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

Long Island Bankruptcy Law Blog

What should you do if you're facing a debt collection lawsuit?

Maybe you've been trying to ignore calls, letters, emails and texts from collection agencies. Then you get hit with a lawsuit or debt claim by one of them. You may be tempted to ignore that, too.

That would be a big mistake. It's essential to respond to the notice within the timeframe you've been given. If you don't, the creditor can obtain a default judgment. This could give them the ability to garnish your wages and bank accounts. They can also add court costs, attorney's fees and interest to the amount you owe.

American Chopper star sells New York home amid Chapter 13

Last year, it appeared that the star of the television show American Chopper could lose his multimillion-dollar Montgomery, New York, home to foreclosure amid his bankruptcy because he had defaulted on his mortgage. However, Paul Teutul Sr. has been able to sell the home.

A judge approved the $1.5 sale of the 3,400-plus square-foot home. That's about half the price he was asking for it almost two years ago. That sale price includes some farm animals as well as various tools and equipment.

What are your options if you're behind on credit card bills?

Younger and older credit card holders are increasingly falling behind on their payments, according to the Federal Reserve Bank of New York. While credit card delinquencies are lower overall than they have been in the past, they've been rising during the past two years -- particularly for people under 30 and over 60.

The credit bureau Experian also reported that the average credit card balance rose slightly between the second quarter of last year and May of this year. It increased from $6,506 to $6,553.

What you should know about a Chapter 13 repayment plan

Many people who file for personal bankruptcy choose Chapter 13 over Chapter 7 in large part because it can allow them to keep their home and other valuable assets. If your income is high enough, you may not even qualify for Chapter 7, so Chapter 13 is your only choice.

The cornerstone of Chapter 13 bankruptcy is the repayment plan. Instead of liquidating your assets to pay off creditors as you'd do in Chapter 7, you develop a three-to-five year repayment plan for your debts. Typically, the person filing for Chapter 13 works out their repayment plan with their credit counselor during their mandatory credit counseling sessions.

Bankruptcy and your debt to the IRS

When debt overwhelms you, it can be a scary thing. Creditors may call or even visit your home or work, and you may face many embarrassing and stressful moments as they try to collect what you owe. Perhaps no creditor is more frightening than the IRS.

The IRS has much more power to collect delinquent tax debt than most other creditors have to reclaim their past-due accounts. For example, while your credit card company must obtain a court order to garnish your wages, the IRS may simply notify you of their intentions before they begin to deduct a percentage of your pay. You may have heard that even bankruptcy will not relieve you of your tax debt, but this is not entirely true.

Unexpected expenses result in the majority of bankruptcy filings

A new report recently published by MarketWatch shows that the number of bankruptcy filings has significantly declined in the past 10 years. In fact, they've reached the lowest rate that they've been since the Great Recession back in 2008. U.S. Court data reveals why most people are pursuing this type of debt relief.

U.S. Courts data shows that nearly 13 million Americans filed for bankruptcy protection in between October 2005 and September 2017. Most did so after experiencing a significant change in their financial situation.

Don't needlessly lower your credit score

When people get into financial difficulties, their credit scores can start to plummet. Unfortunately, many Americans know little about the factors that affect their scores.

Some are fairly obvious, like not paying bills on time and letting credit card and other debt balances get too high. However, sometimes people will take actions that they assume will raise their credit scores when in fact they make these worse.

32% of Chapter 7 bankruptcy filers have student loan debt

The financial institution LendEDU published a report earlier this month that sheds additional light on what may be motivating many individuals to file for Chapter 7 bankruptcy nowadays. They found that student loans may be one such factor.

Data published by the personal finance site Student Loan Hero earlier this year captures how Americans currently owe lenders as much as $1.5 trillion in student loan debt. Their data also shows the average graduate in 2018 carried as much as $29,800 each in debt for their studies.

Taking your audit to tax court

Like many in New York and across the country, after you submit your tax returns, you may expect not to be dealing with the IRS until next year. Therefore, if you receive notice that the IRS is auditing your returns, you may have many concerns. You can prepare well for your audit, but if things don't go your way, you may find that the IRS is making a substantial adjustment to what you owe.

You have a choice. You can accept what the IRS says, or you can dispute the adjustment. If you decide to dispute, you should prepare to take the matter to tax court.

Don't neglect your mental health after filing bankruptcy

The decision to file bankruptcy is a big one. It's often the best way to get your finances back on track. You may feel a sense of relief once you've made the decision and started the process.

However, don't be surprised if that initial sense of relief is followed by a wave of negative emotions. It's essential to recognize those and take steps that will help you feel more positive and empowered.