Many individuals who seek assistance from our office have various misconceptions about bankruptcy. At Genova, Malin & Trier, LLP, we are committed to addressing all of your questions and concerns. Our goal is to ensure that you leave our office with a clear understanding of how both bankruptcy and non-bankruptcy options will impact you.
“It’s difficult to file for bankruptcy”
Filing for and pursuing a bankruptcy case is not overly complicated; however, we strongly recommend hiring an experienced bankruptcy attorney to ensure the process is handled correctly and that all alternatives to bankruptcy are thoroughly considered.
With our years of experience in bankruptcy, we have fostered a relaxed and supportive environment to guide you through the bankruptcy process. Our staff is available in the office from Monday to Thursday, 9:00 a.m. to 5:00 p.m., and on Friday from 9:00 a.m. to 4:30 p.m. We encourage you to reach out to us for phone consultations, and we take pride in returning client calls within 12 hours. Additionally, you can contact us via email.
“Only “deadbeats” file for bankruptcy”
Although filing for bankruptcy may seem like a sign of financial failure, it can often be a necessary step to protect you and your family in today’s ever-changing economy. Most people file for bankruptcy following a significant life event, such as losing a job, facing a serious illness, or going through a divorce. Bankruptcy is a financial tool that many individuals, including those who have previously experienced wealth and business success, utilize to navigate a financial downturn.
“If you’re married, both spouses have to file for bankruptcy”
Either spouse in a marriage can file for bankruptcy individually. For instance, if your partner has good credit and is not a co-debtor on any of your debts, it may be beneficial for only you to file. This approach helps to protect your spouse’s good credit, allowing the family to have a fresh start by utilizing the spouse’s strong credit profile.
“You don’t have to include all of your debts in your bankruptcy filing”
The US Bankruptcy Code requires that you disclose all of your creditors, regardless of the amount owed. If you do not list a creditor, that debt owed is likely not to be dischargeable, which can make it extremely difficult to rehabilitate your credit. Additionally, failing to disclose all of your creditors could lead to a determination by the US Bankruptcy Court that your case should be dismissed due to a lack of good faith. If your case is dismissed for bad faith, your creditors may resume their collection efforts against you.
“You can’t obtain relief from your tax obligations through bankruptcy”
There are exceptions to the general rules regarding income taxes. Under Chapter 7 of the Bankruptcy Code, individual income taxes that are at least three years old, have been with the IRS or New York State for at least 240 days before the bankruptcy petition, and are not fraudulent may be entirely dischargeable.
In Chapter 13, debtors are not required to pay such taxes in full. Even if the income tax does not meet these specific qualifications, filing for Chapter 13 allows debtors five years to pay these taxes, often without accruing interest or penalties.
At Genova, Malin & Trier, LLP, we have the experience to advise you on matters related to income taxes or business taxes, such as failing to pay withholdings or sales tax.
Additionally, Chapter 13 gives debtors five years to pay delinquent real property taxes to the county in which the real property is located. This enables debtors to save their homes from a tax foreclosure sale.
Many of our clients benefit from significant tax relief.
“You may only file for bankruptcy once”
This is simply not true.
Chapter to Chapter Options
• Chapter 7 to another Chapter 7 bankruptcy
• Chapter 7 now filing for Chapter 13 bankruptcy
• Chapter 13 now filing for Chapter 7 bankruptcy
Wait time between Bankruptcy Filings
• 8 years
• 4 years
• 6 years (or payment in full to all creditors through a Chapter 13 repayment plan)
“You may max out your credit cards and not be required to pay”
The Bankruptcy Code is designed to protect creditors. If you use credit cards extensively in the 90 days leading up to your bankruptcy filing, especially for amounts over $500 or for luxury goods priced at $500 or more, your creditors may try to have these debts classified as non-dischargeable. This means you would still be responsible for repaying those debts even after declaring bankruptcy.
“Filing will result in my credit being ruined for 7 – 10 years”
In the state of New York, creditors can review a credit report for up to 10 years to see if you have filed for bankruptcy. However, what matters more to creditors is how you manage your finances after the bankruptcy filing. Once the court grants a discharge, the credit rehabilitation process begins. For instance, consider obtaining a secured credit card and using it regularly for purchases you can afford to pay off when the bill arrives, such as groceries or gasoline. Rehabilitation of your credit may start in as little as 24 months from the date of the entry of the bankruptcy discharge.
“Debt Counseling Programs will Protect my Credit better than Bankruptcy”
This statement is incorrect. Credit reporting operates on a point system. Whenever you negotiate a debt or fail to pay it, a similar number of points will be deducted from your credit score. Furthermore, settling your debt may lead to tax consequences when the creditor reports that the debt has been forgiven, which is not the case with a bankruptcy discharge.
It’s important to note that debt counseling programs do not help individuals eliminate judgments.
Additionally, debt counseling programs are voluntary, meaning that creditors are not legally required to participate.