Bankruptcy can eliminate debt, problems with collectors

On Long Island, New York, it can sometimes be difficult to address the financial needs of the family. When unexpected financial expenses such as medical bills strike, many New Yorkers have no choice but to take out a loan. For families with limited income, staying current with the payments can be a burden.

Fortunately, laws across the United States aim to protect debtors from collectors. However, the extent of protection can vary, depending on where a person lives.

That was underscored by a National Consumer Law Center report that found exemption laws, which should protect struggling debtors from creditors, vary by state. The survey found that only a few places provide basic standards of protection from creditors. These standards include preserving at least $1,000 in a debtor’s bank account and barring creditors from seizing most wages, homes, household goods and vehicles.

So far, only two states have received the highest possible score, a B-plus. New York was not among them.

Although New York law lags behind some other states, that does not mean New Yorkers struggling under a mountain of debt have no protection. It just means that, in contrast to the citizens of certain other states, New Yorkers may benefit more from consulting an attorney to discuss how the law could be applied to their situation.

One of the laws New Yorkers may want to consider is bankruptcy. Filing for bankruptcy may be the last resort for a person with financial challenges. But it also offers a person the chance to eliminate their debt once and for all.

Source: Washington Post, “State laws offer consumers varying degrees of protections from creditors, report says,” Dannielle Douglas, Oct. 10, 2013