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Long Island Bankruptcy Law Blog

5 critical post-bankruptcy tips

Filing for bankruptcy is not the end. It is the beginning. It is the start of your new financial life. It can give you a clean slate. It allows you to reset your debt and move forward in life.

So, how do you do it? How do you make the most of this second chance? Here are a few key tips that can help:

Can you resolve debt without bankruptcy?

If you're a resident of New York who's been struggling with debt, you may wonder if there are any other options left for you outside of bankruptcy. There are, and Macco & Stern, LLP, Long Island bankruptcy attorneys, are here to help you find a solution.

Regardless of your current financial struggles, you can look into debt negotiation, workouts, and settlements. Some of the most popular methods of debt management that don't involve bankruptcy include:

  • Eliminating other mortgages based on your home's value
  • Settling unsecured debts for a portion of the debt itself
  • Negotiating new mortgage modifications

What you should know about medical debt

If you feel submerged under a pile of never ending medical bills, you are not alone. Millions of Americans feel as though they will never escape the burden of medical expenses. In a number of cases, these overwhelming medical bills lead to bankruptcy. A study performed by Kaiser Family Foundation found that one in every three people in the United States has trouble paying for their medical expenses. Approximately 21 million are continually paying off credit card debt associated with medical expenses and another 28 million have run out of money in their banking accounts while making payments. In fact, 62 percent of people who file for bankruptcy in the nation indicate medical debt as the reason for their filing and financial demise.

Costly medical care is just one factor blamed for this high rate of medical bankruptcy. People struggle to pay their monthly premiums to have insurance coverage and are still forced to pay for deductibles and copays for their medical care. Furthermore, the cost of medical injuries and conditions vary significantly depending on what medical institution you go to, as well as what part of the country you live in. Simple injuries, such as a sprained ankle, can generate healthcare costs that vary between a hundred dollars and $24,000.

Tips for negotiating with creditors

New York residents who are looking to get out of debt have several options available to them. One possibility is to negotiate with creditors directly in order to get a repayment or settlement plan that is tailored to fit their current situation.

The Consumer Financial Protection Bureau takes a look at one way to negotiate a settlement with a debt collector. They suggest a three-step process. It involves first learning about the debt in question. Then, the consumer will create a plan for a settlement or repayment proposal based on the knowledge gained through their debt research. It is important for this plan to be realistic, since the success of a negotiation will likely hinge on that. Finally, the proposal should be taken to a creditor for approval.

Primary factors that contribute to credit card debt

Most New York residents have at least one credit card. After all, these convenient cards can be used almost anywhere in the U.S. and are an easy, simple way of paying for things instead of carrying around loads of cash or having to write out checks. But because of their frequent and sometimes improper use, many people suffer from credit card debt as well. Here are some contributing factors.

NBC News takes a look at what happens whenever a person misses their credit card payments. This, along with paying only the minimum and accruing interest charges, are two of the bigger reasons as to why people go into debt. Penalty payments can be incited against people who miss the 30 day payment deadline. This can vary from card to card, but is usually $27. Then, there is "penalty APR", which is often triggered if a person's payment is over 60 days late.  These rates can shoot up to almost 30 percent. It can take as much as six months for an account to be reviewed to determine if the APR rate should be lowered.

How long after a bankruptcy before you can secure a mortgage?

One of the reasons that people often put off seeking the protections of bankruptcy is concern for their future financial situation. Many people believe that they will not be able to rebuild their credit for a long time after bankruptcy.

While it is true that filing bankruptcy will show up on your credit report for some time, failing to file bankruptcy could have a longer-lasting and more serious impact on your financial health. Many delayed or unpaid debts, as well as judgements, on your credit report will look much worse than a single entry from bankruptcy followed by on-time payments.

Credit cards after bankruptcy

When you file for Chapter 7 bankruptcy in New York, you may think you will not be able to have a credit card again. We at Macco and Stern, LLP, know it is important for you to understand your credit options after bankruptcy.

Most of the time, filing for bankruptcy means that your credit is temporarily frozen. U.S. News says that this credit freeze is typically between four to six months for a Chapter 7 bankruptcy. Once your bankruptcy is over, though, you can usually rebuild your credit. It is important to remember that your credit line may be lower than it used to be. Sometimes you may also have higher interest rates. However, there are ways you can have a credit card and slowly rebuild your credit.

What you should know about home loan modifications

At the law office of Macco & Stern, LLP, we understand the frustration and anguish New York residents feel if they are facing a foreclosure. It can be worrisome if you are informed you might soon lose your home, and you are trying to do everything you can to ease your financial burden and keep your house.

If your home is soon to go into foreclosure or you filed for Chapter 13 bankruptcy, you might have received offers to apply for a home loan modification. As U.S. News & World Report explains, the purpose of a loan modification is to lower your monthly payments, which can help you catch up on or stay current with your mortgage payments. Lowering your monthly mortgage payment may also make it easier to pay the rest of your bills.

Moving past a bankruptcy

Before you file for bankruptcy in New York, you might want to investigate and plan how you will use the experience to make your financial future more secure. This is actually exactly what bankruptcy is set up to do - to allow consumers to break free of debt that holds them back so they can make a true fresh start. It may take some time to climb the ladder to the top of the credit ratings but the amount of time involved may be far less than you may fear if you take the right steps.

NerdWallet explains that if you file a Chapter 7 bankruptcy, you will get some relief in terms of your credit score almost instantly because your debt-to-income ratio will improve once your debts have been discharged. Also, bad marks on your credit report about late or missed payments will get older and their impact will lessen.

What should you know about home equity?

As a resident of New York who owns property, the term "home equity" has likely come up multiple times. Understanding home equity and how to use it is a crucial part of owning a home. Macco & Stern, LLP, are here to help you learn about these points of key importance.

The first thing to understand is that home equity is essentially the part of your house that you actually own. You start with the property's market value, and then subtract your outstanding loan balance from that. The remainder left would be money that's entirely yours, as it won't have to go toward paying off your current house loan.

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