O'Connor FirstNew York Insurance Defense Lawyers | Albany Insurance Litigation Attorneys2024-02-11T00:29:18Zhttps://www.1stlaw.com/feed/atom/WordPress/wp-content/uploads/sites/1403963/2023/04/cropped-fav-icon-32x32.jpgOn Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=510712024-02-11T00:29:18Z2024-02-11T00:29:18ZWhat is zombie debt?
Zombie debt is generally a debt that someone once had but no longer owes. Typically, it has either been paid off or has passed the statute of limitations for collection. A debt that has been attached to the wrong person’s name can also be considered a zombie debt. Victims of identity theft or other fraud who don’t realize someone has charged a purchase or taken out a loan in their name can have zombie debts – particularly if they don’t watch their credit card statements or their card issuer doesn’t have strong identity theft protection tools. Zombie debt may or may not show up on a credit report.
How do zombie debts come to life?
There are multiple ways a zombie debt can “reanimate.” For example, if you make a payment on a debt that has expired, that will bring it back. You may even have a debt that was supposed to be discharged in bankruptcy that actually wasn’t – at least not correctly. Debts are regularly “sold” by one collection company to another. It’s possible that a debt you no longer owe for one of the reasons discussed has ended up in new hands, and collectors may pursue it.
How can you identify zombie debts?
If you’re receiving notices, phone calls or other communications about a debt you don’t recognize or thought you paid off, don’t make a payment – no matter how small – just to get a momentary reprieve. An attorney with the National Consumer Law Center says, “Even if you’re feeling pressure during a phone call, don’t agree to make even a $20 payment.” This could wake a zombie debt up and again make you liable for its payment.
You have the right to ask anyone seeking payment on a debt for a debt validation letter. This should contain information about the debt that will help you determine its true status. Don’t pay anything you’ve verified that you still owe the amount you’re told.
Having accurate information about your finances and your true debt is necessary to make an informed decision about what your best course of action is if you’re struggling with debt – including possibly filing for bankruptcy. By seeking legal guidance, you can make the best decision for your specific situation.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=509922023-11-04T00:50:29Z2023-11-04T00:50:29ZThe effect of bankruptcy decreases over time
It would be accurate to say that most individuals who file for bankruptcy will not qualify for a mortgage shortly after their discharge. Bankruptcy drags down people's credit scores by hundreds of points and leads to lenders closing or freezing accounts so that they can't continue spending on credit.
Although people can qualify for some forms of credit in the months after a bankruptcy filing, they will usually only be able to obtain high-cost car loans or secured credit cards that require a financial deposit. A mortgage usually will not be an option in the first year or two after a bankruptcy filing.
However, people may be able to obtain mortgages and other higher-value lines of credit within a few years of their bankruptcy discharges. The terms that lenders offer will typically reflect their sub-optimal credit report. The impact that a bankruptcy has on someone's creditworthiness will decline a bit every month that they make payments on new lines of credit.
As the bankruptcy gets older, people will become eligible for better and more competitive credit options. Eventually, bankruptcy will come completely off of someone's record. A Chapter 7 filing falls off of someone's credit report 10 years after their discharge, while a Chapter 13 bankruptcy disappears seven years after the courts grant a discharge. At that point, a prior bankruptcy will no longer have any bearing on whether or not someone can qualify for a mortgage or other lines of credit.
Seeking legal guidance and learning the truth behind common bankruptcy myths can help people struggling financially choose informed ways to resolve their current financial struggles.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=508582023-08-01T14:37:05Z2023-08-01T14:37:05ZAs of last year, 43.5 million Americans had at least some student loan debt, with an average of $37,787. Many need help to make payments and avoid falling behind.
Many others have chosen to ignore making payments altogether because they do not make enough money to pay for their student loans while maintaining a reasonable standard of living.
Discharge through bankruptcy
Unfortunately, it is difficult to discharge student loans through bankruptcy. U.S. law considers student loans non-dischargeable, like taxes and child support, and they cannot be easily eliminated through bankruptcy proceedings.However, it is not impossible to discharge student loan debt through bankruptcy. To have student loans discharged, the borrower must prove they would suffer "undue hardship" if they paid back their loans. While the criteria for establishing undue hardship vary among jurisdictions, the standard is notoriously difficult to meet.
Brunner test
When evaluating whether an individual meets the standard of undue hardship, courts often use the Brunner test, which considers three factors:
The borrower's current financial situation
The borrower's good faith efforts to repay their loans
Whether repaying their loans would result in a minimal standard of living
While the undue hardship exception is difficult to prove, there have been cases where courts have allowed debtors to successfully discharge their student loan debt through bankruptcy. Successful cases usually involve severe hardships, such as borrowers with permanent disabilities or a lack of future earning potential. These rare instances make it difficult for other borrowers to convince courts that they meet the undue hardship standard.Student loans allow millions of Americans to acquire an education and serve an essential purpose in our country's educational system and economy. However, student loans continue to be a problem for many Americans who need help making their monthly payments while maintaining a reasonable standard of living.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=508462023-06-20T10:41:45Z2023-06-20T10:41:45ZHealth issues are the top reason people file for bankruptcy
According to a review of bankruptcy filings in the United States, roughly 61% of the people seeking a discharge of their debts ended up in that position because of medical costs. Unlike credit card debt that may only add up to a few thousand dollars, medical care can cost hundreds of thousands of dollars, even when people have insurance.
Car crashes caused by people without liability insurance and cancer are among the many health issues that can leave people financially struggling even after they physically recover from their injuries or illness. High levels of patient responsibility for care, like co-insurance, can leave some people with an ever-growing stack of medical bills that they cannot pay. Hospitals and other healthcare providers are often very aggressive about debt collection. They will sell the debt to for-profit businesses or even seek a lien against a patient's home for the bills they have not yet paid in full.
Bankruptcy is a way for individuals to erase some of that medical debt and also for them to prevent collection activity, like a lawsuit seeking a lien that could affect their investment in their primary residence. Realizing that the top cause of bankruptcy is beyond people's control may take some of the shame out of the personal decision to file for bankruptcy and empower people to eliminate the medical debt reducing their quality of life after suffering a serious medical situation.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=493032023-06-06T04:38:59Z2023-02-22T23:21:25Z1. Credit card settlement
Hearing a company advertising about how they can get a credit card company to settle for a fraction of the total balance due may sound too good to be true. That's because it actually is.
Debt settlement companies are for-profit organizations that will offer someone financing and then charge interest on those payments. The settled cards can report the incomplete payment to the credit bureaus, and the borrower may end up without enough revolving credit to balance their budget.
2. Credit card consolidation
Much like debt settlement services, credit card consolidation company offers typically involve taking on a new loan. The interest rate may not be that much better after the introductory period for the consolidation loan.
There could also be numerous fees involved, and the borrower can expect to lose access to their credit cards just as they would in a settlement scenario. If the consolidation company does not close off someone's revolving lines of credit, that might just mean they end up with much higher overall debt levels.
3. Credit card balance transfers
Moving a balance from one credit card to another is not a solution. Unless someone pays the whole balance off in a short amount of time, they may have to pay fees and interest, just as they would on their original card(s).
Bankruptcy is actually a solution for credit card debt because it discharges the balance owed. The person filing won't have to worry about continuing to make payments because, if their bankruptcy proceedings are successful, they will obtain a discharge. Learning more about different credit card debt solutions can help individuals who are struggling with debt better perceive the value of filing for personal bankruptcy.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=492142022-11-07T20:45:31Z2022-11-07T20:45:31ZChapter 13 bankruptcy does not require asset liquidation
Chapter 7 bankruptcies require that the person filing provide the courts with a thorough list of all of their property and debts.
The trustee assigned to their filing uses that information to decide if they have to sell any of their property to pay off their creditors before the courts will grant a discharge of their remaining unsecured debts.
Chapter 13 bankruptcy does not require the liquidation or sale of any of your personal property, so you don't have to worry about what you can exempt and what you might lose when you file.
Chapter 13 bankruptcy takes longer
Depending on the volume of cases going through the courts and the overall amount of debts and assets involved, a Chapter 7 bankruptcy can result in a discharge in several months. In a Chapter 13 bankruptcy, there is a repayment plan involved.
This means that there will be at least three years of monthly payments, if not more, that someone will have to make between when they file and when the courts grant their discharge.
Chapter 13 bankruptcy is accessible to more people
The means test required for Chapter 7 bankruptcy prevents anyone with higher-than-average income from qualifying. Chapter 13 bankruptcy does have income limits and also limits on the total debt involved, but it can offer protection for successful professionals and business owners with higher-than-average income.
For those with more assets or stable income, Chapter 13 Bankruptcy is sometimes the better option. Learning more about what makes Chapter 13 bankruptcy beneficial for certain people can help you decide if it is the right solution for you.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=491502022-09-08T20:32:14Z2022-09-08T20:32:14ZYes, bankruptcy could save your vehicle
So long as you act before you have already lost the vehicle, your bankruptcy filing could prevent repossession and give you an opportunity to discuss the situation with your lender. The same day that you file, the courts will issue an automatic stay.
Your creditors will not be able to pursue collection activity again until the courts resolve your bankruptcy filing. Only creditors who take the time to pursue a special claim in court can prevent the automatic stay from applying to their debt or prevents the courts from discharging a specific debt.
You may be able to reaffirm your existing vehicle loan during the bankruptcy process or negotiate different terms for the loan your lender might agree to increase how many months you make payments or to adjust other parts of the loan to allow you to catch up and bring the loan back into compliance.
You won't receive a warning before repossession
You will likely need to act quickly once you miss a few payments on your vehicle loan. The lender does not necessarily have to inform you of their desire to repossess the vehicle the way that they would have to warn you of a foreclosure attempt related to your primary residence.
Although you may depend on your vehicle to get to work or to meet the basic needs of your children, the company can repossess it and leave you without any transportation if you wait too long to file for bankruptcy. A prompt filing will give you the automatic stay that will temporarily halt collection activity and give you more leverage when negotiating your financial obligations with your creditors.
Understanding the rules that apply to secured debts and financed vehicles in personal bankruptcy proceedings will help you protect your most valuable property.
]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=489502022-06-24T15:25:56Z2022-06-24T15:25:56ZWhat is an automatic stay?
An automatic stay is an injunction that goes into effect when you file for bankruptcy. It can prevent creditors from pursuing debt collection efforts against you.
How long an automatic stay can last typically depends on the type of bankruptcy you pursue. For example, if you file for Chapter 7 bankruptcy, an automatic stay may only last a few months. However, if you file for Chapter 13 bankruptcy, an automatic may last anywhere from 3 years to 5 years.
Additionally, if you had another bankruptcy case dismissed in the past year, your automatic stay may only last for 30 days.
What can happen once my automatic stay gets lifted?
When courts lift your automatic stay, the protections that come with them can go away. That means creditors can typically resume collection efforts.
In some cases, creditors can even request to remove an automatic stay before your bankruptcy case closes. But to do so, they must typically prove that the automatic stay is negatively impacting their business.
Which of my debts can benefit from an automatic stay?
Here are a few types of debt an automatic stay can help you with:
Utility bills: Whether you're behind on gas, electric, trash, recycling or internet, automatic stays can usually stop companies from shutting off your utilities for at least 20 days.
Home foreclosure: An automatic stay can stop home foreclosures. This can allow you to keep your home as long as your bankruptcy case remains open.
Government benefits: If you were overpaid for unemployment, SNAP or even Medicare benefits, an automatic stay can usually stop collection efforts by related government agencies requesting repayments.
Additionally, if you're in the latter stages of the debt collection process, creditors may be pulling your payments directly out of your paycheck. An automatic stay can typically stop wage garnishments by creditors. And, depending on the type of debt you have, it could potentially get discharged in bankruptcy.
You can have a chance to start over
Bankruptcy can give you a chance to reset your finances. And the automatic stay can play a critical role in that reset, giving you time to breathe. You can use that time to pave your path out of debt and into financial freedom.
]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=488812022-02-24T23:07:50Z2022-02-24T23:07:50ZMedian age of 45
Just who files for bankruptcy? They are educated, divorced, married, parents, young, middle-aged and elderly and may even be high-income earners. Commonalities that these people share may include a sudden medical emergency, abrupt job loss and divorce.
Here is some background on the people who file for bankruptcy:
The average person to file is married, older, graduated from high school and earns less than $30,000 annually.
The median age is 45.
A total of 20% of bankruptcy filers are 55 or older.
Slightly more women than men choose bankruptcy. Women comprised 52% of bankruptcy filers while men accounted for 48%.
Married people comprised 64% of bankruptcy filers, while 15% are divorced and 3% widowed.
Roughly 8% have filed for bankruptcy before. Repeat filers comprised 16% of all bankruptcy cases.
A total of 60% earned salaries of less than $30,000, while a little more than 9% of bankruptcy filers earned more than $60,000.
When it comes to education levels, 36% have earned a high school diploma, 29% attended some college and 20% earned a bachelor’s degree or higher degree.
All these people had a serious choice to make, and they chose resolution. The bankruptcy path may lead toward recovery.
Focus on financial education
As you can see, the people who file for bankruptcy run the gamut. Some may have a spending addiction, made questionable financial decisions or experienced a life-changing challenge. Financial education is crucial when going through bankruptcy as well as in dealings post-bankruptcy.]]>On Behalf of O'Connor Firsthttps://www.1stlaw.com/?p=488262021-10-29T16:22:18Z2021-10-29T16:20:33ZChapter 7 bankruptcy debt discharge
Under Chapter 7 bankruptcy, a trustee will recover some of your assets and sell them to repay some of your debt. This doesn’t necessarily mean that you have to sell everything you own. For example, you can keep your house or car if you file for bankruptcy and the equity of the property in question is below New York’s exemption limits.
The trustee will pay as many creditors as they can from the sale of your assets. When there is no longer anything to sell, the rest of your debts will disappear. Most unsecured debts are eligible for discharge under Chapter 7 bankruptcy, such as:
Medical bills
Utility bills
Rent bills
Credit card charges
Unfortunately, Chapter 7 bankruptcy may not get rid of your secured debts (debts backed by collateral). This means that the creditors could still seize your property if you don’t pay, even if its equity is exempt by the law. For example, the creditors could take your house if you are behind on mortgage payments.
In some situations, the court can discharge student debts if the debtor proves that paying the debt would cause them extreme hardship.
Living debt-free
Filing for bankruptcy may seem risky, but it is a solution to get rid of most of your unsecured debts. You must keep in mind that not all of your debts will disappear with bankruptcy, and some of them you’ll still need to pay. Nonetheless, getting some of them eliminated would be a relief that will let you start anew. You don’t deserve to live under stress, and you may get rid of your financial struggles if you take the right steps.]]>