Brooklyn Judge gives New York homeowners a fighting chance against foreclosure

For New York homeowners facing foreclosure, they may feel like the deck is stacked against them.  The economy is in the tank.  Credit has dried up.  Trying to call your mortgage company and negotiate a loan modification feels like an exercise in futility.  And mortgage companies are probably profiting off the delays in the foreclosure process anyway.

But it turns out there is a real hero out there whose name is not BAPCPA Man.  In fact, he works right in Brooklyn.

The Honorable Arthur M. Schack, a Brooklyn bankruptcy judge, has been turning the tables on banks and mortgage companies when it comes to foreclosures, according to the New York Times (“A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style“).

The article goes on to describe how Judge Schack simply makes a point of “taking a magnifying glass to the mortgage industry” and actually looking through all of the mortgage documents.  Turns out there are tons of mistakes by mortgage companies in their documentation.  In one instance:

a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

To date, Judge Schack had overturned 46 of 102 foreclosure motions before him on the basis that if a bank can’t prove ownership, then it shouldn’t have the right to foreclose.  The article quotes Schack as saying:

“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

At a time of great cynicism, it’s inspirational to see someone adding humanity back into the economic formula.  I strongly encourage you to read the whole article.  The article even notes that perhaps Judge Schack’s approach could evolve into a national model.  That is, in lieu of any legislation to protect homeowners, judges start stepping in more to do what’s needed.

Stay tuned for more developments on this front.

In the meanwhile, if you’re facing foreclosure in New York or contemplating bankruptcy filing, please feel free to get in touch for a free initial consultation.

Who Are Your New York Chapter 13 Trustees?

A lot of New York readers may not know who their own Congressional representatives are in Washington, D.C.  And perhaps as few know the state legislator from their district.  But I’m willing to bet that almost no readers know who the Chapter 13 trustees are for their district in New York.  So I’ve listed them below for your benefit.

First, a few things about the Chapter 13 Trustee.  As you’ll see below, there are one or two individuals appointed to serve as Chapter 13 Trustees for each court district.  This is unlike Chapter 7 trustees or Chapter 11 trustees who are members of a panel and selected at random for each case.

Chapter 13 Trustees are in fact private practice attorneys.  They are not government employees.  And the one or two Chapter 13 trustees for each district handle all of the Chapter 13 bankruptcy cases that are filed in their district.

And now, here are your New York state Chapter 13 Trustees.  (FYI, a complete state-by-state list of Chapter 13 trustees can be found at http://www.usdoj.gov/ust/eo/private_trustee/locator/13.htm.)

EASTERN DISTRICT OF NEW YORK

Marianne DeRosa
100 Jericho Quadrangle, Suite 208
Jericho, NY 11753
Phone: (516)622-1340
http://www.usdoj.gov/ust/r02/central_islip/ch13-trustees.htm

Michael J. Macco
135 Pinelawn Road
Melville, NY 11747
Phone: (631)549-7900
http://macco.lawoffice.com

SOUTHERN DISTRICT OF NEW YORK

Jeffrey L. Sapir
399 Knollwood Road, Suite 102
White Plains, NY 10603
Phone: (914)328-7272
http://www.usdoj.gov/ust/r02/manhattan/ch13-trustees.htm

NORTHERN DISTRICT OF NEW YORK

Andrea E. Celli
350 Northern Boulevard
Albany, NY 12204
Phone: (518)449-2043
http://www.13network.com/trustees/alb/albhome.asp

Mark W. Swimelar
250 South Clinton Street, 5th Floor
Syracuse, NY 13202
Phone: (315)471-1499
http://www.cnytrustee.com/DEBTORATTY.HTM

WESTERN DISTRICT OF NEW YORK

Albert J. Mogavero
110 Pearl Street, 6th Floor
Buffalo, NY 14202
Phone: (716)854-5636

George M. Reiber
3136 S.Winton Road, Suite 206
Rochester, NY 14623
Phone: (585)427-7225
http://www.usdoj.gov/ust/r02/rochester/ch13-trustees.htm

If you are seeking Chapter 13 bankruptcy help in New York–anywhere in New York, including Manhattan, Brooklyn, Queens, Staten Island, The Bronx or Suffolk County, Long Island–please get in touch for a free initial consultation and I’ll be happy to explain all of your options to you as well as how the Chapter 13 process works.

What will happen at my 341 meeting of creditors in New York?

It’s very common for clients filing for personal bankruptcy to worry about the 341 Meeting of Creditors.  It’s the first “event” in a bankruptcy case and the first time for most clients to actually go to court.  (Though it’s usually the only time the client needs to go to court in a bankruptcy case.)

A 341 meeting of creditors also sounds very formal and serious, and it conjures up images of being trapped in a room with angry, impatient creditors.  But the reality is that for individual debtors filing Chapter 7 or Chapter 13 bankruptcy in New York, it’s just you, your lawyer and the trustee.  Creditors generally do not attend these meetings.  In other words, most likely you go in with a 2-on-1 advantage.  (Note: In Chapter 11 cases, both personal and corporate, the 341 Meeting of Creditors tends to be a more substantive event.)

The meeting should only take a few minutes if your bankruptcy lawyer has done his or her job well in advance of the meeting.  The trustee will ask you a few questions to get some basic information on the record so that the case can move forward.  This is not to downplay the significance of the 341 meeting of creditors, on which the fate of your case can turn.  The distinction is that the pressure is not on you but rather on your attorney to do a good job of preparing.  As long as you’ve selected an experienced and diligent bankruptcy attorney in New York, everything should proceed smoothly.

There are many, many people filing bankruptcy in New York (especially these days), and the trustee’s main objective is to work through the cases as efficiently and effectively as possible.  That’s not to say they don’t look at everything closely or notice red flags.  But as mentioned above, it all turns on proper preparation.

If you are contemplating filing for Chapter 7 bankruptcy in New York or filing for Chapter 13 bankruptcy in New York, please feel free to contact me for  a free initial bankruptcy consultation.  I’ll be happy to sit down and answer all of your questions about the timetable for the case, the 341 meeting of creditors and any other questions you have to make sure you are aware of all of your options.

Lastly, below the jump is a list of common questions asked by a bankruptcy trustee.  These are not the only questions a trustee may ask, but it’s a good starting point, and it comes straight from 341 of the Bankruptcy Code.

What you should know about the trustee in bankruptcy

When the topic of bankruptcy in New York comes up, you hear a lot about things like Chapter 7, Chapter 13, the “means test,” financial statements and a bunch of other important terms.

But what do you know about the trustee and his or her role in a bankruptcy case?

It’s important to understand what the trustee is and what he/she does since they have the ability to significantly affect your bankruptcy case.

At Rosenberg Musso & Weiner we work with trustees from all angles.  We represent:

• Trustees in some cases in actions against creditors
• Creditors in actions against them by trustees in other cases
• And of course, many clients who are debtors who must interact with trustees.

As a result, we have an excellent understanding of everyone’s perspectives, strategies and even personalities, and we are able to help our clients in a whole range of situations.

What is a trustee?

Chapter 7 Bankruptcy
For a Chapter 7 bankruptcy case, a trustee is usually a regular bankruptcy lawyer who is qualified to be a member on the panel of trustees in a given district.  When a new bankruptcy case is filed, the office of the U.S. Trustee selects a member of the panel at random and assigns him or her to be the trustee for the new case.

Whenever a new bankruptcy case is filed (e.g., Chapter 7, Chapter 11, Chapter 13), a copy of the debtor’s petition is sent to the U.S. Trustees’ Office for that district.  The office of the U.S. Trustee then assigns one if its trustees to that case.

Chapter 13 Bankruptcy
For Chapter 13 bankruptcy cases, there are one or more designated trustees for each district who serve as the trustee for all of the Chapter 13 bankruptcy cases in that district.  These are called “standing trustees.”  They are regular, private practice lawyers who have been selected to serve as Chapter 13 trustees for their district.

In New York, there is only one Chapter 13 trustee for the Southern District of New York (which covers Manhattan and the Bronx as well as Westchester, Rockland, Putnam, Orange, Dutchess, and Sullivan counties), and their are two Chapter 13 trustees for the Eastern District of New York (which covers Kings (aka Brooklyn), Nassau, Queens, Richmond, and Suffolk counties).

What is a trustee’s role?

The trustee is like a watchdog for the case and has the ability to bring actions against (i.e., sue) both the debtor and the creditor in an effort to protect the interests of the estate.  The trustee’s role is a little different depending on the kind of bankruptcy.

Chapter 7

A trustee’s main responsibilities in a Chapter 7 bankruptcy case are to:

1. Investigate the financial affairs of the debtor
2. Liquidate the assets of the bankruptcy estate.  In other words, collect the the non-exempt property and assets of the debtor and convert them into money which is used to pay off the creditors.
3. Examine and, if appropriate, object to the claims of creditors
4. If necessary, object to the discharge of the debtor from bankruptcy

Also, when a debtor files for Chapter 7 bankruptcy, the trustee reviews the debtor’s calculations for the “means test” to make sure that the debtor is eligible and there is no “presumption of abuse.”  If the debtor is on or close to the borderline (i.e., it’s income is close to the median income for the state), then the trustee looks at the other facts in the case and can conduct its own investigation to determine if there is an abuse by the debtor.  The trustee then can decide to bring an action against the debtor disputing the debtor’s eligibility to file for Chapter 7.  Or, the trustee can let the debtor know that it will not bring any action and will allow the debtor proceed with its Chapter 7 filing.

Note: In New York, if the trustee believes there may be abuse, he or she typically refers the matter to the office of the U.S. Trustee rather than bring the action him or herself.

Chapter 13

Unlike a Chapter 7 bankruptcy where the trustee’s takes assets and converts them into money, in a Chapter 13 bankruptcy the trustee has no right to take and sell the debtor’s property.  Instead the trustee’s role is oversee the repayment plan, collect payments from the debtor and distribute them to creditors in an orderly way.

Additionally, the trustee can seek to dismiss the debtor’s case, for example, if the debtor is unable to continue making payments, or if the debtor loses his or her job and source of income.

Creditor Actions
A trustee can also bring actions against creditors to recover money for the debtor’s estate.  Usually, these are in the form of “preference” or “fraudulent conveyance” actions.

One of the purposes of the bankruptcy process is to make sure that all creditors are treated fairly and equally, and that no one creditor gets to push to the head of the line.  If one creditor gets money from the debtor unfairly, that means less money for the other creditors.  It is the trustee’s duty to bring actions (i.e., sue) any creditors that unfairly received money and try to recover that money for the debtor’s estate.

Working with trustees
Whether you’re a debtor or a creditor in a bankruptcy case in New York, you need to be aware of the trustee in the case.  It also helps to have a lawyer who is familiar with trustees–who they are, how they function, what their goals and incentives are–since trustees have the power to affect outcomes in many ways.

For more information about trustees as well as about bankruptcy in New York, Manhattan, Brooklyn, Queens and Suffolk County, Long Island, please feel free to contact us for a free initial consultation.