Bankruptcy Alternatives

March 19, 2009

Judgments, Judgment Liens & Credit Reports in NY

A common question we get is “How long will a judgment stay on my credit report in New York.”

A judgment stays on someone’s credit report for seven years. However, even though a judgment may no longer appear on someone’s credit report, that does not mean that the judgment is no longer enforceable. A judgment in New York is valid for twenty years. During that time it can enforced against a judgment debtor’s income and assets.
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March 13, 2009

Is Debt Settlement Better than Bankruptcy in NY?

by Stephen Z. Starr

The current recession is causing financial hardship for many people. Many people in New York find themselves with no work, or with lower income and hours than they had before. Debt collectors and collection lawyers don’t stop trying to collect debts just because we are in a recession or someone has lost his or her job.

1. Misleading and Extensive Advertising by Debt Settlement Companies.

Many people fall victim to misleading advertising schemes of the so-called debt settlement companies (also known as debt negotiation). They run constant ads on TV and radio with very sympathetic, “common Joe and Jane” type characters who explain how they had financial problems until they call the debt settlement company running the ad. Often, to try to target particular ethnic or immigrant communities, the ads use the patois and words that someone hearing the add from that community would identify with (for example, the ads targeting the Caribbean community have speakers that a listener would identify with as someone from the Caribbean).

2. Failure to Identify that Creditor Participation in Debt Settlement is Voluntary..

The critical thing that the debt settlement companies fail to clearly and prominently disclosure upfront in their advertising and promotional materials is that that participation of creditors (such as banks and credit card companies) in a debt settlement program is entirely voluntary. If a bank or credit card company does not want to participate THERE IS ABSOLUTELY NOTHING THAT THE DEBT SETTLEMENT COMPANY CAN DO TO FORCE IT TO PARTICIPATE. This means that you might hire a debt settlement company and stop paying all of your creditors as they instruct you to do while they propose a debt settlement plan, and in the meantime you may get sued by one of your creditors. This is very common and we see it all the time. We believe this is misleading practice of the debt settlement industry that should be stopped.

Bankruptcy, on the other hand, is not a voluntary process. Bankruptcy is a mandatory process and unsecured creditors (such as they typical credit card debt) don’t get to ignore it and sue you if they want to. But they can in debt settlement Continue reading

December 15, 2008

Wind-Down Outside of Bankruptcy in New York

by Stephen Z. Starr

As a result of the current economic conditions many business owners in New York City have decided that they will need to shut down their businesses. They are faced with the decision of how to best do this. Essentially, the options are to liquidate the business in chapter 7 bankruptcy, to liquidate the business by an assignment for the benefit of creditors in state court, or to liquidate the business outside of bankruptcy. For businesses with greater resources another option is liquidating the business in chapter 11 bankruptcy.

1. Chapter 7 Business Liquidation
This involves filing a chapter 7 bankruptcy petition, with supporting schedules of assets, debts and other information with the Bankruptcy Court. A chapter 7 trustee is then appointed to administer the assets of the business and liquidate them to raise cash to pay creditors’ claims.

One major benefit of a chapter 7 bankruptcy is that, immediately upon filing of the bankruptcy case, the automatic stay goes into effect. This stops all further collection activity against the debtor, as well as any pending litigation, foreclosures or judgment enforcement.

Another positive of a chapter 7 bankruptcy for a business is it is a fairly straightforward process to prepare the bankruptcy papers. Our law firm handles these types of cases on a flat fee basis so the business owners know in advance what their legal fees will be.

One of the negatives is that a trustee is appointed to liquidate the assets of the company, and he or she has the ability to investigate financial transactions involving the company and bring lawsuits against insiders to seek to avoid or recover certain transactions. This topic is discussed further in the Frequently
Asked Questions (FAQs) on our website.
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August 27, 2008

Is Credit Counseling Something I Should Try Before Filing Bankruptcy in New York?

by Stephen Z. Starr

In response to questions we received from clients and prospective clients in Manhattan, Bronx, Brooklyn, Queens and Westchester, in a series of 4 posts we are exploring the most common alternatives to personal bankruptcy for New Yorkers faced with money problems.

A prior post on our blog I Live in New York and Am Considering Bankruptcy — Should I Try Negotiating with My Creditors First? covered negotiating directly with creditors and/or collectors.

Another prior post on our blog I Live in New York and Am Considering Bankruptcy — Should I Try Debt Settlement First? addressed so called debt settlement or debt negotiation.

In today’s post we will explore credit counseling. Future posts will explore other alternative to bankruptcy.

Credit Counseling

The Credit Counseling industry is more reputable than the so called Debt Settlement – Debt Consolidation – Debt Negotiation industry, in part because as a result of the amendments to the Bankruptcy Code in 2005 every individual debtor who wants to file for personal bankruptcy has to complete a credit counseling course from a credit counseling agency approved by the Office of the United States Trustee – which is part of the U.S. Department of Justice. Each federal judicial district has a list of authorized credit counseling agencies (you can find this list through the Bankruptcy Court’s website in your district).
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August 21, 2008

Should I Try Debt Settlement First Before I file Bankruptcy in New York?

by Stephen Z. Starr

New York is expensive place to live. We have higher rent, higher taxes, and higher utility bills than many other parts of the country. Many people in Queens, Brooklyn, Manhattan, Long Island and Westchester are feeling the pressure of higher gas prices, higher food prices and stagnant wages. Faced with mounting credit card debt and other bills filing a personal bankruptcy case, whether chapter 7 or chapter 13, may or may not be the right solution depending on the circumstances. In a series of posts we are exploring alternatives to bankruptcy.

A prior post on our blog I Live in New York and Am Considering Bankruptcy — Should I Try Negotiating with My Creditors First? addressed negotiating directly with creditors and/or collectors.

In today’s post we will explore so called debt settlement or debt negotiation programs. Future posts will address additional alternatives.

Debt Settlement – Debt Consolidation – Debt Negotiation

The so called Debt Settlement – Debt Consolidation – Debt Negotiation industry is driven by advertising and high pressure sales tactics. It is not regulated in many states and is generally not licensed. Many of our bankruptcy clients have had disastrous results with debt settlement companies. The problem is that they advise you to stop paying ALL of your creditors and make payments to them (the debt settlement company). They send out a proposal to all of your creditors. In the meantime there is absolutely nothing whatsoever from stopping your creditors from suing you.
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