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Staten Island Bankruptcy Lawyer Daniel Gershburg discusses the inevitability of Bankruptcy

Sunday, February 7th, 2010

Ive handled many Chapter 7 Bankruptcy cases for clients in Staten Island, as well as everywhere across New York.  One of the things that I notice the most when a potential Chapter 7 client walks into my office is that clients emotions.  What I mean by that is whether theyve accepted the fact that it is literally mathematically impossible to pay off the amount of debt they have, and therefore that Bankruptcy may be the only realistic solution for them.  I just wish that many of these individuals were able to discover that sooner, as it could have saved them literally thousands of dollars.

Here is what I mean as an example.  If youre someone who makes about $40,000 a year in gross wages (before tax) and you have approximately $20,000 in debt or more, chances are you will NEVER pay off this debt.  If you havent missed a payment, you’re like paying the minimum on many of these cards since it would be implausible that youd be paying the entire amount of the balance and living on 40k a year BEFORE taxes.  If you’re keeping a balance, youre likely paying a rate of anywhere from 10-20%.  If you’ve missed a payment, that percentage likely went up to 30%.  If you do the math, there simply is no way at all that you could possibly make a dent in this debt while continuing to support yourself.  I understand that there are just so many emotions involved in something like this.  Fear, shame, embarrassment.  In any case, you need to realize that when you made these purchases that you had every intent to pay them back (I imagine).  And many of my clients who have finally come to grips with the fact that they need to file have contacted the creditors, but they are simply unwilling to compromise to payment plans that you can afford.

Also, when you settle a debt, you can be taxed on the amount you save as regular income.  So if you settle a 10k debt with a creditor for 5k, you may be responsible for taxes on the 5k you saved as ordinary income.

Look at the end of the day this area of law has more to do with your emotions than anything legal.  We are able to get the vast majority of people through a Chapter 7 case in Staten Island, Brooklyn, Manhattan or anywhere in New York with little or no problem.  But this issue is an emotional one.  Once you come to grips with the fact that there is no way you could possibly pay back this amount of debt you have, the decision can become a much clearer one for you.

Posted in Bankruptcy, Debt Settlement, Gersh Blog | Comments

Manhattan Real Estate Lawyer and Blogger Daniel Gershburg discusses problems with lenders

Monday, February 1st, 2010

As a Manhattan Real Estate Lawyer I deal with real estate purchases in New York City on almost a daily basis.  And as this recession and literal tanking in the real estate market has occurred across New York it is painfully obvious that lenders have absolutely no idea what they are doing.  Now you may call this a rant, and you are justified in doing so, however I think its absolutely ridiculous to discuss an improving real estate market in the greater New York area without discussing what appears to be this general absurdness that comes with working with lenders these days.

Case in point.  My client is selling a co-op apartment in  Brooklyn.  Again, she is SELLING the apartment in Brooklyn, not buying it.  Weve found purchasers who are paying cash.  We have a closing date.  But we cannot close because the bank is unable to send us the stock and lease (analogous in some respects to a deed for a home).  Weve called in approximately 10 times (not a typo) and have been on hold each time for approximately 30 minutes.  Th bank cannot tell us why they cant send us the stock and lease and state that someone will get back to us within 24 hours or 2 weeks.  Can you imagine if you called a friend and they said they would either get back to you later today, or Mid February.  Unless this was your mother in law where youd be happy to wait the 2 weeks, you would not be pleased.  We were not pleased.  Also the bank cant communicate with the proper department because that department doesnt have phones.  The dept has live people, and computers, but no phones.  Again Id like to emphasize all we are currently looking to do is pay the bank lots of money but the bank is saying “We know, and wed love to take the money, but we cant take the money, we dont know why we cant take it, and we dont know when we could tell you why we cant take it, but someone may or may not be able to tell you why we cant take it within 2 weeks.”

On another closing, the bank appraised a home for a certain sum and said “Youre ok to close.”  They then came back the following week and re-apraised the house for $50,000 less.  Lets again use a real life example.  I come to you and tell you Id like to buy your Mercedes, and that Id be willing to pay you $20,000 for the car and tell you I’d like to meet you the following week to pay you.  You agree.  The following week I show up announced and say “Let me look at the car again” and after looking at the identical car I tell you I will pay you $14.32 right now on the spot.  Absurd no?  Well folks welcome to 2010, the year when the recovery will hit.

In business, companies are always obsessed with bottom lines, and thats normal.  However, when you’re looking to buy a home in New York City and the lender is telling you that they’re telling you that they dont have phones, there is something wrong.  No business can recover financially if they are acting completely irrationally.  You may be reading this and thinking that there is something more to the story.  Something is missing because it doesnt make sense.  I wish there was.  Our firms Manhattan Real Estate practice has shifted in that we now do so much more on a daily basis for our clients than we ever have just to get them into the homes they wanted.  There really should be no discussion of a bottoming of the market in New York City without discussing why we’re stuck here now in the first place.

Posted in Co-Op, FHA, Gersh Blog, New York City Real Estate | Comments

Manhattan Bankruptcy Lawyer Daniel Gershburg discusses the Meeting of the Creditors

Wednesday, January 20th, 2010

I am a Manhattan Bankruptcy attorney and have seen my fair share of 341 meetings (better known as the meeting of the creditors).  One of the most important responsibilities I have to my clients, as a Manhattan Bankruptcy attorney, is to prepare them for this meeting.  Why?  Because this is the meeting that really generally decides whether the trustee will close your case or keep it open.  It depends on whether that trustee believes or trusts the answers that you are giving.  Basically does everything make sense or not.  One of the most important facets of this is meeting the bankruptcy debtor or speaking with them on the phone to ensure they are prepared for the questions that will be asked.

What are the most common questions you’ll hear in a New York City Bankruptcy case:

1.  When was the last time you used credit cards.

2.  Whats the most amount youve had in your bank account in the past year.

3. Have you ever owned a business.

4. Is anyone sick or dying and leaving you money.

5. Do you, or have you ever owned any real estate?

6. Do you own a car.

There are plenty more, however, the key, again, is to make sure I prepare my client for that meeting.  If you’re reading this and you’re planning to file for Bankruptcy in New York City, you may think “These are easy questions, no problem.”  The issue is that you generally feel fine at home, but you tend to get nervous at the time of the meeting.  Its normal.  Its somewhat intimidating.  But thats the key to preparing for that meeting.  If we’ve gone over the questions together, you’ll feel much more comfortable on the day of the meeting.  Furthermore, I always tell my clients to show up at least 30 minutes before their meeting time so they can sit in the room and listen to the questions that will be asked.

If you’re prepared for a Chapter 7 Manhattan Bankruptcy meeting, then the trustee will know it, in my opinion, and your case may move smoother along.  Think about it, the trustee has to interview dozens of people a day, many of which are not prepared and are thinking about answers for a long period of time.  If you come in, and already know the typical questions and answer quickly and truthfully, it will lessen the burden on that trustee.  Its what I do for all of my clients and it helps everyone involved in the Chapter 7 bankruptcy process.

Posted in Bankruptcy, Gersh Blog | Comments

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