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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Bankruptcy Filings Are Reaching New Highs

Thu, 19 Nov 2009 01:30:58 -0800

Written by Craig D. Robins, Esq. Individual Bankruptcy filings have continued to increase this year, bringing the filings for those overwhelmed by consumer debt to new highs since the bankruptcy laws were overhauled in 2005. Nationally, the 135,913 consumer bankruptcy filings in October represented a 27.9 percent increase over last October’s monthly total of 106,266. The above graph, courtesy of the Calculated Risk Blog, shows consumer filings on a quarterly basis going back to 1996. We are now approaching the levels seen just prior to when the bankruptcy laws were changed in October 2005. The filings have increased virtually every single quarter since 2006. I previously wrote about Bankruptcy Filings Returning to Pre-Amendment Levels . Through October, there have been 1.18 million personal bankruptcy filings in the U.S.

Bankruptcy Filings Returning to Pre-Amendment Levels Written by Craig D. Robins, Esq. Last month,...
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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Can Credit Card Companies Trust the Collection Firms They Hire?

Wed, 18 Nov 2009 06:00:33 -0800

Written by Craig D. Robins, Esq. Law Firm of Bill Collectors Dissolves Amid Law Suits Alleging that the Collection Firm Engaged in Fraud I previously wrote about debt collector law firms in New York that had gotten in trouble with the law. Debt Collectors Shut Down by Attorney General . Now it is coming to light that a large regional collection firm in Georgia crashed and burned amid allegations that the firm failed to file collection law suits on behalf of their clients and also used funds for those suits to pay the firm’s own expenses. The firm, Trauner, Cohen & Thomas, located in Sandy Springs, Georgia, dissolved after operating for more than 30 years. What led to the firm’s demise? Several of the firm’s clients, who are banks and credit card companies, sued the firm, alleging various gross improprieties. NCO Financial Systems, (a company I regularly deal with on behalf of my Long Island bankruptcy clients as they purchase massive amounts of delinquent debt), brought suit against the Trauner collection firm alleging that it gave the firm more than $1.3 million to reimburse the firm for filing fees and other expenses of collection suit litigation relating to more than 15,000 lawsuits the firm was to handle on NCO’s behalf. Instead, the collection firm used the funds for its own operating expenses and inflated it reimbursement requests according to the pleadings. Midland Credit Management brought another suit on similar grounds, alleging that they were defrauded $1.7 million. A third suit alleges that the Trauner collection law firm is affiliated with a collection company, National Asset Recovery Inc., and that this company and the law firm defaulted on $1.7 million in loans. There are even more similar law suits filed by Zenith Acquisition Corp. and Northstar Capital Acquisition. One wonders if the financial pressures that many of these debt collection firms are suffering from encourages them to take shortcuts and violate consumer rights. Congress recently issued a scathing report about the illicit practices of bill collectors: Credit Card Debt Collectors Ripped in Federal Report .

Credit Card Debt Collectors Ripped in Federal Report [caption id="attachment_2685" align="alignright" width="250" caption="Many debt collectors are downright...
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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: New Bankruptcy Chapter: Chapter 14 ???

Tue, 17 Nov 2009 16:45:14 -0800

Written by Craig D. Robins, Esq. Possible New Bankruptcy Chapter for Companies “Too Big To Fail” We are all familiar with bankruptcy Chapters 7, 11 and 13. Then there’s Chapter 9 for municipalities, Chapter 12 for farmers, and rather recently, Chapter 15 Bankruptcy for international insolvency matters. In an American Bankruptcy Institute Legislative Symposium held today, the panelists discussed whether Congress should add a new chapter to the Bankruptcy Code to handle filings by this country’s largest troubled companies that have recently been in the news as being “too big to fail.” After the failure of Lehman Brothers and the possible failure of AIG and the big three automakers earlier this year, there has been significant concern about how to handle such large companies. Daniel Flores, chief Republican counsel for the House Judiciary Committee, suggested that these companies need to be treated specially and that the United States needs to modify its bankruptcy laws so that the largest companies can fail without causing turmoil in this country’s financial system. Flores advocated for congressional passage of H.R. 3310, which would create a “Chapter 14” to institute a new legal process designed to help restructure troubled non-bank financial holding companies whose collapse would pose a systemic risk to U.S. economic stability. The new chapter would create an oversight board that would bring together the failing company, its creditors and regulators to address complicated financial issues before a bankruptcy filing. It appears that not all conference presenters were convinced that this new Chapter 14 filing category is really necessary. “I don’t know if it’s necessary to have a separate chapter,” said Harvey Miller of Weil Gotshal & Manges, who is the lead bankruptcy attorney for Lehman Brothers. “The Bankruptcy Code now is not perfect, but with some amendments, it could clearly deal with issues of non-bank financial holding companies.” ———————— About the image: the political cartoon is courtesy of David Donar, a Clemson University professor who maintains the blog, Political Graffiti . Although he teaches digital film projection, David has a sharp wit for political satire and uses his political cartoon site to showcase his opinions on all sorts of topics…middle east, US politics, environment, sport, anything news or opinion worthy. Check it out.

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Bankruptcy Attorney Representation — How Important Is It?

Mon, 16 Nov 2009 21:30:18 -0800

Written by Craig D. Robins, Esq. The two major reasons why people who know they need to file for bankruptcy, but put off doing so, is anxiety about filing, and concern about paying the legal fees. Some consumers consider filing themselves. However, this can be a major mistake and create additional problems. Here’s why: In every bankruptcy case, the debtor must appear before a court-appointed trustee. The trustee is not your friend. To the contrary, the essential purpose of the trustee is to investigate the debtor and determine if there are any assets that can be taken for the benefit of creditors. Meeting with an experienced bankruptcy attorney will enable the debtor to have his or her assets reviewed. What many debtors do not realize is that certain conduct that may have occurred years before filing can have a major impact. For example, giving away assets or transferring an interest in real estate can result in significant litigation in the bankruptcy case. Such matters are regularly reviewed by bankruptcy counsel before a bankruptcy petition is filed. There are many reasons Why Consumer Debtors Can’t Transfer Assets Like a House or Car Before Filing Bankruptcy on Long Island . The bankruptcy petition is written in plain English, so one would think that it is quite readable. However, a fully-completed petition in a Chapter 7 bankruptcy in New York, when including all of the various forms and schedules, can easily exceed 40 pages. The petition requires preparing numerous schedules and budgets. Proper information about debts and assets must be listed. Not necessarily an easy task. Then, there are several dozen questions in a Statement of Financial Affairs that must also be answered. The creditors and their addresses must be listed not only ih a schedule of debts (that is broken into three separate categories) but also in a special format called a Matrix. When Congress drastically overhauled the Bankruptcy Code in 2005, many new requirements were imposed. Now there is a complex and complicated means test, as well as the requirement for mandatory credit counseling. The Chapter 7 trustee as well as the Office of the U.S. Trustee reviews each and every petition to make sure all of the requirements under the new law are properly met. I reviewed issues under the new bankruptcy laws in several posts. Here’s one: Bankruptcy Judges Convene to Discuss New Bankruptcy Laws on their One Year Anniversary . In addition, the means test is very tricky. Failure to properly prepare the bankruptcy means test can spell disaster as the United States Trustee can seek to have the bankruptcy case dismissed. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case . Another important aspect is Determining Household Size for the Means Test . If the bankruptcy court determines that the debtor did not include the proper number of family or household members for the means test calculation, the means test eligibility can change, resulting in an abusive filing situation. Consumers must also choose which Chapter 0f bankruptcy to file. If a consumer is seeking to stop foreclosure and cure mortgage arrears, A Chapter 7 filing won’t do the trick. Of course, there are many books that explain how to do the process. They are all several hundred pages long. Yes, any American consumer can file their own bankruptcy petition. However, there are so many traps for the unwary that even attorneys who do not regularly practice bankruptcy often get their clients into hot water. A good bankruptcy attorney will also prepare the client for the meeting of creditors. For example, How Much Should You Say at the Meeting of Creditors in Bankruptcy Court? Every trustee I know on Long Island has expressed concern about those consumers who file bankruptcy without an attorney because these consumers often make serious mistakes with the procedure. Many consumers who file on their own get bad advice from a friend or relative. When it Comes to Bankruptcy, Don’t Listen to Uncle Joey . Self-representation by pro-se debtors in bankruptcy matters can end up being penny-wise, but pound-foolish. This is one of Three Reasons Why a Chapter 7 Bankruptcy Case Can Go Bad .

The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case Written by Craig D. Robins, Esq. Since the bankruptcy...
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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Super Ninja Bankruptcy Attorneys

Mon, 16 Nov 2009 05:00:17 -0800

Written by Craig D. Robins, Esq. What happens when you take two spirited six-year-old boys who love to use their imagination and pretend to be Power Rangers, and it also happens that both of their fathers are bankruptcy attorneys? Why, you get Super Ninja Bankruptcy Attorneys! My son went through a faze where he couldn’t get enough of the ”Power Rangers” television program. He would often pretend to be a Power Ranger, which is a seemingly ordinary individual who morphs into a powerful, costumed superhero. Add to the mix visiting Daddy’s bankruptcy law office, seeing Daddy come home “costumed” in his suit and toting his briefcase, and hearing Daddy talk a lot about this thing called, “bankruptcy.” So about three years ago, my son, Max, while playing with his best friend, Sam, came up with the idea that they were Super Ninja Bankruptcy Attorneys. Sam is the son of former Brooklyn Chapter 13 trustee Stuart Gelberg, who now is a Long Island bankruptcy attorney, like me. I was never able to get Max or Sam to reveal exactly what the Super Ninja Bankruptcy Attorney does, as they explained to me that this was “top secret.” However, I see them constantly trying to save the world. Or at least that’s what it looks like from where I sit. The boys, now nine, are still hard at work, playing Super Ninja Bankruptcy Attorney.

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: It’s Time for Bankruptcy Songs

Sun, 15 Nov 2009 19:45:00 -0800

Written by Craig D. Robins, Esq. My friend, Steven Horowitz, the originator of the Bankruptcy Bill and BAPCPA Man bankruptcy comic strips, recently announced a bankruptcy song contest. Although practicing bankruptcy is usually serious business, it’s still fun to make light of its humorous aspects. I’m considering entering the song contest. In the meantime, I will post some already-written bankruptcy songs. Here is one by Michael Silverstein, who was previously a senior editor with Bloomberg Financial News. He wrote this to make light of how consumers were hurrying to file their bankruptcy petitions before the law changed in 2005.

The Bankruptcy Song
(To be sung to the tune of
“My Bonnie Lies Over The Ocean”)

To bankruptcy court I am fleeing,
This cop out is calling to me,
I’ve spoken to Irv my accountant,
He says it’s my best strategy.
Bankrupt, bankrupt,
There’s creditors at my front door,
My door;
Need a,
Court date,
Before Congress changes the law. The stock market took down my savings,
It’s years since I got my last raise,
My bills keep on growing like fungus,
There’s just one way out of this maze. Bankrupt, bankrupt,
There’s creditors at my front door,
My door;
Need a,
Court date,
Before Congress changes the law. I’m woefully overextended,
When the phone rings I shake and I twitch,
The gap twixt my debts and my assets,
Makes the Grand Canyon look like a ditch. Bankrupt, bankrupt,
There’s creditors at my front door,
My door;
Need a,
Court date,
Before Congress changes the law. To see more of Michael’s funny songs and poetry, which emphasize satirical verse about financial themes, check out his website: [www.wallstreetpoet.com].

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Bankruptcy Can Provide Way Out of Bad, Highly-Leveraged Real Estate

Tue, 10 Nov 2009 01:30:16 -0800

Written by Craig D. Robins, Esq. For many, purchasing a home in the past few years with no money down was the way to go. Now, however, with real estate values plummeting, many homeowners are finding themselves owing substantially more than their homes are worth. This is a concept I’ve focused on repeatedly in many blog posts over the past several months. The concept of taking a loss with such real estate purchases has to do with leveraging — putting very little down, but purchasing a lot. When property values are increasing, the homeowner is considered a winner. However, with the collapse of real estate values, often combined with an increase in the costs of monthly mortgage payments because of adjustable-rate mortgages, the costs of home ownership become especially difficult. Homeowners faced with this pressure have to make a decision as to whether it is worth it to keep their home if they can barely afford to pay the mortgage and they have absolutely no equity at all. Our Long Island bankruptcy attorneys help counsel homeowners with exploring the various options. To those who qualify, a bankruptcy can provide an opportunity to walk away from over-leveraged bad real estate without any future liability.

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: How Do Creditors Find Out About a Bankruptcy Filing?

Mon, 09 Nov 2009 03:00:47 -0800

Written by Craig D. Robins, Esq. The instant a bankruptcy petition is filed, an “automatic bankruptcy stay” goes into effect, making it illegal under federal law for creditors to take any further steps to collect on a debt. This is the first step to getting debt relief in any bankruptcy case. So who notifies the bill collectors and creditors about the bankruptcy filing, and how do they find out that you filed for bankruptcy? I previously wrote: How Quick Will Creditors Stop Calling Me If I File Bankruptcy? Once the bankruptcy petition is filed with the bankruptcy court, the Court sends out a “Notice of Commencement” form which, in a Chapter 7 case, is also known as a “Notice of Chapter 7 Case, Meeting of Creditors and Deadlines.” This notice is uniform throughout the country as it is on Official Form 9A. The court typically mails the notice between two and four days after the petition is filed. The Court sends the notice to all creditors and interested parties listed in the petition. Thus, it is important to make sure that you provide correct and accurate addresses for all creditors in the petition. The notice contains your name and address; your Social Security number; the date of filing; the name and address of the bankruptcy court where the case is pending; the chapter of bankruptcy you filed for relief under (usually Chapter 7 or Chapter 13); the name of the judge; the name, address and phone number of the trustee; the date, time and location for the meeting of creditors; the deadline for filing objections to discharge; the deadline for filing objections to exemptions; a notation as to whether a “presumption of abuse” exists (in Chapter 7 cases); a notice to creditors that they may not engage in collection actions; and a schedule of explanations of common bankruptcy terms and concepts. This notice is the only time the Court will send a creditor any documentation containing your Social Security number. Violating the automatic bankruptcy stay is a very serious offense. What Are Your Rights If a Creditor Violates the Automatic Bankruptcy Stay? If creditors call you after filing because they have not yet received this notice, you can tell them that you filed for bankruptcy and give them the chapter (usually 7 or 13), the case number, and the name of the Court. For most of my clients that would be “the Bankruptcy Court for the Eastern District of New York.”

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: New Fannie Mae “Deed for Lease” Program May Be an Alternative to Foreclosure But It May Not Be the Best Choice for Many Homeowners

Fri, 06 Nov 2009 20:15:53 -0800

Written by Craig D. Robins, Esq. If you have a Fannie Mae mortgage, are delinquent with your mortgage payments, and are headed towards losing your house in foreclosure, you may be able to get a temporary break. A new program entitled, “Deed for Lease” permits homeowners to transfer the deed to their house to Fannie Mae and sign a one-year lease. The program was just announced two days ago. Why would Fannie Mae do this? The foreclosure process is usually lengthy and time-consuming. This program will permit families to stay in their homes (albeit for a limited period of time) and avoid the uncertainty of foreclosure. However, the program is not for everyone. There is a detailed application process and you must be approved. Also, the program only applies to Fannie Mae mortgages. Is the “Deed for Lease” program better than filing bankruptcy or engaging in foreclosure defense? Only an experienced bankruptcy attorney can really help answer that question. There are pros and cons with all options. The “Deed for Lease” program means losing your home — for good. On the other hand, filing a Chapter 13 bankruptcy enables the homeowner to cure the mortgage arrears over time and keep the home. The program also guarantees a minimum one-year rental period, which also calls for a monthly rental payment. However, defending a foreclosure proceeding (assuming that there is a reasonable foreclosure defense) can often provide the homeowner with an even longer period to stay in the home, during which time the homeowner does not make any rent, mortgage or real estate tax payments. In the program, you would have to pay “market rate” for rent, which could be fairly pricey. For a typical Long Island home, that could easily be $2,000 per month or more. Finally, even if the program sounds good for you, there is no guarantee that you will be accepted into it, and the approval process can take some time — and all the while the mortgagee can continue a foreclosure proceeding. Of course, if the bank takes back a deed in exchange for a lease, the homeowner is off the hook for any mortgage deficiency. However, keep in mind that a Chapter 7 bankruptcy filing in New York would discharge such a deficiency. If you’ve already filed for bankruptcy, you are not eligible for the program. How do I know if I have a Fannie Mae mortgage? Fannie Mae has a website that enables you to look up your property to see: [loanlookup.fanniemae.com]. What are the details of the “Deed for Lease” program?

The mortgage servicer has to decide that the homeowner qualifies for a “deed in lieu of foreclosure.” Basically, borrowers who are in default on their loan voluntarily give the deed back to the lender, negating the need for a drawn-out foreclosure process. Traditionally this has been considered less damaging to the borrower than foreclosure, although both actions have severe effects on a borrower’s credit standing–and both result in loss of their home.

Borrowers-turned-tenants must be able to afford market rent on the home. That rent can’t exceed 31 percent of their monthly gross income, which must be documented.

Borrowers cannot have 12 or more past-due payments on their mortgage. And they must have made at least three payments since the loan was first taken out–or since the last time it was modified. Borrowers can’t be in the process of declaring bankruptcy.

Rentals are for 12 months, with the possibility of an extension.

The home remains available for sale, subject to the terms of their lease. Renters remain responsible for maintaining the property.

Only primary residences qualify. Landlords may qualify if their tenant has been using the home as a primary residence.

Mortgages backed by the FHA, VA or other government agencies don’t qualify.

Borrowers who think they might qualify for the new rent-back program should talk with their mortgage servicers, who, in conjunction with Fannie Mae, will figure out if they qualify for a rent-back offer.

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» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law: Credit Card Debt Collectors Ripped in Federal Report

Fri, 06 Nov 2009 04:00:21 -0800

Many debt collectors are downright evil!

Written by Craig D. Robins, Esq. Two weeks ago the Government Accounting Office (GAO) issued a scathing report about the illicit practices of bill collectors. Of course, this is a regular complaint that I hear from my Long Island bankruptcy clients. The GAO has been asked by Congress to examine federal and state consumer protections statutes to see if they were working. They concluded that they were not and reported back to Congress that the Fair Debt Collection Practices Act (FDCPA) should be amended to provide consumers with better protection. Like, tell us something we don’t know! The report, Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology, is interesting reading and 66 pages long. The Federal Trade Commission (FTC) receives more complaints about bill collectors and the debt collection industry than any other industry. Last year they received 79,000 complaints on third-party debt collectors. This is almost 19 percent of all of the complaints it received. Ongoing abusive practices include trying to collect debt that isn’t owed or is beyond the statute of limitations, making harassing phone calls, threatening to make arrests that the debt collector has no authority to make, and collecting debt discharged in bankruptcy. I previously wrote about efforts here in New York to deal with the problem of rogue bill collectors: Debt Collectors Shut Down by Attorney General . Hopefully, Congress will indeed make the debt collection laws stricter to prevent the abuse that we hear so often.

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