Archive for the ‘Debt Settlement’ Category

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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

Brighton Beach Bankruptcy Lawyer Daniel Gershburg discusses how Cohen & Slamowitz, Rubin & Rothman and the rest can freeze your bank account without you knowing

Tuesday, December 22nd, 2009

I am a Manhattan Chapter 7 Bankruptcy attorney but there are numerous instances where I have clients in New York City who do not want to file for Chapter 7 Bankruptcy in Brighton Beach, Coney Island, or whereever. Instead, they have one or two unpaid bills that are now in the hands of collection firms like Rubin & Rothman, Pressler & Pressler, Cohen & Slamowitz and the rest. Heres the constant problem that they have. They get these absurdly harrassing phone calls from these companies (Ive never been part of the convo, but my clients tell me they are harassing phone calls) and then the client gets scared and will give up a crucial piece of information, like a social security number or a bank account number. At that point, good luck. Almost immediately, you’ll have these collection firms freezing these accounts. The only way to get your money out of that account is to file an Order to Show Cause with the local court, filing for Bankruptcy, or agreeing to a settlement (sometimes this doesnt even work.) So whats my advice? Well my advice is that you should NEVER EVER disclose any personal information to these collection firms, unless and until you speak to an attorney. Furthermore, you shouldn’t ever give up this information unless your provided with written proof of the validation of the debt from the collection firm. How do we know that they own this debt and can go after you for this money? How do we know that the amount they claim you owe for some unpaid debt is accurate? The answer is, we dont. Not until they prove it to us, on paper, and in a legally acceptable fashion. Do not believe what these collectors tell you on the phone when it comes to outlandish claims that they will get you fired, put in jail, or punished in some other ways. You have a slew of state and federal laws that are specifically made to help consumers when they deal with credit collectors. Make sure you’re aware of those and do not become another statistic. Someone who has had their account frozen, money garnished, or worse, because you were intimidated by these individuals. There are simple legal ways to fight back and ensure that what you’re doing is correct.

On a personal note, I’d like to wish all of our readers and clients a very Merry Christmas, a very happy healthy New Year and Happy Holidays. Our business has grown and grown thanks to your support. And we’re able to do what we love to do, helping consumers, because you continue to show us the confidence you have in us to treat you the way you deserve to be treated. All the best to all of you in the new year. May it be stress free and collection call free!

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You can’t be Half Bankrupt

Tuesday, June 9th, 2009

Just like the expression “You can’t be half pregnant”, the same is true for Bankruptcy in New York.  What I mean by this is that I have to turn away many potential clients who want to file for Bankruptcy but have considerable assets which they do not want to give up during the Bankruptcy process.  Now many lawyers will say you can protect some assets and even engage in something called “exemption planning”, and that is all well and good.  However, if you have considerable assets, for instance a car which is only a few years old and is paid off, chances are you likely will not be able to protect that asset when filing for Bankruptcy.  In other words you’re either going to have to surrender it, or you’re going to have to buy it back from the Trustee for a particular price.  The monies used from the sale or from your re-purchase go to the creditors.  Thats what the entire process is intended to do.  It’s intended to allow you to take care of various unsecured debt that you have, however the caveat is that if you have assets which fall above the limit that the Bankruptcy law protects, you will have to give up those assets.  Taken in context, this, for many, is a great deal.

Lets say you have $100,000 in credit card debt and your assets fall above the exemptions allowed under Bankruptcy law.  For instance lets say you have a rare book collection worth $10,000 .  The Bankruptcy exemptions under New York Law will likely only protect a portion of the value of those books, so they likely will have to be sold and proceeds used to pay off the creditors.  However, for about $10,000, you get rid of $100,000 worth of debt.  That means no more restraints on your bank account or garnishing wages.  It should be looked at as a relief.  Now, again, many people do not have assets or assets whose value goes above the amount allowed under the Bankruptcy Code.  But if you’re one of the few who do, realize that you cant get rid of your debt AND not give up valuable property.  However, for a fraction of the cost of the actual amount of debt, you’ll be able to start fresh again.

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