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Long Island Bankruptcy Law Blog

Achieving debt relief through non-bankruptcy remedies

When it comes to addressing overwhelming debt, most New York residents will likely examine all possible options. The first steps might include establishing a strict household budget and sticking to it, while paying as much on the debt as possible each month in an effort to bring the balance down. If that doesn't make a dent in the debt balance, some people may try other options, like reaching out to creditors to explain the circumstances of a temporary hardship, hoping to structure some kind of relief from payments or interest charges.

And, for those who may be facing foreclosure as it becomes harder to make the monthly mortgage payment, one option might be to attempt to modify the terms of the mortgage. Even as the housing market in America improves and more consumers are looking into buying their first houses, creditors still have a pretty powerful incentive to keep mortgagees in their homes, where they will continue taking care of the property and paying back the debt owed, even if on modified terms.

Are balance transfers a good way to address credit card debt?

There are millions of Americans who are dealing with credit card debt. While some of these individuals and families may just focus on paying the minimum monthly payment, there are many who are doing their best to address this debt issue and find healthy financial solutions. For some, part of the solution might be to transfer the balance of one credit card with a high interest rate to another credit card with a lower interest rate. This is known as a "balance transfer."

But, are balance transfers a good way to address credit card debt? Well, a recent article noted that while, in general, balance transfers can be a useful way to pay down credit card debt, there are some important factors to consider. Most importantly, if your plan involves opening up a new credit card, that will result in what is known as a "hard inquiry" on your credit, which will reduce your credit score by a few points in the short term.

Bankruptcies come off credit reports after a number of years

Many of our readers in New York know that during the so-called "Great Recession" one of the biggest issues was the when the housing "bubble" burst. As the economy started to crumble at the end of 2007 and into 2008, Americans saw billions in investment holdings disappear. But, it wasn't until the value of homes started to crater soon after, that individuals and families in New York and throughout the country really began to feel the most serious impact of the recession. For millions of people, that meant filing for bankruptcy.

But, now that it is 2017, many of those people who filed for bankruptcy several years ago will finally begin to see those filings disappear from their credit reports. Many of our readers may know that the "black mark" of a bankruptcy stays with the filer for several years, but one of the benefits of filing for bankruptcy is that this financial red flag doesn't last forever.

Filing for bankruptcy to stop foreclosure

Our readers may be familiar with many of the advantages that New York residents will benefit from in the bankruptcy process. Many different types of debt can be addressed, and the financial challenges of unexpected life changes that impact finances can be resolved. However, for some people, there is one main goal when filing for bankruptcy: stop foreclosure.

Under bankruptcy law, an "automatic stay" goes into effect upon the initiation of a bankruptcy action. This stay prevents all collection efforts by creditors and lenders, and that includes mortgage lenders. So, not only will you stop receiving those annoying calls and letters from credit card companies trying to collect unpaid debt, but your mortgage company's foreclosure action will be temporarily halted as well. The stay remains in effect as long as the bankruptcy action is pending.

Addressing credit card debt with a bankruptcy filing

Many people in New York are able to make their monthly credit card payments, even as they carry thousands of dollars in balances on the cards. Maybe they think that they will be in a better financial position to make a full effort to repay the debt later on down the line, perhaps after getting a salary increase or finding a better paying job. In the meantime, they continue to use credit cards for purchases and make every effort to make the minimum payments each month.

While making sure to pay at least the minimum payment each month is crucial in maintaining a semblance of a credible credit score, this isn't really the best way to address credit card debt. The reality is that when New York residents "skim by" like this, they are taking a big risk. What happens if you run into financial challenges and all of the sudden you can't even make the minimum payment? It won't take long for your finances to get seriously mixed up.

What are the most common questions when it comes to foreclosure?

Individuals and families in New York who are facing financial challenges are usually looking for options: Can I increase my income? Can I trim my budget? Can I address my debt situation? The questions and answers are different for everyone, but one financial challenge can be scarier than the rest - the prospect of losing your home in a foreclosure action.

What are the most common questions when it comes to foreclosure? For New York residents facing this situation, there are many, but the most common is probably, "What is foreclosure"? In essence, a foreclosure action is a mortgage lender's legal option to reclaim property when a borrower doesn't comply with the mortgage agreement. In the most common scenario, a homeowner becomes delinquent on monthly mortgage payments, or can't pay at all. The family home is the collateral for that mortgage agreement. If the lender doesn't get the financial payments that it is entitled to as part of the mortgage agreement, it will attempt to reclaim the home in question. From there, after reclaiming possession and ownership of the home, the lender can re-sell it to another party to recoup the balance of the mortgage agreement.

What causes Americans to pursue a bankruptcy filing?

Most of our readers have probably seen the most recent news about the national economy that indicates that things are looking good for the future. However, there are still plenty of people in New York who are facing financial challenges that an upswing in the economy can't help. For many people, the main problem is debt, and excessive debt can lead individuals and families in New York to consider filing for bankruptcy. But, what type of debt is the most common cause of bankruptcy filings in America? According to a recent article, the answer is medical debt.

The recent article noted that, according to one organization that keeps track of financial issues, more than 25 percent of adults in America face problems when it comes to paying down medical debt. In one year alone, 2014, an estimated 40 percent of people in America accumulated some amount of debt due to medical treatment.

Answering your questions about bankruptcy filings

People in New York who are on the verge of filing for bankruptcy have usually already faced quite a few financial challenges. For some, the march toward bankruptcy has been years in the making, as credit card debt has piled up and left them with few options. For others, the financial problems have occurred more suddenly, perhaps due to unexpected life changes, like a health condition that results in significant medical expenses or the sudden loss of employment in a struggling economy. Whatever the reason, these individuals and families have arrived at the conclusion that a personal bankruptcy filing is the best option to address these serious financial issues.

But even those who ultimately decide that bankruptcy is the best debt relief option they have will likely still have many unanswered questions. Most people will have specific questions about the process, such as when and where to file, while others will likely have questions about the legal aspects of the bankruptcy filing, such as which assets might be exempt and how soon the automatic stay will go into effect to put a stop to foreclosure actions and creditor harassment. The good news is that the answers to these questions can be found.

The benefits of an automatic stay in a bankruptcy filing

Previous posts here have mentioned that New York residents who are facing financial challenges need to weigh the "pros" and "cons" of filing for bankruptcy. While some people may believe that there are more drawbacks to filing for bankruptcy than there are benefits, that isn't necessarily true. One powerful benefit of filing for bankruptcy is an automatic stay on creditor collection efforts.

Harassing calls and lawsuits from creditors and collection agencies can drive a person crazy. That is why the automatic stay that is granted under bankruptcy law can be such an important tool for New York residents. When the most serious of debts are being called in -- like a mortgage or utility bills -- and threats are coming about taking your home or turning off your electricity and water, the automatic stay will put a "pause" on these issues. This can be just the right amount of breathing room an individual or family needs in order to get a handle on financial problems.

How do you make the decision to file for Chapter 7 bankruptcy?

When New York residents face financial challenges, they also face difficult questions. They may explore all of the possible options, but, in many cases, the only reasonable option might be filing for bankruptcy. So, how do New York residents make the decision on whether or not they should file for Chapter 7 bankruptcy?

The decision to file for bankruptcy is a big one, but, like most other decisions, it can be approached by weighing the pros and cons. When most of our readers think of bankruptcy, they probably think that the "cons" outweigh the "pros." But, in many cases, that isn't the result of this weighing test.

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