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

Long Island Bankruptcy Law Blog

Important advice from a New York bankruptcy judge

If one of your New Year's resolutions is to get your debt under control, a bankruptcy judge in New York's Northern District has some valuable advice. She notes that while sometimes the events that lead to bankruptcy are outside people's control -- like a job loss or an illness that results in exorbitant medical bills -- many of the factors that lead to bankruptcy filings are controllable.

The judge is involved in community financial literacy programs for students, women in shelters, immigrants and others. She emphasizes the value of financial literacy for everyone, starting at a young age. She has some other important tips that can help people avoid ending up in her court. Among them are the following:

Financial guru has some surprising advice for federal employees

The federal government shutdown is nearing the one-month mark, and some 800,000 federal employees have now gone without their first paycheck. They're becoming seriously worried about how they're going to continue to make ends meet and support their families. The shutdown has also caused ripple effects across communities -- impacting many private business owners and service providers.

Well-known personal finance expert Suze Orman is offering some advice for people whose savings accounts are quickly depleting that she admits is unexpected. She says, "This will be the first time in the history of my entire career that I am telling anybody to even consider this. But if you don't have the money to pay your bills, if you don't have any way to feed your children, then you might want to consider taking a loan from your retirement account."

How do you know it's time to file for bankruptcy?

Bankruptcy is a big step -- and not one that anyone should take without careful consideration. So when should you begin considering it?

If you are having difficulty making the required payments on your loans, credit cards and other debts while still being able to manage your living expenses, it's worth exploring the advantages that bankruptcy could provide. Here are some other signs that bankruptcy may be the best solution:

  • You're taking out loans (such as payday loans) to pay your everyday expenses and monthly bills.
  • You're so behind on your mortgage payments that your home is in danger of foreclosure
  • You're using your retirement accounts to pay your debts and/or expenses
  • Debt collectors are contacting you or perhaps have even filed suit against you

What can you do to fight back against creditor harassment?

New York consumers who are dealing with an overwhelming amount of debt may find they have to deal with attempts from creditors to collect on past-due balances. Creditors and debt collectors have the right to seek payment from consumers, but there are limits to what they can do and say. In fact, consumers have the right to fight back against creditor harassment and inappropriate treatment.

No matter how much debt you owe, you do not have to put up with harassing treatment from creditors and debt collectors. You can fight back against these actions as well as seek a better financial future for yourself. Filing for bankruptcy may provide you with a way to deal with your debt and put a stop to contact from creditors once and for all.

How do you deal with holiday debt?

You promised yourself that you were going to take it easy on the spending this holiday season. However, things got away from you. You spent a little more on gifts than you intended. Your kids outgrew their formal Christmas outfits from last year, so you had to buy new ones. You saw some holiday decorations you just had to have.

If, like many people, you put many of these purchases on your credit cards and forgot about them, the bills you'll be getting within the upcoming weeks will quickly remind you. So how do you get control of your holiday debt, which may be piled onto an already troublesome mountain of debt?

What does the latest interest rate hike mean for your debt?

The Federal Reserve has raised interest rates four times this year and nine times in the past three years. The latest rate hike of a quarter percentage point was just announced. While that's good news for people who have interest-earning accounts, it's troubling news for people with credit cards, home equity lines of credit, adjustable-rate mortgages and other types of debt with variable interest rates.

One economist says that Americans with credit card debt will likely see the higher rate reflected on their bills within the next month or two. While a quarter percentage point may not sound like much, if you've got a $10,000 balance, that's $2 extra a month — for one card.

How can you keep your vehicle in Chapter 7 bankruptcy?

One of the primary concerns that people considering Chapter 7 bankruptcy have is whether they'll be able to keep their vehicles. After all, we rely on our cars to get to work, chauffeur the kids to school and other activities, go grocery shopping and so much more.

The good news is that there are steps you can take to keep your car in Chapter 7 bankruptcy, whether you still owe money on it or you own it free and clear. There's more than one way to do that. Let's take a look at the options.

Not all debts can be discharged in Chapter 13

Chapter 13 bankruptcy can be a crucial first step out of overwhelming financial difficulties. Chapter 13 allows people to reorganize their debts and develop a three-to-five year repayment plan.

Some debts can be discharged completely in Chapter 13 bankruptcy. However, some cannot be. Let's look at a few kinds of debt that cannot be discharged.

Can you file for bankruptcy more than once?

You filed for bankruptcy years ago. Now, due to a series of unfortunate events, you find yourself considering it once again. How soon can you file for bankruptcy a second time? How many times can you file for bankruptcy over the course of your life?

It depends on the type of bankruptcy and whether it was discharged or dismissed. If your Chapter 7 bankruptcy was discharged, you cannot file for Chapter 7 again for at least eight years after the date of the first filing. If you qualify for Chapter 13 bankruptcy, you can file for that four years after the filing date of your Chapter 7 bankruptcy.

Does your tax debt place you at risk of IRS levies?

Falling behind on your taxes can happen very quickly, and tax debt is among the hardest to overcome. Not only are there few alternatives for eliminating tax debt, but the IRS has power to claim the money you owe without seeking the court order that most other creditors need. While the government gives you plenty of warning, you may still be shocked to discover how far the IRS will go to obtain the taxes it says you owe.

You may receive notices in the mail with the intimidating logo of the IRS on the envelope. Like many who are burdened with debt, you may put them aside without opening them. However, these envelopes contain information you need to proceed with debt repayment. If you are facing a mountain of tax debt and have taken no steps to qualify for an installment plan, you may find yourself the subject of a tax levy.