Jeffrey M. Rosenblum, P.C.
A Fresh Start

Long Island Bankruptcy Law Blog

Why many Americans are 1 medical crisis away from bankruptcy

Most of us take good health for granted -- until a serious injury or illness strikes us or a family member. The resulting medical bills, possibly coupled with lost or reduced income, can devastate a family financially.

It's widely assumed that people who are driven into financial turmoil by a medical crisis are poor and/or have no health insurance. In fact, according to a recent study published in the American Journal of Public Health, most people who file for bankruptcy amid insurmountable medical bills have health insurance and are middle class. Numerous studies have concluded that health issues are the leading cause of bankruptcy.

Why consolidation loans can leave people in greater debt

When people are deep in debt, trying to juggle payments to a multitude of credit card companies and lenders each month in addition to paying their basic living expenses, the idea of a "consolidation loan" can be very attractive. Why not take out yet one more loan offered at a low-interest rate and use it to pay off all of your other bills?

The large print on the ads for these loans may look good. The interest rate advertised may be far lower than what you're paying on your other credit products. As one financial psychologist says, "Consolidating debt seems to create the psychological effect of making you feel like you've zeroed it out."

Experts say customer credit quality is declining

The first quarter of this year brought some troubling news regarding consumer credit. The credit card industry saw an increase in the charge-off rate. That reflects the percentage of debt that companies don't expect to collect. While that rate (3.82%) is low by historical standards, it's still the highest in seven years, according to Bloomberg Intelligence.

That's not the only troubling gauge of what's called "bad debt." The seven largest credit card issuers in the country all reported increases in the number of accounts that are at least 30 days past due. That's a key indicator of future write-offs.

Finding legitimate debt relief assistance

Far too many New York residents have found themselves struggling financially in the last few years. If you are one of them, you have likely been looking for debt relief options that will improve your situation without having to file for bankruptcy. In your search, you have probably found more than a few companies offering to rid you of debt in a way that seems too good to be true. Well, if it seems too good to be true, that is a sign that you may want to pass.

The sad reality is, many of the companies you can find on the internet offering to help you with your debt are run by scammers. Every year, numerous people across the country fall victim to debt relief scams and, as a result, find themselves even more in debt than they were before.

Student loan debt and bankruptcy: Are changes on the horizon?

Student loan debt has risen significantly in recent years. Proposals for helping Americans deal with their crushing debt and even canceling some debt are being discussed by people who have entered the 2020 presidential race, like Sen. Elizabeth Warren.

Unfortunately, even though student loan debt can lead to serious financial issues that have people considering bankruptcy, it's not easy to discharge that kind of debt if they file for Chapter 7 bankruptcy. The American Bankruptcy Institute's Commission on Consumer Bankruptcy is hoping to change that. In a recent report, it outlines a number of proposed changes to address how student loan debt is handled in bankruptcy. One of the proposals would allow borrowers to discharge their student loan debt seven years after it becomes due.

Debt collectors may soon have more tools at their disposal

Back in the day, if someone owed money to a creditor, they may have received seemingly relentless telephone calls from collection agencies. Now, many people don't have landlines and may not even answer cellphone calls. Younger people, especially, are more likely to communicate via text.

Now the Consumer Financial Protection Bureau (CFPB) is proposing new rules for debt collectors that would allow them to text and email people who owe money. Those methods aren't typically in current use because, as one industry official notes, "It's not illegal but it's fraught with a lot of potential pitfalls. The rules aren't clear because there just aren't any."

Know the facts about the impact of bankruptcy on your credit

The decision to file for bankruptcy should never be made lightly. However, it should be made based on accurate information and not on widespread myths and misconceptions.

One of the primary reasons that people hesitate to file for bankruptcy is the impact that it will have on their credit. Indeed, bankruptcy can have a significant effect on your credit score, even if you have had a good payment history and little negative information on your credit record.

Gambling debts and Chapter 7 bankruptcy

Have some big losses at an Atlantic City casino contributed to the financial situation you find yourself in that has you considering bankruptcy? You may wonder if gambling debts can be discharged in Chapter 7 bankruptcy. The good news is that they likely can be.

However, you might get some pushback from the bankruptcy trustee assigned to your case. Gambling is a completely legal activity in places like Atlantic City, Las Vegas and casinos owned by Native American tribes throughout New York and the rest of the country. However, many people still consider it an irresponsible activity -- particularly when the losses add up.

Want a foreign bank account? Think about this first

New York residents have a number of reasons why they may want to open offshore bank accounts. There can be some advantages to doing so, but there can also be some disadvantages. For instance, you may not be aware of some tax implications.

When it comes down to it, the Internal Revenue Service does everything it can to discourage the use of foreign bank accounts. The IRS has placed restrictions on the banks that allow the opening of these accounts and owners of these accounts may have to pay significant penalties if they fail to report the assets to the government.

New state law restricts debt collection efforts after a death

When a New Yorker dies, does their debt die with them? Not necessarily. However, that doesn't mean that surviving family members are responsible for it.

Nonetheless, some creditors and debt collection agencies have aggressively gone after surviving family members to collect money owed by a loved one when they passed away. According to Secretary of State Rossana Rosado, "Dishonest companies are contacting grieving family members and pressuring them to pay debts they do not legally owe."