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

Long Island Bankruptcy Law Blog

You can rebuild your credit after bankruptcy

Bankruptcy doesn't have to be the end of your ability to get credit. It can provide a fresh start to a healthier financial future unencumbered by mountains of debt. However, that won't happen overnight. It takes time, patience and careful planning to repair and rebuild your credit.

The bankruptcy process will zero out debts like collections accounts and overdrawn credit cards. However, the negative impact on your credit score will remain for some time -- typically 10 years if you file Chapter 7 and seven years if you file Chapter 13.

Selected for an audit? Here is what you can expect

If you have never had problems with your taxes before, getting a notice from the Internal Revenue Service that they are auditing you can be a bit alarming. The word audit is scary to a lot of people, simply because they do not know what to expect. Knowledge is power, and knowing what to expect during the audit process can help you and other New York residents in your same position get through it relatively unscathed.

The first thing everyone should know about audits is the IRS notifies taxpayers that they are auditing them. Most people get robocalls stating that they are in trouble with the IRS. This is not, nor will it ever be, how the IRS contacts taxpayers. If the IRS is auditing you, it will send you an official letter in the mail with contact information regarding the individual handling your case. What comes next?

Is Chapter 13 a good option for dealing with student loan debt?

One of the largest sources of debt for many Americans is student loans. Many are still paying off loans decades after they finished college or graduate school.

As you've likely read or been told, it's very difficult to discharge student loan debt in a Chapter 7 bankruptcy. However, you can discharge other debts, which can potentially help you manage your student loan debts better.

Why you shouldn't procrastinate if you're considering bankruptcy

Many people dread the thought of filing for personal bankruptcy and put it off for as long as possible. However, this procrastination often makes a bad situation even worse. If you're considering bankruptcy as an option for getting out from under an avalanche of debt, it's best to start learning about the process sooner rather than later. It's not a quick and easy process. However, with good professional legal help, you can make the best choices for your situation.

First, it's essential to determine which type of bankruptcy -- Chapter 7 or Chapter 13 -- to use. Often, people prefer Chapter 7 because it allows them to discharge a good deal of their debt.

Top benefits of legal help when considering bankruptcy

Those facing overwhelming debt often search for a solution for some time before bankruptcy becomes an option. Once these individuals begin to consider Chapter 7 or 13 as a possible solution, they must then contemplate a number of questions before making a decision. Examples include:

  • Do the benefits of bankruptcy outweigh its disadvantages?
  • Which type of bankruptcy is right for me?
  • How will filing affect my credit history?
  • Will I lose all of my property if I decide to file?
  • Can I do it myself or do I need a lawyer?

Finding answers to these questions and other concerns over bankruptcy is critical in identifying the best course of action. The problem for many debt-strapped individuals in New York is that they do not know how to find answers tailored to their unique circumstances. We understand that it is not very difficult to find general information about Chapter 7 and Chapter 13 bankruptcies on the internet. However, such basic information may not address all of your concerns.

What is a 'wage earner's plan'?

If you're considering filing for bankruptcy, then you may have heard the terminology "wage earner's plan" thrown about. This phrase is just another name for a Chapter 13 bankruptcy. It's a simple way of describing what's involved in filing for this type of debt relief.

The reason that Chapter 13 bankruptcy is referred to as the "wage earner's plan" is because debtors who file for this type of debt relief often do so after failing a Chapter 7 mean's test. If after tallying a person's assets, income and expenses, if what's left over exceeds state limits, then an individual becomes ineligible to file for Chapter 7 bankruptcy. Those with income above this are required to file Chapter 13 bankruptcy instead.

You do have rights when dealing with the IRS

If the Internal Revenue Service has reached out to you about a potential tax problem, you may feel concerned and on edge about the whole thing. It is completely normal to feel that way. Many people believe that when dealing with the IRS they do not have any rights or protections. That simply is not the case.

The Taxpayer Bill of Rights exists to protect you and other New York residents just like you who have found themselves dealing with tax issues. Here is what the Taxpayer Bill of Rights says.

5 potential reasons for bankruptcy

Bankruptcy does not always happen the way you assume. There are many reasons people get into financial trouble, some of which they have no control over themselves. It is important to understand these reasons as you consider all of your options.

Five reasons why someone might file for bankruptcy protection include the following:

Chapter 13: The automatic stay stops most collection attempts

Making the decision to file a Chapter 7 or a Chapter 13 bankruptcy is difficult. One of the most powerful elements of bankruptcy that helps people make this decision is the promise of an automatic stay. This means an almost-immediate cessation in collection attempts made by your creditors. Most people find that once creditors stop their collection attempts, they feel better about moving forward with bankruptcy.

A Chapter 13 filing cannot stop everyone you owe from attempting to collect, but under the guidance of your attorney, it can stop most of them. To improve your clarity about this valuable bankruptcy benefit, the following sections will explain several things that creditors cannot do after you file.

Bankruptcy assistance helps you avoid tax evasion allegations

Both Chapter 13 and Chapter 7 bankruptcies give New York residents a clean slate upon which to build a secure financial future. A Chapter 7 filing can also help debt-strapped people get out from under some of their tax obligations. This is a perfectly legal approach to discharging or minimizing tax debt, as long as the government does not believe that you are attempting to evade your tax obligations unlawfully.

The bankruptcy attorneys in our office know that not everyone accused of tax evasion through bankruptcy intended to defraud the government. We know that most people who file a Chapter 7 or another form of bankruptcy simply want to put their financial lives back together. Unfortunately, tax evasion allegations can derail these attempts and land the person who files a bankruptcy in serious legal trouble.