Daniel Gershburg

By: Daniel Gershburg

New York City is burgeoning with people who have become “debt settlement counselors” almost overnight.  It does not take much to become a debt settlement counselor in New York (not discussing the relevant legal issues involved).  Put up a sign saying something to the effect of “Say No to Debt” or “Debt Be Gone”, throw up a fancy 877 number, have your secretary act as a “call center” and there you go…you’re now a debt center.

Why the sarcasm Daniel?  Good question.  In my community, many clients are coming in to explain to me that they have to file for Bankruptcy even after attempting to settle their debts.  Why you say?  Apparently the practice of debt settlement and credit counseling has grown so large that attorneys (and non-attorneys) are getting in on the action by charging EXORBITANT fees for the privilege of settling your debts for you.  What do I mean by exorbitant?  Oh lets say you owe $50,000 to about 6 separate cards and your counselor decides to charge you $10,000 in order to bring your debt down to $35,000.  Seems like a great deal.  Seems like you just saved $5,000.  Well thats right, but who is to say you could not have done that on your own.  The book I am currently working on (shameless plug), shows you how to do it on your own, and this isnt rocket science.  The collection agencies, who purchase the debt of credit card companies in bulk and make HUGE profits because they buy the debt for pennies on the dollar, are all to eager to settle your accounts for approximately 50-60% of what you owe.  

Take this example:  If you owe Amex 10,000 and you haven’t paid in 4 months, Amex send that debt to collection company A who, after several unseuccesful attempts, sells it to company B and C and so on.  Company E, who just paid $1200 for the $10,000 original debt, has no problem settling for $5,000.  It’s all a big game and whoever says it isn’t doesnt know what they’re talking about.  

So the point is there is NO REASON to pay absurd, exorbitant fees to attorneys and non attorneys to try and settle your debts when you can do it on your own.  All it takes is some time and perseverance.  

By the way, you might be wondering if I have ever done debt settlement.  I have and continue to do it.  But I don’t charge nearly as much as many others out there and I counsel my clients NOT TO HIRE ME IF THEY HAVE TIME ON THEIR HANDS!!  Literally, I say that to them…you can ask them (although I doubt they would volunteer that they came to me for problems with debt and also there is this whole attorney/client privilege thing.  I digress….)  One of the reasons my clients hire me to do this is because they are overwhelmed and they just do not have the time, money, patience, health, etc. to get through this.  Thats where I come in.  However, I am stressing you should not be paying even close to 15% of what you owe as a fee.  Its just as difficult to settle a $1,000 debt as it is to settle a $10,000 debt.  It genuinely does not take more time.  

If you need some advice as to how to help you settle debts on your own, give the office a buzz.  This isn’t a solicitation, but within 30 minutes, we can help you figure out a way for you to help yourself and save a ton of money in the process.  Once you settle your debts you’ll even have more free time to call the debt collector at odd hours of the day and pretend you are a debt collector yourself and you are collecting a debt they owe…always a fun time (I’m not allowed to advocate that but from what I have heard it is in fact quite a fun time.)  

Oh and by the way, there are several not for profit (real not for profit) agencies that will legitimately assist you in settling your debts without the absurd fees and costs.  Try the National Foundation for Credit Counseling (www.nfcc.org) as a starting point.

Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving  clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester.  Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area.  Currently he is working on his first book giving practical advice about repairing troubled credit and how to improve credit post Bankruptcy

By:  Daniel Gershburg

While I have written about this topic before, I nevertheless wanted to write a post to make clear two certain points.  

The first point is that, with very very very limited exceptions, student loan debt is NOT dischargeable.  I have been receiving numerous emails from students wanting to know if they can discharge their student loan debt and get a “fresh start” if they do not find a “decent” paying job when they finish college.  The answer is typically no.  You would really need make to showing of an undue hardship in order to qualify to discharge your student loan debt.  Bank on the fact that barring a very severe financial crisis you will likely not be able to show such a hardship.  The lesson, as cliche as it sounds, is to never borrow more than you need.  I say this from experience.  My debt in law school was tremendous and looking back I could have been more responsible with managing the law school debt.  Do not put yourself in the same position.  

The second issue I wanted to touch upon is Bankruptcy fraud.  Its more of a serious issue than you may think.  In previous posts I have always said that Bankruptcy Trustees and credit card companies are not involved in some vast conspiracy to stop you from filing Bankruptcy forever.  Usually they will not even bother to file any claims in Bankruptcy court.  However, if they see suspicious activity they will in fact retain counsel and cause problems.  What would suspicious activity classify as?  That would be purchasing a flat screen tv for $2000 immediately prior to filing for Bankruptcy.  Or going to Europe with your friends on the old Amex about 2 months before you file for Bankruptcy.  In other words it is debt that you have no intention, or could not possibly pay back, when you made the purchase.  It’s a pretty stringent standard but one to absolutely keep in mind.

Filing for Bankruptcy in college is the same as filing for Bankruptcy anywhere else.  So long as you really hit a tough patch in life, you should be ok.  However, if you are doing this to escape legitimate debts or you racked up the card and now think you’re going to get away free and clear, its best to think again.  

Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving a diverse clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester. Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area. Currently he is working on his first book giving practical advice about repairing troubled credit and how to improve credit post Bankruptcy