Source: http://longislandbankruptcyblog.com/2011/03/
Timestamp: 2019-04-20 01:04:06+00:00

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In March 2010, I wrote a rather detailed review of the Baum law firm as they had gained a significant amount of notoriety for not only being the largest foreclosure firm in New York but also the one most plagued by allegations of foreclosure misconduct. See Has Steven J. Baum, P.C. Served You with Foreclosure Papers?
I then provided an update with my second post about Baum in which I compared Baum, as the Foreclosure King of New York, with David J. Stern, a former foreclosure king in Florida who tumbled from grace amid robo-signing scandal. See: Is Steven J. Baum, the Foreclosure King of New York, Worth $50 Million?
In this post I will now provide you with an additional update on some of the ongoing trials and tribulations of the Steven J. Baum foreclosure mill.
If you have been served by Baum in a foreclosure case, are in the process of litigating against that firm, or are simply intrigued, as I am, about this monster of a foreclosure factory, then read on.
In a nutshell, the firm has preserved its reputation for engaging in shoddy and improper foreclosure litigation as indicated in a host of court opinions, lawsuits and investigations.
I was also successful in having the Suffolk County Supreme Court toss out a foreclosure case that Baum had brought against one of my clients and this was just reported in the New York Times: Craig Robins Mentioned in New York Times Cover Story About Sloppy Foreclosure Lawyers Who Represent Lenders.
In that case, Baum represented mortgagee Wells Fargo, who it turned out failed to have standing to bring the case in the first place.
In August, a federal class action suit was filed against the Baum firm alleging that tens of thousands of New York State homeowners were victims of foreclosure fraud orchestrated by the Baum law firm.
The case, Connie Campbell v. Steven Baum, MERSCORP, Inc., et. al., is pending here in the Eastern District of New York. The case alleges that the Baum firm engaged in a bevy of improprieties worthy of being sued under RICO, which is the federal criminal statute designed to permit the authorities to punish members engaged in organized criminal enterprises.
The RICO statute also permits victims of organized crime to seek redress in a civil suit for acts that are orchestrated as part of a criminal enterprise. This class action involves that type of civil suit. RICO’s original intended use was to prosecute the Mafia.
In the suit, Ms. Campbell, who lost her Brooklyn home in a foreclosure proceeding that the Baum firm had brought, alleged that the foreclosure filings were false.
She claimed that Baum sued her, claiming that HSBC was the owner of the mortgage. Yet, Ms. Campbell asserts that the loan was never assigned to HSBC, but instead, was assigned to MERS.
MERS is a very controversial, privately-held electronic registry that does not really own a mortgage, but tracks servicing rights and ownership.
I previously wrote about special defenses that a homeowner can assert to defend a foreclosure action involving a MERS mortgage. See: A New Powerful Mortgage Foreclosure Defense — Compliments of MERS.
In essence, Ms. Campbell alleged that any MERS mortgagee does not have standing to sue, and the Baum firm was complicit in bringing improper foreclosure suits.
She also alleged that the Baum firm was in cahoots with MERS with the robo-signing of various foreclosure documents.
Since New York City attorney Susan Chana Lask commenced the suit in August, 2010, she amended it twice. You can see a copy of the Second Amended Campbell v. Baum Class Action Complaint. The case is Campbell v. Baum, 10-cv-3800.
Since the class action started half a year ago the parties have been bitterly bickering about exchanging documents and information in the discovery phase of the suit. This has resulted in Ms. Lask having to make a number of applications seeking to have the court determine that Baum’s discovery requests were unreasonably burdensome.
In other words, she has claimed that Baum is papering her to death — a grossly unfair tactic that is used to abusively smother and sidetrack an opponent while draining their resources by serving an excess of papers and demands, thereby creating unnecessary legal work. But looking at Baum’s less-than-stellar history, perhaps that could have been expected.
Baum also engaged in what many believe to be the dirtiest of dirty pool — he counter-sued Ms. Lask, claiming he defamed her by discussing the suit. Yet, in interviews that she gave to the press, she insisted that everything she said was true, based on various court decisions against Baum.
More than one attorney believes Baum has violated the rights of many. Baum must now defend against another class action suit that is now pending in the Central Islip Courthouse of the U.S. District Court for the Eastern District of New York.
In November 2010, Jacob Manashe filed a class action against the Baum firm, alleging that Baum was illegally charging homeowners for attending settlement conferences.
This case is Menashe v. Steven J. Baum P.C., 10-cv-5155. The attorney for that case is New York City attorney Randall S. Newman.
Mr. Newman sent me a copy of the complaint which you can view for yourselves. Click Menashe v. Baum federal class action complaint.
It seems that New York courts regularly criticize the Baum firm for shoddy, sloppy and problematic foreclosure practices. Last year, Baum’s firm foreclosed on a Garden City home owned by Pal Raia.
After Baum succeeded in conducting a foreclosure sale, he sought to evict the homeowner. However, Baum neglected to properly identify the mortgagee owner that took over the property.
In this case, Baum’s firm was ordered to pay about $15,000 in legal fees and costs, on top of a $5,000 fine.
I’ve read reports that the Baum firm is being investigated by New York’s Attorney General for overcharging, filing false documents and representing parties on both sides of a mortgage transfer.
Arthur M. Schack, a New York State Supreme Court Judge sitting in Brooklyn, has been especially vocal with his criticisms of the Baum firm.
In one case he called the firm’s explanations “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling,” referring of course to the old, black & white classic TV show, theTwilight Zone (which I have recently been watching on the Syfy channel) about science fiction and the supernatural.
Read Judge Schack’s Twilight Zone case for yourself: HSBC Bank USA, N.A. v. Yeasmin, 2010 NY Slip Op 50927(U).
In a foreclosure case last year pending in the Kings County Supreme Court, Judge Schack admonished Baum for representing two parties in the same action, which is a conflict of interest.
In the case, Lasalle Bank, N.A. v. Smith, Judge Schack denied the mortgagee’s motion for a judgment of foreclosure that the Baum firm had brought on the ground that they failed to provide an affidavit of facts executed by an officer of the mortgagee who had knowledge of the facts.
However, Schack also criticized the Baum firm for simultaneously representing both first and second mortgagees in violation of 22 NYCRR 1200.24 of the Disciplinary Rules of the Code of Professional Conduct since Baum was unable to demonstrate that his clients consented to such representation after full disclosure of the risks involved. The slip opinion was rendered on March 22, 2010.
Upon searching for various Baum foreclosure cases, one other interesting case turned up: Baum v. Baum.
It appears that Baum is involved in a heavily litigated divorce case pending in upstate New York before Judge John O’Donnell who recently ordered Baum to pay pendente lite support.
I’ve also prepared a rather lengthy and detailed list of various decisions that New York judges have issued in various Baum foreclosure cases, most of which have highlighted various irregularities and sloppy conduct on the part of the Baum firm.
I am hoping to assemble that for a future blog post.
If you think the above is something, you must see my first Baum Post from 2010 About the Stephen J. Baum Foreclosure Mill.
Also see my second Baum post: Is Steven J. Baum, the Foreclosure King of New York, Worth $50 Million? .
A decision from the 7th Circuit Court of Appeals last week illustrates the importance of providing accurate information in the bankruptcy petition. In that case, debtors from Michigan failed to do so and were denied a discharge. (Stamat v. Neary, 7th Cir. Mar. 24, 2011).
Dr. and Mrs. Stamat of Illinois filed a high-debt Chapter 7 bankruptcy case in July 2007. Dr. Stamat is a medical doctor who operates a pediatric clinic. The wife owns a medical billing company. They sought to discharge over $1.5 million in debt.
After being examined, the trustee alleged that the debtors failed to list numerous assets and transactions including past business interests, two limited partnerships, a $10,000 law suit settlement payment, and $90,000 obtained from a refinance. The trustee also alleged that they misreported their 2006 income.
Accordingly, the trustee sought to deny their discharge by bringing an adversary proceeding under Bankruptcy Code section 727, arguing that the debtors concealed estate assets with intent to defraud their creditors, fraudulently made false statements under oath, and failed to satisfactorily explain the loss of assets — some pretty serious charges.
The bankruptcy court agreed with the trustee, denying the debtors a discharge. The debtors unsuccessfully appealed to both the District Court and the Court of Appeals, who held that the debtors made numerous material omissions which displayed a reckless disregard for the truth.
The debtors indicated in their petition that their 2006 gross income was $53.000. However, their 2006 tax return indicated that Dr. Stamat grossed $265,000 from his medical practice and his wife grossed $22,000 from her billing business. That’s quite a disparity.
In addition, the debtors failed to disclose past investment and business interests, as well as ownership interests in various limited partnerships, which information they were required to list in the Statement of Financial Affairs, which is one of the schedules of the bankruptcy petition.
The debtors also refinanced their home twice in the two years before filing the bankruptcy petition, receiving over $90,000 in cash, and they failed to report that as well.
The decision underscores a basic tenet of consumer bankruptcy — that an honest debtor is entitled to a fresh new financial start. Honesty and candidness are paramount.
The Court stated that the debtors knew or should have known that the information they provided was inaccurate and that the cumulative effect of their false statements was material. This established a pattern of reckless indifference to the truth.
First, the debtors in this case are both intelligent and educated. They ran a medical practice. So they were smart enough to know what they were doing. When it came to their bankruptcy petition, they made not one omission, but many. It appears that they did so to deceive the court.
If the debtors had merely neglected to schedule one particular asset, or if they merely provided inaccurate information about their income, they likely would have been able to coast, assuming that they were immediately forthright about amending their schedules to provide accurate information.
However, in this case, the debtors’ failure to provide accurate information was so wide-spread, that it was impossible for the court to overlook, as the only reasonable conclusion was that the debtors intentionally acted to withhold important information.
The bottom line is that it is important to be as accurate as possible when disclosing information about your financial situation. Failure to do so can result in having the court deny your dischage.
Every so often we file a bankruptcy case that has a rather unusual asset – and unusual assets sometimes lead to unusual dispositions by the trustee.
Almost two years ago, in 2008, we filed a Chapter 7 bankruptcy petition in the Central Islip Bankruptcy Court here on Long Island that was routine in every respect – except one. The debtor had an unusual asset which the trustee thought he could sell for the benefit of creditors.
Our client, an African-American, had inherited some property 30 years ago that had been in his family for quite some time.
According to Wikipedia, 40 acres and a mule was a practice in the 1860’s of providing farmable land to Black former slaves who became free as Union armies occupied areas of the Confederacy.
The combination of the land, together with Army mules, was meant to provide a sound start for a family farm.
40 acres (16 hectares) was a standard lot size for rural land, being a sixteenth of a square mile.
Over the ensuing years, the great grandfather and his descendants carved up the property several times and transferred it down family lines.
When the debtor inherited some of this property about 30 years ago from his parents, it consisted of two unimproved lots, one about two acres in size, and the other about four acres. Other family members owned adjoining parcels. The trustee assumed that six acres of property had to be worth something.
However, the property was located in a very rural area in Southern Virginia consisting primarily of farms and vacant, unused land. Neither of the debtor’s parcels abutted a roadway; there were no structures on or near the land; and there was no utility service to the land. Basically, the property had very little value.
Nevertheless, the property was not exempt under any statutory authority. Since the debtor did not reside on the land, he was unable to assert the homestead exemption to protect it, and since the bankruptcy case was filed before New York’s exemption statutes changed a few months ago, the debtor could not utilize any wildcard exemption.
The debtor had hoped to keep the property for sentimental reasons, but realized that cooperating with the trustee and obtaining a discharge of his existing debts was more important.
Nevertheless, the debtor knew that there was very little demand for such lots as there were many of them, and hoped the trustee would just abandon it.
The Chapter 7 bankruptcy trustee, known in local circles for being rather aggressive about pursuing assets, would do no such thing. The trustee brought an application to retain a local Virginia real estate broker to list and sell the property.
I initially tried to persuade the trustee, who I am friendly with, to abandon the property as having no value to the bankruptcy estate. However, the trustee was somewhat adamant so I assured him that the debtor would fully cooperate with him.
The broker tried to sell the parcels for two years with no success. The trustee did not give up. Earlier this month, he fired the broker and brought an application to retain another one. That application was granted just yesterday.
Today, quite unexpectedly, the trustee filed a “no-asset report” – just 24 hours after getting court approval to retain a new real estate broker.
By filing this no-asset report, otherwise known as a “Chapter 7 Trustee’s Report of No Distribution,” the trustee advised the bankruptcy court that there were no assets to be distributed and that the case should be closed as having been fully administered.
What happened in 24 hours? I haven’t spoken to the trustee yet, but my guess is that the trustee finally realized what the debtor had known all along – that the property had very little extrinsic value and that it would be very difficult to sell. Sometimes Debtors Can Keep Non-Exempt Assets in Chapter 7 Bankruptcy Cases .
Out of curiosity I called the broker who acknowledged that this property would certainly be a hard-sell.
Consequently, the debtor received his discharge (the court actually granted this over two years ago) and he was able to keep all of his assets – including the land remaining from his great grandfather’s emancipation from slavery – forty acres and a mule.
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In November I wrote about a Long Island attorney, Jay Korn, who, on March 24, 2010, had just jumped eight stories to his death amidst an investigation into whether he fleeced millions in a Ponzi scheme.
He jumped from the roof of his the Hempstead building where his law office was located at 50 Clinton Street.
That led several investors in the scheme to put Korn’s firm, Korn & Spirn, into an involuntary Chapter 7 bankruptcy.
See: Korn & Spirn — Involuntary Bankruptcy Just Filed Against this Beleaguered Long Island Law Firm for a post that contains a fairly detailed discussion of the situation, the bankruptcy case, and an explanation about involuntary bankrutpcy.
The Nassau County District Attorneys Office just concluded, after examining Korn’s financial affairs for a year, that Korn was solely responsible for the Ponzi scheme.
In a statement, Nassau County District Attorney Kathleen Rice said, “The credible evidence did not establish that anyone other than Jay Korn was involved in the alleged criminal wrongdoing.” She added that the D.A. was closing the case.
The bankruptcy case, which had been filed in November, was assigned to Chapter 7 bankruptcy trustee, Andrew M. Thaler, who is in the process of investigating the decedents financial affairs to ascertain if there are any assets to liquidate for the beneift of creditors, who primarily consist of scammed investors.
The trustee may likely adopt some of the legal theories currently used by the trustee in the Bernie Madoff Ponzie scheme case to “claw back” from those investors who benefited from the scheme.
So far, about $13.1 million in claims have been filed in the involuntary bankruptcy case. However, reported assets so far consist of a mere $2,500 representing funds that were in the law firm’s bank account.
How Did Korn Defraud His Friends and Clients?
Korn told friends and clients that he was administering a real estate investment program and he promised to pay investors returns of 12 to 15 percent per year.
As an attorney, Korn also represented parties in real estate transactions. In one of those transactions, he represented a Manhattan doctor who was purchasing a condo. Two weeks before Korn committed suicide, the doctor wired him $2.5 million for that real estate purchase. The doctor has not seen the money since.
Long Island Bankruptcy Attorney David Baram, a colleague of mine who was with me at the National Association of Consumer Bankruptcy Attorneys Workshop in Puerto Rico last fall, represents Arthur Spirn, who was Korn’s law partner. Spirn says he was a victim of his Korn.
The Nassau County D.A. has not pursued him at all and appears to have been cleared by the D.A.’s investigation.
Two years ago I wrote about a scandalous situation in which a consumer bankruptcy attorney in New York thought he had found a way to by-pass the requirement of having his clients go through mandatory credit counseling. He had his secretary do it for them!
I wrote a detailed post about that attorney: Attorney Caught Cheating on Credit Counseling Requirement .
This attorney didn’t even bother telling his clients about their obligation to do credit counseling. He just had his secretary do it for them, in their names. When the Chapter 7 trustee discovered this “irregularity” he told the debtor that there were serious problems with the case.
That debtor wound up coming to me for advice since he no longer trusted his attorney (and for good reason). I took the case over and was successful in getting the former attorney to refund the debtor’s legal fees and pay my fees as well.
The U.S. Trustee then went on to investigate the attorney and sanctioned him $40,000. In addition, the bankruptcy court suspended the attorney from practicing bankruptcy before the court for a year. He was also required to take 16 hours of continuing legal education covering bankruptcy law, four hours of which had to be for ethics.
Here’s the update: The New York Appellate Division for the Second Judicial District learned of the suspension and misconduct. It disciplined the attorney by giving him a public censure. This is the highest form of discipline short of suspension.
The attorney paid the full $40,000 sanction, took the required continuing legal education courses, and has since been reinstated to practice before the bankruptcy court.
In short, a very expensive price to pay for taking a foolhardy and highly improper shortcut around a bankruptcy law requirement.
Bankruptcy exemptions have been receiving a great deal of attention here in New York lately because of the recent dramatic changes to our state’s exemption statutes. These changes include giving debtors the option of using either the federal or New York State exemptions.
It is therefore an ideal time to discuss a recent, interesting Second Circuit decision involving a Connecticut bankruptcy case that addresses the federal exemption for protecting entitlement to a claim for lost post-petition earnings.
In Jackson v. Novak, 593 F.3d 171 (2d Cir. 2010), the husband and wife debtors, who were a psychiatrist and a psychologist, filed a typical Chapter 7 consumer bankruptcy petition in which they sought to discharge typical consumer debt. One of the assets that they sought to exempt consisted of the proceeds of a settlement for wrongful discharge.
Prior to filing, both debtors had been employed by a health insurance company in Connecticut. The company closed the local office and terminated the debtors’ employment about six months pre-petition. Also prior to filing, the debtors asserted claims against the company for wrongful termination, alleging they were fired in retaliation for challenging the way certain health insurance claims were treated.
In October 2003, the debtors filed their Chapter 7 bankruptcy petition, listing the cause of action for wrongful termination. Thereafter, the Chapter 7 trustee pursued the claims against the former employer and reached a settlement of $130,000 about a year after the bankruptcy was filed.
The settlement was “to satisfy claims for future lost earnings.” After attorney’s fees and expenses, the net proceeds to the debtors amounted to $83,000. In essence, the settlement essentially bought out the debtor-husband’s contract, paying him an amount equal to one year’s worth of salary. The debtor had stood to earn half of this amount prior to the time the bankruptcy was filed, and the other half, after the bankruptcy was filed.
The debtors sought to exempt the settlement proceeds by amending their schedule of exemptions, stating that under Bankruptcy Code § 522 (d)(11)(E), which is one of the federal exemption provisions, these proceeds were exempt.
The trustee objected, arguing that the proceeds were not exempt under several different theories, and the matter landed before the bankruptcy court judge who held a trial.
The bankruptcy court concluded that given the language of § 522(d)(11)(E), only earnings related to the period after the filing of the bankruptcy petition could be exempted. Property of the estate, and a debtor’s exemption therein, is determined as of the bankruptcy petition date. Section 522(d)(11)(E) refers only to post-petition loss of earnings, and the debtor may not exempt that portion of the settlement proceeds that provided compensation of his pre-petition loss of earnings.
Accordingly, the court conducted an computational analysis. Basically, since the debtors had a monthly shortfall of $4,000 a month, the court let the debtors keep that sum for the period of the settlement that covered the post-petition period. That amount was $16,550.
The debtors, who had hoped for much more, appealed to both the District Court and the Second Circuit Court of Appeals, arguing that the bankruptcy court had improperly calculated the amount. Both appellate courts affirmed the decision of the bankruptcy court.
The Second Circuit emphasized that the provisions of § 522(d)(11)(E) apply only to post-petition earnings and defined the term “future” as “looking forward from the date of the bankruptcy filing” and not from some previous point in time, as the debtors had argued.
The Court of Appeals found no error in the lower courts’ reasoning that considered such factors as the debtors’ needs, including present and anticipated expenses, their assets, present and anticipated income, training and education, and “ability to earn a living” in arriving at the $16,550 figure that represented a shortfall in their income.
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 March 2011 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. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
The state median income figures that you need to use for the means test change periodically. The last change was on November 1, 2010, and the change before that went into effect exactly a year ago, on March 15, 2010. The change before that was November 1, 2009.
It seems the means test median income figures change twice a year to coordinate with the changes to daylight savings time. I’m not sure what the analogy here is.
The changes last fall actually made it slightly harder to qualify. However, the changes going into effect in two weeks will make it slightly easier for most Long Island consumers.
In order to automatically pass the bankruptcy means test your income must be less than the median income in the state where you live. For New York residents, it will be slightly easier for some families to qualify for Chapter 7 bankruptcy than last year.
For those seeking to file for Chapter 13 bankruptcy, debtors will be fortunate in that many will be able to pay at close to a thousand dollars less each year, or even more than that. A family of four stands to pay about $1,500 less per year, a very significant savings. Considering that a Chapter 13 plan lasts three to five years, that can mean a savings of many, many thousands of dollars.
The figures used for the each state’s median income are based on United States Census data, and adopted by the Office of the United States Trustee. These figures routinely change once or twice a year. Pursuant to 11 U.S.C. § 101(39A)(B), the means test median income data is regularly adjusted, based upon the Consumer Price Index (CPI) for All Urban Consumers.
Usually, income rises each and every year because of inflation, the cost of living, etc. When we were deep into the recession last year, income actually decreased slightly from the prior year. That resulted in lower median income figures which made it more difficult to qualify for Chapter 7, and also required some Chapter 13 debtors to pay more into a Chapter 13 plan.
However, it appears that we may be heading out of the recession as median family income has increased over the past six months. Accordingly, debtors will benefit.
To see the very old and now obsolete median income data for each of the 50 states, go to the U.S. Trustee Census Bureau Median Income Means Test Chart for cases filed between November 1, 2009 to March 14, 2010.
To see the old data from last year of median income data for each state, which is only good through the end of this week, go to Median Income Means Test Chart for cases filed between March 15, 2010 and October 31, 2010.
To see the current median income data for each state, which is only good through the end of next week, go to Median Income Means Test Chart for cases filed between November 1, 2010 and March 14, 2011.
To see the new median income data going into effect next week, go to Income Means Test Chart for cases filed beginning March 15, 2011.
Family Size of One: If you are a single individual, which means that you have a “family size of one”, the New York median income has increased, from $45,548 earlier this year to $46,295. This is a minor but nevertheless significant change of $747 per year, or about $62 per month.
Family Size of Two: For a family size of two, the new median income figure has increased, from $67,292 earlier this year, to $68,396.
Family Size of Three: For a family size of three, the new median income figure has increased, from $56,845 earlier this year, to $57,777.
Family Size of Four: For a family size of four, the new median income figure has increased, from $82,587 earlier this year, to $83,942.
In my Long Island bankruptcy law practice, I estimate that at least 9 out of 10 clients now seeking to file for Chapter 7 bankruptcy relief do indeed qualify under the means test.
Making the most of qualifying under the means test and making the figures work for you requires that you meet with an experienced Long Island bankruptcy attorney to ascertain eligibility for filing for bankruptcy relief.
I’ve written several dozen articles on various issues concerning the bankruptcy means test. You can see them by clicking the category, Bankruptcy Means Test.
Last month I wrote about some bombshell news for New York bankruptcy debtors: outgoing-Governor Paterson unexpectedly signed legislation greatly increasing the New York state law exemptions, which are the statutes debtors can use to protect assets while seeking bankruptcy relief. The new law became effective on January 22, 2011.
See the January 2011 Suffolk Lawyer article — Bankruptcy Exemptions for New York Suddenly Increased for 2011 .
Not only does the new law increase existing exemption amounts for various assets, but it also permits debtors to use the federal exemptions – something that New York debtors (and their attorneys) never had to consider in the past.
It is therefore exciting that we will now be able to protect our consumer bankruptcy clients with a set of exemption statutes that open the door to all sorts of new possibilities. The most intriguing federal exemption is the wildcard exemption. It’s as if we’re playing poker and we’ve been dealt a new “wild” card that will enable us to win.
The wildcard exemption should permit most Long Island debtors to keep all of their assets in a typical Chapter 7 case. Previously, assets such as cars, bank accounts, personal injury causes of action, and tax refunds were at times difficult to fully protect for some clients.
First, a little about choosing the exemption scheme. A debtor can choose either the federal exemptions or the state exemptions, whichever is more favorable, but a debtor cannot use a combination of the two. If a married couple files a joint case, both spouses must use the same exemption scheme.
If you’ve read any older material referring to these federal exemptions, you’ll notice that all of the above amounts are different. They changed in April 2010, and they will change again in a few years. We New Yorkers are not used to that, as the federal exemptions have barely changed in two decades.
(5) The debtor’s aggregate interest in any property, not to exceed in value $1,150 plus up to $10,825 of any unused amount of the exemption provided under paragraph (1) of this subsection.
Sub-section 522(5) is the wildcard exemption. This sub-section works together with section 522(1) to enable a debtor who does not use the federal homestead exemption to exempt $10,825 in “any property”.
Thus, one great thing about the wildcard exemption is its flexibility which enables a debtor to split the wildcard exemption amount over multiple items and stack it on top of other exemptions as needed to protect any exposed equity.
This, coupled with the other asset-specific exemptions found elsewhere in section 522, usually allows a debtor to exempt all of his or her property in a Chapter 7 bankruptcy.
So how does one learn more about the new federal exemptions? Here’s my plan of action. Since I am not used to them, I will need to commit them to memory and determine how to employ them in a strategic manner.
Therefore, I plan to read and re-read section 522 a dozen times until they sink in. This section is lengthy and will require some dedicated concentration.
I will review various bankruptcy treatises like my favorite, Consumer Bankruptcy Law and Practice, published by National Consumer Law Center. I will also begin reading recent cases from other parts of the country that interpret various aspects of the federal exemptions – cases that I conveniently ignored for years because they did not mean anything to me; but now they are ever so important.
I also like Consumer Bankruptcy News, published by LRP Publications – a nice bi-weekly review of new bankruptcy cases combined with news and some articles about bankruptcy practice.
I will be looking forward to the next CLE about the subject. Suffolk Academy of Law Dean and Chapter 7 Trustee Richard L. Stern will be moderating a Lunch ‘n Learn Seminar about the new federal exemptions at the Suffolk County Bar Association on Wednesday, March 9, 2011.
Finally, I will be eagerly anticipating the first few decisions from our very own bankruptcy judges in the Eastern District of New York, as debtors’ counsel and trustees really try to see how these new laws work.
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 2011 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. (516) 496-0800 (516) 496-0800 (516) 496-0800 (516) 496-0800 (516) 496-0800 (516) 496-0800 (516) 496-0800 (516) 496-0800 (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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