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

Long Island Bankruptcy Law Blog

You can discharge student loans, but it is difficult

You may have heard that Chapter 7 bankruptcy cannot be used to get rid of student loans. While that is true for many people, it is not 100 percent accurate in all cases.

While most student loans stand even through bankruptcy, some can get discharged when they result in an undue hardship. It has to go beyond your not wanting to pay or not wanting to sacrifice nonessential items -- like cable TV or a new car -- to make the payments. You need to actually be unable to pay entirely, to the point that it is highly detrimental to you and/or your children.

Can you buy a car after declaring bankruptcy?

You want to use Chapter 7 bankruptcy to eliminate your debt, but you worry that it will destroy your credit rating. This will make it hard for you to buy a car, something you absolutely need to do for work. Can you buy a vehicle after bankruptcy?

You absolutely can. The key is simply to work on re-establishing your credit after bankruptcy. When you build your score back up, you should be able to get a loan for a new car because all of your overwhelming debt is gone.

Moving forward with the appropriate chapter of bankruptcy

Making the choice to move forward with filing for consumer bankruptcy can be difficult, especially if you are unsure which chapter may be most appropriate for your unique situation. If you are unable to meet your financial obligations and are struggling with debt, you would be wise to seek an explanation of the legal options available to you.

Bankruptcy is not the ideal choice for every person who is overwhelmed by debt, but it does offer many New York consumers the ability to effectively address their debt and build a better financial future. You may need help to decide which chapter is best for you and offers you the most benefits.

Budgeting tips after Chapter 13

The point of Chapter 13 bankruptcy is to give you affordable payments to pay off what you owe. These are due on a monthly basis.

As such, you need to have a budget and stick to it. You do not want to miss those payments. Creating a budget helps you see what "affordable" looks like in your case, and it helps you work your way through until you have completed every single payment.

Debunking 1 common bankruptcy myth

Bankruptcy myths abound, and they can often give people the wrong idea about the process. It is time to break down at least one of those myths to show exactly why it does not hold up.

The myth is simple: Bankruptcy is going to put everyone's credit score on an equal level, no matter how much debt they have.

Tips to rebuild your credit after bankruptcy

Worried that your credit score will drop after you file for bankruptcy? That is one of people's most common concerns, but do not worry that it has to last forever. There are plenty of things you can do to rebuild your credit. That's why people refer to bankruptcy as a fresh start.

A few steps you may want to consider include:

  • Getting both a savings account and a checking account at a credit union or a bank.
  • Applying for a secured credit card, which requires a deposit. It may be helpful to just think of it as if it were a debit card. However, secured credit cards do get reported, so using it and paying it off on time increases your credit score.
  • Consider cards that you can use for everyday purchases. For instance, you may be able to get a special card for the gas station. You need to buy gas either way, so you might as well buy it on the card and then pay it off as you build up your credit.
  • Never miss payments on any of your typical bills. This means paying for things like gas and electricity on time. Pay the rent or the mortgage on time, as well.
  • Check your own credit reports to see if anything on them is actually incorrect. If so, you may be able to start a dispute and remove these items, thereby reducing the negative impact to your score.

I'm being audited, what are my rights?

You received the letter from the Internal Revenue Service that no one in the state of New York, or anywhere else for that matter, wants to get. You are being audited and now you have concerns about how to handle the situation and what you are going to do if you end up having to pay even more in taxes, fees and penalties since you are not in a financial place to do so.

When it comes to tax audits, did you know you have protections under taxpayer rights? The IRS may have wide discretionary powers, but it does not have the power to walk all over you. What are your rights during an audit?

Chapter 13 has one big advantage over Chapter 7

Chapter 13 bankruptcy gives you an affordable repayment plan that you can use for the next few years -- typically between three and five years -- to pay back what you owe. Some of your debt may be forgiven, but the goal is repayment instead of elimination.

Chapter 7, on the other hand, just erases your debt. You do have to liquidate your assets and use the money to pay off some of the debt, but this could be a very small percentage of the total.

Bankruptcy may impact your spouse, even if you file alone

You want to file bankruptcy alone, without your spouse, hoping to shield him or her from the impact as much as possible.

Your debt may still impact your spouse. For one thing, if you have a joint credit card -- and many couples do -- then the creditors may be able to get your spouse to pay. You both agreed to pay off that debt at the beginning. Just because you claim that you cannot pay does not mean your spouse cannot do so.

Do not spend excessively before you file for bankruptcy

One of the prevailing myths about bankruptcy is that since you are going to eliminate your debt anyway, you might as well spend frivolously for a month or two before you file.

For instance, perhaps you have a credit card with a $20,000 limit. You have $5,000 of debt on it, and along with all of your other growing debt, you tend to add about $1,000 per month. You decide to declare bankruptcy. Should you go out and spend your last $15,000? You're going to eliminate your credit card debt, so why not have fun with it?