Consumer Advocacy | Daniel Gershburg

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My Grandmother is Immortal

Tuesday, August 30th, 2011

My Grandmother may in fact be immortal. The woman is 92 years old and is in great mental shape. She lives in the same apartment in Brooklyn for the past 30 years. She also basically pays the same rent she has for the past 30 years. Her expenses never change much and her SSI payments and Medicaid basically take care of everything. She’s got nothing to worry about financially. Forever. Because she’s immortal and will live forever. Ate fatty foods her entire life and smoked. My mother says “It’s because in Russia, everything was fresh.” I have no idea what that means.

The rest of us, to the best of my knowledge, are not immortal, and therefore we have to do some prudent financial planning going forward. Our life expectancies are going up. Our money has to stretch farther than ever. Which means we have to save more for retirement. Which means we have to put more money away now towards retirement. Which means we need to free up more money to put away but not paying for unnecessary expenses. Which means I have absolutely no idea whatsoever why you are paying credit card minimums when you are so neck deep in debt that you will never, ever, ever, be able to get out of it by doing the things you’re doing now. Like that buildup? It was OK. No big deal.

Heres my point: You have to assess your financial situation immediately and take steps to rectify it and put you back on the path you need to get on. If you’ve got a ton of credit card debt that you know you wont be able to pay off, and your sacrificing putting money aside because of it, then maybe you should stop. Or at least talk to a Bankruptcy Lawyer. Almost every single one of my clients, before they came to my office, thought that their debt was manageable. But how can you manage interest accruing at 30%. The Mafia doesnt charge that (there, um, is no mafia).

I’m not telling you to simply stop paying your bills and put money aside. Specifically if you’re not in over your head. But I am telling you that if you realize you’re only making minimum payments, then you have to have a conversation about what to do going forward. You can’t simply say “I was doing OK because I was paying minimums”. It would be weird if I owned a car and could only afford to put one gallon in at a time. Maybe thats telling me something. Maybe I shouldn’t own a car. Maybe I should figure out why I keep driving my car when I can only put in one gallon at a time.

Realistically speaking, you know when you’re in over your head. There is no magic formula. You just know. You might want to trick yourself into thinking if you just wait another year you’ll get that promotion or someone will give you money or your grandma will die and leave you the money in her will, but that likely wont happen. More importantly, thats another year of bad credit. Another year where you haven’t contributed to your IRA, 401k, your kids college fund. For what? For the sake of saying you’re paying minimums on cards you wont be able to pay off? Or making interest only mortgage payments on a house you know you can’t afford.

Its time to have a conversation with yourself. My grandmother may be immortal, but we are not. We’re going to need money to live on.

Posted in Bankruptcy, Consumer Advocacy, Credit Cards, Debt Settlement, Gersh Blog | No Comments »

Settling with Creditors because you have tons of money to throw away. Like, tons…

Tuesday, June 7th, 2011

I’ve discussed this issue in the past 203493 times, but here it is again. Nice client comes in. Nice client sits down. Nice client wants to talk “debt settlement.” I sigh, knowing full well where this conversation will go. I’ve filed hundreds of Bankruptcy cases in New York and I can tell you that many of the cases started along the same lines. People want to settle with their creditors and pay them money that they don’t have because they don’t know what else to do. So, client tells me she’s about $75,000 in debt or so. Says she wants to settle. Works full time but doesn’t make much and has a few kids she has to take care of. Oh, and she has no money left at the end of the month. What’s more? The client has already paid close to 10K to her creditors to try and settle in the past year!!! I don’t know what more I can say in situations like this other than to tell you all to take a step back before you cut a check to Rubin and Rothman, or Mel S. Harris and Associates or any of the other firms. It doesn’t make financial sense. Some concerns most people have and reasons why they plop down thousands to a never ending hole of creditors:

1. ” Filing Bankruptcy will ruin my credit for 10 years. My neighbor told me.” Your neighbor is a liar and is jealous of the view from your apartment and shes much too loud on the phone. Bankruptcy will IMPROVE your credit almost overnight. You heard me. Improve. As in get better. If you’re tens of thousands in debt and missing payments, trust me, your check to settle Debt #1 out of 15 is not going to do much for your credit. Bankruptcy, on the other hand, can greatly improve something called your Debt/Income ratio, which effectively comprises about 35-40% of your score.

2. ”They’ll take my couch if I file Bankruptcy. They’ll come in and go through my stuff” Stop this. Who will? The US Marshalls? They want your Levitz couch from 2002? Big market out there for your coffee tables? In all seriousness there are enough Bankruptcy exemptions as of January 2011, that we can confidently state that you likely wont have any issue with used furniture, etc. It just doesn’t really happen.

3. ”I own a home and Im scared” If we file under the New York Exemptions, you’ve got $150,000 in equity you can protect in your home. $300,000 if both you and your spouse are on the deed of the home and you’re both filing. Next.

4. “It feels weird to file Bankruptcy.” I know, it feels weird to get a Mud and Cucumber facial too, but you feel like a million bucks at the end (not that I know….seriously not that I know). I know it feels weird, and you don’t want to do it, but you do it because you want to open up a bank account again and not be scared that someone is going to freeze it or garnish your wages. You do it because you want to sleep at night and not worry about $30k in debt growing at 30% interest. You did it because you want a fresh start. You feel great when the process is over. Don’t believe me? Ask anyone who has filed (and had a good lawyer)

The lesson here is to stop throwing money you don’t have at creditors who aren’t going to go away. If your house is on fire, are you going to get cups and fill them with water and throw them at the carpet? Same thing here. If you’re thousands in debt, settling with one creditor and hoping you’ll have enough to settle with the others is a losing proposition. There are other, less expensive, faster, more efficient, painless ways to get through this mess. Before you send in another check, make sure you speak with a Chapter 7 Bankruptcy lawyer.

Posted in Bankruptcy, Consumer Advocacy, Credit Cards, Gersh Blog | No Comments »

Rubin and Rothman froze my bank account but I dont want to file for Bankruptcy

Tuesday, April 26th, 2011

Let me just say something here. Our offices do Chapter 7 Bankruptcy work across all 5 boroughs and Long Island and we still have many of these issues arise from clients. Let me be honest with you….if you have a bank account thats frozen, it’s likely, not guaranteed, but likely that you have plenty of other debts in your name. Debts you cannot afford to pay. Debts that have built up interest and penalties for years and years and years. Get rid of them if you want to get a fresh start in your financial life.

I’m not allowed to offer advice here really. Its supposed to be an informative blog that lets you know about recent issues in the Bankruptcy and Real Estate field, but lets be real for a second. If you’re settling some debt for 50% of what its worth, but you have $20,000 in other debt that you cant pay off, whats the point of settling that debt. If you could file a Chapter 7 Bankruptcy and be done with them all, for a fraction of what it would cost to settle each one, why wouldn’t you? Think your credit will be worse off? Not true. I can show you articles and studies. Think they’re going to take your stuff? Unlikely. New York has some of the most liberal exemptions in the Country now (thanks Governor Patterson-he never heard that phrase much, did he?). There is zero reason to unfreeze your bank account by settling on debts IF you have plenty of other debts you can’t pay. Why? Because those other creditors will likely try and freeze your accounts. Now we’re back to square one.

Look, to be honest, lawyers get paid either way. If they’re settling court cases or filing Bankruptcy. But I can’t express how much better Chapter 7 usually is for peoples livelihoods, pockets, and credit. Once you get around the whole “stigma” surrounding Bankruptcy, you realize how much more it can do for you. I know I sound like Im selling Bankruptcy Time Shares, but its really the case.

Like a warm and loving family member, we are here for you. Unlike a warm and loving family member, we will not ask to borrow your car.

Posted in Consumer Advocacy, Credit Cards, Debt Settlement, Gersh Blog | 2 Comments »