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

Long Island Bankruptcy Law Blog

Understanding the differences between Chapter 7 and Chapter 13

You may never have imagined that one day you'd be considering the option of filing for bankruptcy. The word has had a negative connotation for many years. However, contrary to what some people believe, it doesn't mean that you'll never get credit again or be able to fulfill your dreams. Indeed, with some vigilance and hard work, bankruptcy can be a step forward for you financially.

If you decide that bankruptcy is the best option for you, one of the first decisions you'll need to make is which type of bankruptcy to file. There are two primary types of personal bankruptcy: Chapter 7 and Chapter 13. Which one(s) you qualify for and which is best for you depends on a number of factors. Let's look at each one.

What are your options if you can't pay your taxes?

A lot of Americans are getting an unwelcome surprise when they file their taxes this year. Thanks to recent changes in the tax laws, they're getting a smaller refund than they're used to or -- worse yet -- they owe the Internal Revenue Service (IRS) a considerable amount of money. The Government Accountability Office (GAO) anticipates that over a fifth of Americans will owe money to the IRS this year.

Many people can't afford to get hit with an unexpected tax bill. A recent survey by Bankrate found that 60 percent of people in this country don't have enough savings to cover a $1,000 emergency.

Understanding the difference between foreclosure and short sale

Falling behind on your mortgage can be terrifying. In some cases, the lender may refuse to accept mortgage payments until you can pay the full amount of your delinquent payments, and this can mean falling deeper in debt as each due date passes. If you have exhausted your alternatives, you may have decided to relieve yourself of the debt by letting go of the house.

There are two ways to do this. You can allow the bank to foreclose on you, or you can sell the house. If you owe more than the property is worth, you may think it will be impossible to sell because you could never get the amount of money you need to repay the debt. However, you may be able to do a short sale.

Why cancer treatments are resulting in more bankruptcies

People who are diagnosed with cancer have access to more and better treatments than ever. However, those treatments come at a steep cost. So do medications like Gleevac, which is used to treat leukemia.

This means that while cancer patients should be focusing all of their thoughts and energy on battling the disease, many are fighting with insurance companies to get reimbursement and figuring out how they're going to pay for chemotherapy, radiation and more experimental treatments that have shown promise. Sadly, too many people delay getting treatment.

Tax filing obligations before and after Chapter 7 bankruptcy

Some people who have filed for bankruptcy believe that they don't have to file income taxes. They often believe that the bankruptcy trustee will handle it. That's a dangerous mistake to make.

If you've filed for bankruptcy since you filed last year's tax return, you still have to either file your tax return on time or get an extension. If you fail to do one of those two things, your bankruptcy case may end up being dismissed or converted.

New York Fed: Auto loan delinquencies are at a record high

New data just released by the New York Federal Reserve Bank indicates that over 7 million Americans are at least 90 days past due on their auto loans. That's a record number -- higher even than in the post-recession years of nearly a decade ago.

According to the economists at the New York Fed, the data, which reflects the status of loans at the end of last year "suggests that not all Americans have benefited from the strong labor market…." Not only are there more and larger delinquencies, but Americans' cumulative auto loan debt rose some $584 billion -- more than at any time in the nearly two decades that the New York Fed has been tracking it.

Not just federal employees are unprepared to miss a paycheck

During the recent federal government shutdown -- the longest in history -- Americans saw and heard seemingly endless heartbreaking stories of people whose lives were thrown into chaos because they missed one paycheck and then a second. Even though the shutdown ended after just over a month, many federal employees weren't certain when they'd see the money that they were owed. Some contractors, depending on the terms of their contract, may never be paid for that period.

The shutdown put a spotlight on a problem that impacts too many people in all walks of life -- not having enough savings to pay for necessities like rent, food and gas if their paycheck suddenly disappeared. That means they don't have money set aside to cover an unexpected expense like a major car repair or an emergency room visit.

Want to file for Chapter 7? You'll have to take the means test.

It is not easy to come to the realization that filing for bankruptcy is probably your best choice. This decision likely comes after months or years of financial hardship brought about by things like medical issues, job loss, divorce and more. While it is probably not something you imagined doing, filing for bankruptcy can actually be a smart way to regain your financial footing.

Chapter 7 bankruptcy is a popular choice for individuals who are seeking relief from unsecured debt, such as medical bills and credit card debt. Many people prefer this choice because it takes less time to complete; however, not everyone is eligible. In order to file for relief through Chapter 7 bankruptcy, you must first take the means test.

Lady Gaga talks about being millions in debt even after success

Lady Gaga has had a level of success in her 32 years that most artists can only dream of. Now she's got two Oscar nominations for A Star Is Born -- including one for Best Actress. Gaga, who was born Stefani Germanotta, became a very wealthy woman thanks to her album sales and concert tours.

However, she says that less than a decade ago, after the first leg of her worldwide Monster Ball tour, she learned that she was deeply in debt. This was three years after her 2008 debut album.

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: