
Here’s why: too many companies loaded up with too much debt to survive the next year without defaulting on their debt obligations. As such, they will need to file for bankruptcy protection under Chapter 11.
There is still too much debt on the balance sheets of corporate America. Banks gave many loans in 2007 when the economy was still strong. However, these loans are now coming due at a time when the economy is still weak and access to additional credit is very tight.
The recent improvement in the stock market may make credit more available. However, banks will only make credit available to financially healthy companies, and not those who may need it the most.
The article concluded by saying: “The irony is that a record number of troubled firms could tumble into bankruptcy next year, at the same time that the economy and credit markets start showing major signs of improvement.”
Unfortunately, the wave of Chapter 11 bankruptcy filings will certainly hit Long Island, as it is home to a number of struggling companies, including retail and restaurants.
Written by Craig D. Robins, Esq.Long Island is going from bad to worse, causing many middle Americans on Long Island to seek bankruptcy relief
Long Island is suffering big time, according to data just released by the New York State Labor Department. Long Island lost private-sector jobs at an annual rate of over 40,000 in the one-year period ending in June, 2008.
What this means is that Long Island is experiencing job losses at a magnitude that it hasn’t seen since the recession in 1991.
In addition, unemployment is at its highest rate since 1992 — 7.5 percent. This is a great increase from the levels we saw a year ago. Unemployment for June 2008 was only 4.7%.
In the early 1990’s, Long Island suffered some of its highest unemployment losses as a result of the recession at the time and the closing and downsizing of many Long Island defense industry businesses. Now Long Island is suffering because of another recession and a severe economic downturn.
Many consumers have no choice but to turn to bankruptcy as they are being battered by high debt combined with job insecurity. My Long Island bankruptcy practice is helping more white collar workers than ever before.
According to the data, the largest job losses are in the retail and construction sectors.
Written by Craig D. Robins, Esq.
Business bankruptcy filings on Long Island have increased substantially. A report in today’s Newsday highlighted the large number of new business bankruptcy filings here.
There has been a 73% increase in business bankruptcy filings on Long Island in the 12 months ending march 31, over the same period last year. The actual number of bankruptcy filings during this period was 252.
This rate is higher than the rate for the country, which was 59%.
The article quoted Irwin Kellner, the chief economist for MarketWatch.com, who said the financial industry meltdown and resulting credit crunch have exacerbated the debt problem for businesses. “Many are having difficulty maintaining or renewing their credit lines,” he said.
Written by Craig D. Robins, Esq.There were articles yesterday, both in Newsday and USA Today about how foreclosures were continuing to set records despite the Obama administration’s efforts to help borrowers.
Long Island Foreclosure Figures
In Suffolk County, for the first half of this year, one out of every 155 households was facing foreclosure, while one out of every 166 Nassau County households was facing foreclosure, according to data released by RealtyTrac.
This means that there were 3,512 Suffolk Foreclosures and 2,762 nassau foreclosures. This represents a 63.6% increase from last year.
National Foreclosure Figures
So far in 2009 there have been 1.9 million foreclosure filings in the first six months. This represents a 15% increase from last year, according to data from RealtyTrac.
June was the fourth consecutive month that nationwide foreclosure filings exceeded 300,000.
The Recession Continues
The staggering level of foreclosures is further evidence that the recession is continuing. Americans and Long Island consumers continue to be victims of job losses and cutbacks. Falling home values also continue to plague consumers.
It’s no wonder that we are seeing large increases in Chapter 13 bankruptcy filings by consumers to save homes from foreclosure.
Long Island Railroad Was In Bankruptcy
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Written by Craig D. Robins, Esq.
Here is a fact that only a few historians probably know: The Long Island Railroad filed for bankruptcy in March, 1949.
In the 1940’s, LIRR costs had greatly increased, but because of government regulation, railroads were not permitted to raise fares. In addition, in the years after World War II, the rise of the automobile and improved air travel caused passenger rail service to decline dramatically. These elements created great financial difficulty.
At the time, the LIRR was owned by the Pennsylvania Rail Road. When the LIRR’s debts got to be too much, the Pennsylvania Rail Road stopped paying them and put the LIRR into bankruptcy. At the time of the bankruptcy, Pennsylvania transferred the LIRR to a subsidiary, the American Contract and Trust Company.
Eventually, Governor Nelson Rockefeller created the MTA which took over the LIRR in 1966.
Notes about the photograph: In the rare time that I take off from my Long Island bankruptcy practice, I like to take fine art photography images. I personally took this photograph at the Montauk Train Station in 2006. It was published by both The New York Times and Newsday, and it is in the permanent collection of the Long Island Museum in Stony Brook, where it won their first annual juried photograph competition in 2007 out of about 400 entrires.
Written by Craig D. Robins, Esq.Even the least-risky mortgages are seeing a drastic increase in delinquencies as consumers are being laid off
According to data just released by the Office of the Comptroller of the Currency, first-time foreclosure filings on prime mortgages more than doubled over the past year. Now 2.9% of all prime mortgages are in default.
Prime mortgages are those that are considered least risky. About two-thirds of all U.S. mortgages are prime mortgages.
It appears that mounting job losses are pushing more and more borrowers towards foreclosure. Even consumers with good credit are finding it difficult to make monthly payments when their income has decreased.
Here on Long Island, consumers who have held the same job for well over a decade are being laid off. Depending on the particular facts, a bankruptcy filing may be the easiest and most efficient way to deal with the situation.
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If a house is upside-down with no equity, now may be the time to walk away, rather than be a hostage to your home. Under the right circumstances, a bankruptcy filing can provide that option.
Written by Craig D. Robins, Esq.
Long Island consumers are eliminating credit card debt and stopping foreclosure in droves by filing for bankruptcy relief .
Bankruptcy filing numbers are universally up across the country including Long Island. The reason for this is simple. Job losses and the disastrous housing market, combined with high medical bills and a recessionary economy, are driving more people to seek bankruptcy relief.
Many consumers who might have previously coasted by under such financial pressure can no longer do so because of the tightened credit market. They find that they just cannot borrow any more from credit card accounts to make ends meet.
With many additional people expected to be laid off as the result of General Motors and Chrysler filing their own bankruptcies, even more consumers will need to consider bankruptcy as an option for dealing with their debts.
Long Island residents in serious financial trouble from Nassau County to Suffolk County are learning that bankruptcy is often the best way to get a fresh new financial start.
When consumers can’t pay debts bankruptcy can provide debt relief. It can also stop foreclosure. And if Bankruptcy is not a good fit for one reason or another, then debt negotiation is a possibility. We’re finding that the risk officers at credit card companies are realizing that they are better off accepting a reasonable settlement on a credit card debt, rather than get nothing at all in a Chapter 7 bankruptcy filing.
So what can you do if you’re in a bad debt situation? Don’t wait until you’re drowning in bills. If you have trouble making even one payment, that means it is time to talk to a debt negotiation and bankruptcy attorney to learn your options.
Written by Craig D. Robins, Esq.
Your blog author quoted in Newsday article about problems with loan modification companies
Newsday ran an in-depth cover story in today’s newspaper addressing the problems with the Long Island loan modification industry and highlighting the Federal Trade Commission’s recent nationwide crackdown on “fraud and deception” by mortgage modification companies.
Randi F. Marshall, an investigative staff reporter at Newsday, wrote the extensive article, which will continue in tomorrow’s edition. Ms. Marshall brought attention to the fact some attorneys, like myself, refuse to do loan modification work.
“No matter what’s going on in the economy, you’re going to have these companies come out of the woodwork and take advantage of people in a vulnerable situation,” I was quoted as saying.
The fact is that most lenders are not cooperative in negotiating modifications. Yet, this has not stopped numerous people and companies, essentially those who previously sold sub-prime mortgages, to now scam those homeowners who are desperate for a solution and are susceptible to fraud.
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Newsday commented that many consumers paid exorbitant fees to loan modification companies on Long Island, only to find that the companies disappeared with their funds without doing any work at all.
Written by Craig D. Robins, Esq.
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Bankruptcy case filed in Central Islip Bankruptcy Court today will test the use of a large “marital adjustment” on the means test for high-income debtors
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From time to time I review the bankruptcy filings of other attorneys to get an idea of what kinds of cases are being filed and to also see what other attorneys are up to.
One case that was filed today really stood out because the means test indicated an annualized family income of $197,377 per year.
Now I’ve filed a number of cases where the family income was between $100,00 per year and $150,000 per year. However, I have never came across a Chapter 7 Long Island bankruptcy case where the family income was touching $200,000.
Many Long Island consumers have rather high incomes and still qualify for Chapter 7 under the new bankruptcy laws which impose a strict means test requirement. See my previous post: If I Make Over $100,000 a Year, Can I Eliminate Credit Cards Debts in Bankruptcy?
This case, in which only one spouse filed for Chapter 7 Bankruptcy, has a very high “marital adjustment” on the means test
Other interesting facts about this case are that the family size is relatively small – only three people, and the monthly mortgage payment is only $3,599. What enabled this debtor to pass the means test is that only the wife filed for bankruptcy (her husband did not), and she claimed a “marital adjustment” for her non-filing spouse of $5,517.
It was also interesting that the debtor did not explain how the marital adjustment was being used.
Generally, a debtor’s non-filing spouse’s income must be included in the means test. However, the Bankruptcy Code says that the debtor need only include this income to the extent to which it is contributed “on a regular basis for the household expenses of the debtor or the debtor’s dependents.”
Accordingly, for means test purposes, a debtor can deduct from the non-filing spouse’s income that sum which the non-filing spouse uses for herself or himself, and does not contribute to the family’s expenses. This is called the “marital adjustment.”
The extent of how much a debtor can deduct for the “marital adjustment” on the means test will be tested
However, one of the unsettled areas of law concerns what deductions are reasonable. In this case that was filed today, the Office of the United States Trustee will certainly review the means test and the relatively-large marital adjustment with a fine-tooth comb and possibly raise objections.
My colleague, Long Island bankruptcy lawyer Joseph S. Maniscalco, Esq., of Wantagh, is representing the debtor, and my colleague, Richard L. Stern, Esq., is the Chapter 7 trustee. Dorothy T. Eisenberg is the bankruptcy judge assigned to the case.
I will follow up on this case and keep you posted in a future blog post.