What You Need to Know About Bankruptcy
Below are 11 very important points everyone should know before filing bankruptcy.
1. Although the bankruptcy process is a court proceeding, the ordinary case does not involve a trial. About a month after our lawyers file your papers we will meet in a classroom-type atmosphere with the bankruptcy trustee who will read these papers and ask you relevant questions. We will prepare you for this meeting, and will be sitting next to you to assist you. With a long-standing reputation for thoroughness and preparation, Corash & Hollender, P.C., has an excellent track record for success in the bankruptcy court.
2. It is not advisable to file bankruptcy without the assistance of an experienced, specialized bankruptcy attorney. You may not be aware of bankruptcy “traps” and circumstances that would make filing for bankruptcy a terrible idea, creating risk for you and your family members. However, with proper guidance from the attorneys in our firm we can identify those situations where either you should not file bankruptcy, you should file at a later time, you should file a different type of bankruptcy case, or you should take certain protective steps before filing.
3. People of all backgrounds file for bankruptcy, usually due to circumstances beyond their control: loss of a job, loss of a spouse, or an unexpected large expense or family emergency. Our typical client did not “run up” his credit cards before filing, but rather became disillusioned after trying very hard to make payments, only to find that those payments were applied to interest and fees, and were followed by continual annoying calls from creditors.
4. With proper legal guidance, you will not lose your property if you file bankruptcy. In New York you can keep a certain of amount of equity in your house, and your car, an accident case, and in some cases, even cash. The exact amount is determined by they type of exemptions we claim, and your other assets. You can keep your IRA, your 401(k) and pension as well. The important thing to remember is to obtain experienced bankruptcy counsel to assist you. Once you file your case, any mistakes you have made will be difficult to correct, and could be costly.
5. Although your credit report will reflect your bankruptcy filing for 10 years, you must remember that your credit history at the time you seek bankruptcy assistance is likely in poor condition already. It is important to consider the value of getting a fresh start. We can show you how to rebuild your credit again. Often, our clients have obtained car loans right after bankruptcy, and mortgages within a year! Many of these people would not have been able to get this new credit without getting rid of their old debt. We try to develop ongoing relationships with our clients, which includes assisting them getting their lives back on track after bankruptcy. We strive to help you put past problems behind you and get a new lease on life.
6. Although bankruptcy filings are public records, they are not published anywhere. Your friends and neighbors will not know you have filed, nor will your employer, unless you are subject to ongoing credit checks at work.
7. Filing for bankruptcy protects you because creditors can no longer call you, send you mail, sue you, take your money or otherwise require you to make payments; however if there are specific debts you wish to pay (e.g., medical providers, friends or relatives), you may voluntarily pay all or a portion of those debts any time you wish to.
8. Bankruptcy will appear on your credit report and on the credit report of anyone who co-signed for any of your debts (e.g., joint credit card). With proper planning, that risk can be avoided. If your spouse is not obligated on any of your debts, your bankruptcy will not affect your spouse’s credit report.
9. While most people find it hard to believe, bankruptcy can even discharge certain types of taxes; or under Chapter 13 bankruptcy, taxes can be paid over five years without interest! These rules are complicated. Your situation must be reviewed in detail to determine your best options.
10. It is not always necessary to file for bankruptcy. If your only income is from Social Security or a pension, these exempt assets in a bank account cannot be taken by creditors. Although your account can be temporarily frozen once there is a judgment against you, upon your providing proof that the sole source of the funds is from a pension or Social Security, the creditor must instruct the bank to release your funds. Likewise, if you don’t have a job or a bank account, you have no risk if you don’t file for bankruptcy, other than the annoyance of receiving continued calls and lawsuits.
11. If you are thinking about filing for bankruptcy, there are certain things you should not do. Although your natural instinct might be to pay off loans to friends and relatives beforehand, that is a trap you should avoid. You should not make any large purchases on your credit cards, or any balance transfers to lower your interest rates. Nor should you try to put your house, car or bank account in someone else’s name. What might make sense to do, if you were not filing for bankruptcy, could be the worst possible move just before bankruptcy. It is best to seek professional help before you take action.