The economic recession has forced many people in New York City to lose their sources of income and have led many to bankruptcy. These desperate and debt-ridden people are often enticed by any advertisements and offers from debt settlement agencies in New York to help them get out of debt.
If you are one of those burdened with debts and seeking help from a debt settlement agency, then you have to be careful because there is a chance that you may end up worse off than you were. The settlement agencies usually charge between 15% to 20% of a consumer’s credit card balance as fees. It has been estimated that consumers rarely get out of debt settlement programs with their debts cleared. In most situations, consumers get out of these debt settlement programs worse off with severely damaged credits, continuous threats from collection agencies and lawsuits from their creditors.
The first thing the settlement agencies tell you is to stop making payments to your creditors and rather make the payments into a special account that they will set up for you. They do their best to assure you that you will have nothing to worry about once you start the program. They tell you once you manage to reach a certain amount, they will strike a deal with your creditors to cut your debt by half and pay the debt off. This debt settlement program usually has to last between 2 and 3 years.
All this information that the debt settlement companies provide to consumers can be best described as fraudulent if not deceptive. This is because after you start the program, you will soon realize that your participation in the program does not necessarily stop the calls and threats from your creditors and collection agencies. When you start getting calls from your creditors and debt collection agencies, you will immediately call your debt settlement agency thinking that they have you covered. The usual response from them will either be that you do not yet have enough money in your account to cover the debt or that they have no control over the actions of your creditors and collection agencies. What will shock you even further will be the realization that you only have about half of the money you have been paying so far in your special account. For example if you have managed to pay about $3000, you will find out you only have about $1500 in your account. When you ask why, your debt settlement agency will tell you they used the about half of your money to cover administrative fees. Meanwhile, the calls and threats of lawsuits from your creditors and collection agencies will be forcing you into bankruptcy.
Before you sign on to any debt settlement program, please contact your qualified Bronx, Brooklyn, Queens, Manhattan and other New York City bankruptcy attorney for counsel. Do not make that choice without a bankruptcy lawyer and drown yourself deeper in debt.
The law protects you from collection agents when the means used in collecting debts are improper.
Before a debt collection agency starts pursuing you for unpaid debts, it must first give you notice of the debt and also provide you with an opportunity to either confirm or deny the debt. Every person who has a claim against another must give that other person notice of the claim and a chance for that other person to contest the claim or debt in court. This is known as service of process. The service may be faulty if the debt collection agency fails to properly investigate or find the actual residence of the debtor and serves process at the wrong address. Don’t succumb to pressure from these collection agents. If you have not been given proper notice as explained here, call your NY bankruptcy attorney now.
The most common unfair debt collection practice is where the debt collection agency or lawyer harasses or scares you, the debtor through continuous phone calls to the debtor’s home or cell phone. If a debt collection agent calls you at odd hours, for example late in the night or at dawn, with the intention to force the debtor to make payment, please call your NY bankruptcy attorney now for immediate help.
Another way the debt collection may be improper is when the debt collection agency fails to investigate, (especially where the agency was not the original creditor) whether you, the debtor in fact owed the amount as claimed by the original creditor.
Furthermore, the debt collection agent needs to prove that the original creditor has duly and properly assigned all right, title and interest in the account or debt to it. This will be the basis for pursuing any claim against the debtor. If your debt collector has no proof of assignment of the debt to her, call your NY bankruptcy lawyer now.
The law seeks to protect the most vulnerable members of the society who may feel intimidated just at the sight of a letter signed by a lawyer. In instances where such abusive means is used by a debt collection agency or agent, the court usually protects you by dismissing the complaint of the debt collection agency. Your lawyer can have the court set aside a default judgment which was given in favor of the debt collection agency if you did not have a chance to set aside the debt. Don’t just wait for debt collection agencies to drive you into bankruptcy.
Congress enacted the Fair Debt Collection Practices Act to stop abusive debt collection practices. One way to stop this abuse by debt collectors is the requirement of a validation notice and period in collecting debts.
If the debt collection agency does not follow this requirement, you can let your New York lawyer seek an order from the court to get the debt discharged and even get damages against the debt collection agency.
Under the Fair Debt Collection Practices Act, all debt collectors are to send a written notice to the debtor setting forth the debtor’s right to dispute the debt, among other things. This notice must be sent within 5 days of the debt collector’s initial communication with the debtor. This is called the ‘validation notice’.
The debtor then has 30 days from the time of receiving the validation notice to send the debt collector a notice disputing the debt. This period is known as the validation period.The debt collector is free to go on with her debt collection activity during the validation period if the debtor fails to dispute the debt.
However, the debt collection agency must not do anything that might overshadow or be inconsistent with the debtor’s right to dispute the debt or request the name or address of the original creditor. For example, in NY, it is wrong for the debt collection agency to serve a debtor with a summons and a complaint within the 30-day validation period without accompanying communication assuring the debtor that her rights under the validation period remain in force and are not affected by the service of the lawsuit. The courts have this requirement because most Bronx, Queens, Brooklyn, Manhattan and other NY state residents might get confused and understand the service of the lawsuit as a termination of their rights during the validation period.
To prevent such confusion, the best practice is to provide an explanation in both the validation notice and the summons and complaint clarifying the rights of the debtor and explaining that the starting a lawsuit does not override the debtors rights.
It’s one of the most common misconceptions that bankruptcy attorneys in NYC have to deal with: the erroneous belief that filing for bankruptcy will make all debts disappear.
While bankruptcy can discharge (eliminate) a substantial amount of debt, there are certain types of debt that are permanently exempt from being discharged. There are also several different types of bankruptcy filings, so whether or not a debt can be discharged in your situation is best left to discuss with one of the many expert bankruptcy attorneys in NYC.
The federal Bankruptcy Code lists 21 different types of debts that are subject to being ineligible for discharge. Again, the type of bankruptcy you file will dictate whether a debt can be discharged, but as a general rule, bankruptcy attorneys in NYC advise potential clients that the following types of debts will not qualify for discharge under most personal bankruptcy cases:
Alimony and Child Support:The courts deem family obligations to be a matter of top priority, and strive to protect and maintain the interests of dependents and/or the ex-spouse. Bankruptcy attorneys in NYC have seen far too many cases where one spouse has sought bankruptcy protection as a means to avoid paying alimony, only to be told that alimony and child support are ineligible for discharge.
Taxes and Liens: You probably knew this one was coming. While the government wants to give struggling consumers the chance at a fresh start, Uncle Sam made sure to position himself near the top of the list for repayment. As such, most taxes and liens are exempt from discharge, both under Chapter 7 and Chapter 13 filings.
Student Loans:As much as bankruptcy attorneys in NYC would like to help struggling students, again Uncle Sam is not quite so forgiving. While it used to be possible to wipe out student loans under the protection of bankruptcy, the increased volume of loans, as well as the skyrocketing cost of an education that drove up loan amounts caused the government to exclude student loans from discharge.
If you’re wondering which of your debts might qualify for discharge, it’s important to consult with one of the many reputable bankruptcy attorneys in NYC before proceeding, so you don’t make a financial misstep that won’t really help you in the long run.
If you’re contemplating filing bankruptcy in NYC, it’s important to take the time to educate yourself as thoroughly as possible before you actually start the process. Not only will this help you make informed decisions along the way, but it also ensures you’ll fully understand the ramifications of events as they unfold.
Some of the key steps to filing bankruptcy in NYC are set forth below, but as with any legal matter, always seek competent legal advice from a NYC bankruptcy lawyer before proceeding.
Mandatory Credit Counseling – 180 Days Before Filing
Many people mistakenly believe that the first step in filing bankruptcy in NYC is to file the actual petition. But the new bankruptcy laws enacted in 2005 now dictate that people intent on filing bankruptcy in NYC undergo credit counseling through a government-approved program before actually filing the petition.
Establish/Verify Residency
In order for you to qualify for filing bankruptcy in NYC, you must have been a resident of the state of New York for at least 90 days prior to filing. If you’ve lived in New York less than 90 days, you have to either wait until you meet the 90-day requirement, or else file in your previous state of residence.
File the Petition for Bankruptcy
Your case officially starts once your attorney files the petition with the court. At that time, a trustee will be appointed to those filing for bankruptcy in NYC. The trustee will oversee your case throughout its entirety, whether it be a few months for Chapter 7, or up to five years for Chapter 13.
Meeting with Your Creditors
In order to comply with the terms of federal bankruptcy law regarding filing for bankruptcy in NYC, your creditors will be given a chance to meet with you to review the debt you owe. This happens at what is a referred to as a 341 Meeting, or a Meeting of Creditors. This is often the most intimidating part of the process for most people, but be assured the meeting is usually short, and your attorney will prepare you for it ahead of time.
Mandatory Financial Education
Pursuant to the new bankruptcy laws in 2005, those who engage in filing bankruptcy in NYC must undergo mandatory financial education in order to prepare them to improve their fiscal decisions and habits.
Discharge of Debts
If there are no objections from your creditors as to the truthfulness of your bankruptcy petition, and you faithfully fulfill the terms of the bankruptcy process, your debts will be discharged and your case will conclude.
This is just a brief overview of the process for filing bankruptcy in NYC. Because bankruptcy entails many life-altering consequences, it’s imperative that you seek legal counsel from a reputable bankruptcy attorney in NYC.
While bankruptcy laws exist for both the protection of debtors as well as creditors, the system has been subject to abuse. Therefore, Congress chose to overhaul bankruptcy laws four years ago through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. While a reputable bankruptcy lawyer in BRONX can advise you best, here is a partial list of some of the key changes the law addressed:
Mandatory Credit Counseling: Before a petitioner can file for bankruptcy, the law now requires a consumer to undergo mandatory credit counseling via a government-approved program (click here < http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm> for a list of approved providers), or your professional bankruptcy lawyer in BRONX can refer you to a qualified counseling agency.
Requirements for Tax Returns and Proof of Income: Consumers wanting to file either Chapter 7 or Chapter 13 must now furnish proof of income via their tax returns in order to qualify for bankruptcy protection.
A New “Means Test” to qualify for Chapter 7: The new means test is based upon the median income for your state. As a general rule, if you make more than the median income and have $100 leftover to put towards debts (after meeting your essential monthly expenses), then you have to file under Chapter 13. An experienced bankruptcy lawyer in BRONX can advise you further about whether this.
Fewer Automatic Protections (“Stays) for Filers: In the past, people who filed for bankruptcy protection enjoyed an array of automatic protections (in legal terms, called ‘Stays’) from their creditors. Under the new law, however, some of these protections have been eliminated, including protection from eviction or from driver’s license suspensions. Again, a seasoned bankruptcy lawyer in BRONX can explain the parameters of this aspect of bankruptcy law in greater detail.
New Priority for Unpaid Child Support and Alimony: Money for back payments for child support and/or alimony (or new obligations to pay for these expenses) qualify as familial debts, which are now given top priority in the hierarchy of creditors.
Mandatory Financial Education at the Conclusion of the Bankruptcy Action: As your bankruptcy process winds down, the new law requires you to undergo a mandatory financial education program before you will be allowed to have a final discharge of your debts. A reputable bankruptcy lawyer in BRONX can refer you to a government-approved program that will help you meet this final requirement.
