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Bankruptcy Fallacies – Part I

new york bankruptcy lawyerOne of the most widely held beliefs concerning individuals who file bankruptcy is they will never be able to obtain credit again. This is simply untrue. Although a bankruptcy filing will be maintained on your credit report for 10 years, most individuals who file bankruptcy can rehabilitate their credit within 18 months. A debtor who files for chapter 7 bankruptcy can eliminate all of his or her debt.

If the debtor obtains a secured credit card after filing bankruptcy and makes credit card payments on a regular basis he or she can reestablish credit. When this debtor files a new credit application, the financial institution will see all prior debt was discharged in bankruptcy and the individual, for the past 18 months, has been paying his or her debt on time. This makes this individual less of a credit risk to the financial institutions.

In my legal practice, I have represented individuals who have filed for bankruptcy three times during the course of my career. This means after the first and second bankruptcy they are able to establish credit all over again, run their credit up, go bankrupt again and then do a third time.

Individuals Who File Bankruptcy Can’t Have Assets

It is a mistaken belief that before someone can file bankruptcy they have to have virtually no assets. This is untrue. New York State has an exemption statute of $150,000 for equity in a home (this statute depends on which county the home is located in). There are also exemptions under New York State law for $5,000 in cash and a car with up to $4,000 in equity in it. New Yorkers can also choose to utilize Federal exemptions. Under Federal exemptions, there is a $21,625 exemption for the value of a home and $10,825 for cash held by the individual filing for bankruptcy.help in filing for bankruptcy

Senior Citizens Filing Bankruptcy

CreditCard.bmpMany seniors no longer have sufficient assets to maintain their lifestyles. There is a tendency in these situations to go into debt. Seniors use credit cards to finance routine purchases with the hope that they will be able to pay their credit cards back at some point in the future.

In some instances, they are unable to accomplish this goal. Most seniors will not ask family, friends or charities for help. This is true even in cases where seniors have previously helped other family members. Most senior citizens are too proud to ask for help!

The credit card debt that seniors are maintaining has been growing. Seniors also require more medical treatment than younger Americans. In situations where the medical treatment is not covered by insurance, seniors find themselves in debt.

The average age of individuals filing bankruptcy has been rising for the past few years. The group with the largest increase in bankruptcy filings are Americans older than 55 years of age.

The primary reason for seniors filing bankruptcy has to do with their inability to pay credit card debt. The medium credit card debt for seniors filing bankruptcy is over $27,000. Medical expenses are the second largest cause for seniors to file bankruptcy.

In addition to problems involving credit card debt and medical expenses, more and more seniors in their late-fifties and sixties are still carrying mortgages on their principle place of residence. Today, 63% of all Americans in their late-fifties and sixties are still making mortgage payments. This is up significantly from the 49% of individuals in this category that were carrying mortgages in 1989. These figures were obtained from the Joint Center for Housing Studies at Harvard University.

About Our Law Firm

The Law Offices of Schlissel DeCorpo represents individuals filing for Chapters 7 and Chapter 13 bankruptcies. We are also involved in the preparation of wills and trusts. We probate wills and we represent individuals in contested will cases and estate proceedings.

Elliot S. Schlissel is a member of the National Academy of Elder Law Attorneys and has been assisting New York seniors in dealing with all types of legal problems for over 20 years. Our phones are answered 24 hours-per-day, 7 days-per-week. Our phone numbers are 1-800-344-6431, 516-561-6645 or 718-350-2802. You may also contact us by email.

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