What Questions You Should Ask New York City Bankruptcy Attorneys?
If you’re struggling under debt, it’s hard enough to figure out where you should turn to for relief. Fortunately, for many people, one of the best solutions is a bankruptcy. Even if you think that filing bankruptcy is right for you, it’s hard to know what questions you should be asking a bankruptcy attorney about the bankruptcy process. In this article, we’ll look at some of the questions you should ask New York City Bankruptcy Lawyers during an initial consultation.
How is bankruptcy a form of debt relief?
People that are struggling with debt are likely looking for something that means debt relief. This debt can arise from different types of debts – credit cards, student loans, tax debt, medical debt, mortgage payments. It’s important to ask and understand how bankruptcy is a form of debt relief.
One of the popular forms of debt relief that people see often in commercials is debt consolidation. A debt consolidation is when you obtain a loan to pay off debts that are carrying higher interest. Commercials for debt consolidation often use credit card debt as an example. Many credit card debts are subject to interest of 20% or higher. Debt consolidation companies will offer loans at lower interest rates (but still high interest) so that you pay off your current debts, and then repay the loan.
This may work in a few cases, but likely not work if you’re dealing with overwhelming debt. One reason is that these loan consolidation companies still rely on your credit score to determine your loan terms. So if you’re struggling with $15,000 of credit card debt accruing 22% interest, these companies may only offer you a $5,000 loan at 17% interest. This shaves some of the interest you battle each month, but doesn’t give you true debt relief. This is why, in my experience, many people that tried loan consolidation eventually turn to file bankruptcy anyways. This strategy often does nothing to stop creditor harassment.
Bankruptcy, however, can dramatically clean up even the most difficult financial situation. When you file a bankruptcy petition, you immediately get the power of the automatic stay, which stops that terrible creditor harassment. Moreover, when you get your bankruptcy discharge, the creditor cannot take any action to enforce or otherwise collect that debt – permanently. So, unlike in a loan consolidation where you remain stuck in the same situation paying off debt at high interest, bankruptcy is a powerful form of debt relief that offers immediate relief, and permanently prevents creditors from trying to collect a discharged debt in the future.
When Is The Right Time To File For Chapter 7 Bankruptcy In New York?
In New York, the right time to file for chapter 7 bankruptcy is when you are struggling with paying your debts. Getting your bankruptcy filing started sooner is generally better than waiting, and there are several reasons for this. First, the longer you have negative credit accounts, the worse your credit score takes a hit. The length of negative credit can dramatically impact your credit score. So if you find yourself having a tough time paying your accounts, learning about bankruptcy relief as soon as you can would be wise.
Another reason you should consider filing for bankruptcy sooner rather than later is the consequence of judgments obtained against you. Many people rush to file bankruptcy because they wake up one morning to a wage garnishment or a bank account being frozen. While people can file bankruptcy at any time, emergency filings are always a little challenging because you never know what else might be going on in your life.
For instance, when you file bankruptcy, you can protect and keep property as long as you can claim exemptions to cover your property. Let’s say however, that you ignored the summons that started the civil litigation. Not that long ago, you bought a car that you need to get to work. One Friday, you get your paycheck and see a wage garnishment. You rush to speak with an experienced bankruptcy attorney, and learn that if you file to stop the wage garnishment, you may lose your car because it is non-exempt property. It’s for this reason that you want to seek out filing for chapter 7 bankruptcy as soon as you start experiencing financial difficulties, rather than waiting until an emergency occurs.
Will Bankruptcy Hurt My Credit Score or Rating?
People that contact my office asking about filing bankruptcy under chapter 7 almost always ask whether bankruptcy will hurt their credit score or rating. Surprisingly, many people have reported experiencing an increase in their credit score immediately after filing for bankruptcy. One reason this may occur is because of change in debt load on a person’s credit report.
To dive a little deeper, when a person file’s for bankruptcy, a creditor is prohibited from enforcing or otherwise attempting to collect that debt. This also means that the creditor must change the status of the debt with the credit bureaus. That is, a creditor can no longer report that debt as in arrears or delinquent, but rather just report that the debt is part of a bankruptcy.
Since the number of debts being reported as delinquent is reduced after the filing a bankruptcy, this may be why many people report experiencing a boost in their credit scores immediately after filing their case in bankruptcy court.
What Can You Keep if You File for Chapter 7 Bankruptcy in New York?
One of the biggest negative myths about bankruptcy is that the government takes all of your personal property if you file a case. This is very inaccurate. As I’ve shared before, protecting property is one of the most important parts of a bankruptcy case, and you are allowed to protect and keep property that you may claim an exemption for.
In bankruptcy, exemptions refer to laws that state what property is protected from enforcement of a judgment. What this means is that exempt property cannot be used to pay off or satisfy a judgment. Put another way, no creditor can touch exempt property to satisfy a debt. This is why you can keep all exempt property in a bankruptcy case.
There are both federal exemption and state exemptions, each set protects different things. When filing for bankruptcy in New York, you can only choose one set of exemptions – either the state or federal exemptions, but you cannot choose or mix-and-match from both.
Generally speaking, the laws contain an array of exemptions that will usually allow you to protect:
- most clothing;
- household goods and furnishings;
- small electronics;
- some equity in a car;
- some jewelry;
- personal medical equipment;
- most 401/403 retirement accounts;
- social security benefits and public assistance;
- possibly some cash/bank accounts;
- possibly equity in your home.
It’s really important to understand and get your exemptions claimed properly, otherwise the bankruptcy trustee may seek turnover of that property.
How can bankruptcy help you?
Although we mentioned it earlier, it’s worth mentioning again that consumer bankruptcy offers people powerful debt relief. First, immediately when you file your personal bankruptcy, you get the power of the automatic stay. The automatic stay, which comes from the Bankruptcy Code, refers to the immediate injunctive relief a person gets when their case gets filed. The automatic stay prevents a creditor from the enforcement or collection of a debt. This is super important, especially with time-sensitive matters, such as if someone is facing a wage garnishment, repossession of a car, or even a foreclosure sale of their house. The automatic stay can prevent a creditor from going through with these actions.
Another powerful benefit for bankruptcy filers is the discharge of their debts. The discharge order essentially makes the automatic stay permanent, prohibiting any collection efforts. As a result, a creditor cannot attempt to enforce or collect that debt ever again. If they do try to enforce or collect that debt after the discharge order is entered, a debtor may be able to sue that creditor in bankruptcy court for damages.
Yet another of the advantages of debt relief through bankruptcy is that you get to deal with all of your creditors in one place at one time. Alternatives to bankruptcy, such as debt consolidation, require you to deal with each of your creditors individually. That means that you have to contact each creditor, obtain a payoff quote, try to negotiate a repayment plan, etc. While you are going back and forth with one creditor, another creditor may decide to attempt judgment enforcement matters. Being able, however, to deal with all of your creditors in one place at the same time reduces the time and stress of having to correspond with each creditor individually.
Will I ever get credit again if I file for Bankruptcy?
Another popular question that people have when exploring bankruptcy for debt relief is whether they will be able to get credit again after filing for bankruptcy. There is a myth out there that a person can never get credit ever again if they file bankruptcy. The short answer, however, is yes, a person can definitely get and rebuild credit after filing bankruptcy. In fact, many people who file for bankruptcy find that they are able to start rebuilding their credit within months of filing.
To rebuild a credit score, a person needs to use and payback credit. Many of my own clients reported that they received offers for new credit cards even before the case was over! Still further, I have had clients that have been able to rebuild their credit and buy their first home in just a few years.
How Do I Get Started?
If you’re done struggling with old debt that keeps you from living life on your terms, then you should seek out a quick and powerful form of debt relief. Bankruptcy is exactly that – a quick and powerful form of debt relief. There are certain things a person looking to file bankruptcy may want to start putting together.
First, there is a cost associated with bankruptcy. Currently, the court filing fee for a chapter 7 bankruptcy case is $338. (If you’re a married couple filing together, then you only pay one filing fee.). In addition to the filing fee, there is your bankruptcy attorney fee.
Finally, everyone that files for bankruptcy must complete two courses. One course, referred to as credit counseling, must be completed before you file your case. The second course, referred to as debtor education, must be completed after your case is filed. There are court-approved agencies that offer these courses, usually either online or over the phone. The cost of them varies widely, anywhere from $10 to $50.
If you’re looking for legal representation, many New York City Bankruptcy Attorneys, including the Law Office of Richard Kistnen, offer telephone consultations. You’ll want to get that done as quickly as possible, since many questions can be answered quickly, and you can expedite the preparation and filing of your case this way.
Finally, there will be documents that you need to provide so that your case can be prepared. Some of the documents you can expect to provide include:
- last filed tax returns
- bank statements
- paystubs
- credit report
- collection letters and lawsuit documents
- financial statements of retirement accounts
- title to vehicles
- title to real estate
- any documentation concerning a lawsuit
- documentation concerning any business interests
This list is general, and not exhaustive. The documents you will be providing will depend on your circumstances.
If you’re looking to ask questions to a New York City Bankruptcy Attorney, Contact the Law Office of Richard Kistnen today!
If you’re struggling with keeping up with your debts, it can be a scary time. Creditors engage is aggressive and abusive actions to collect their money, including unlimited letters and incessant phone calls. This experience can lead to serious distress and health issues in your life. If this what you are experiencing right now, then I encourage you to explore bankruptcy for debt relief.
You may have many questions about bankruptcy, including some of the ones we addressed in this article. How does bankruptcy provide debt relief? Can I keep my property if I file bankruptcy? Can I rebuild my credit if I file bankruptcy?
If you still have other questions, then contact the Law Office of Richard Kistnen today to schedule your no-obligation bankruptcy consultation. If you prefer to book your consultation online, you can do so by clicking here. Otherwise, you can send an email to [email protected] for more information, or call (718) 738-2324 right now.