In response to questions we received from clients and prospective clients in New York City, Bronx, Queens, Manhattan and Westchester, in a series of 4 posts we are exploring the most common alternatives to personal bankruptcy for New Yorkers faced with money problems.
A prior post on our blog I Live in New York and Am Considering Bankruptcy — Should I Try Negotiating with My Creditors First? covered negotiating directly with creditors and/or collectors.
A second post I Live in New York and Am Considering Bankruptcy — Should I Try Debt Settlement First? addressed so called debt settlement or debt negotiation.
A third post I Live in New York and Am Considering Bankruptcy — Should I Try Credit Counseling First?
addressed credit counseling as an option.
In today’s post we will explore whether doing nothing is a viable option and what it means to be judgment proof.
Instead of Bankruptcy Should I Do Nothing — Am I Judgment Proof?
Unfortunately many people with financial problems by default seem to select the “Do Nothing” approach. This is the “ostrich approach” (the large bird that can’t fly that sticks its head in the sand when there is trouble). Unlike fine wine, personal financial problems don’t age well (they age more like fish left out in the hot sun).
If you have financial problems and ignore them they are likely to follow a very predictable path – COLLECTIONS followed by COLLECTIONS LAWSUIT followed by JUDGMENT followed by JUDGMENT ENFORCEMENT including wage garnishment and bank account seizures. If you deal with the problem at any early stage you may be able to nip it in the bud before it becomes a collections lawsuit or a judgment. By the time you are faced with collections lawsuits and judgments, doing nothing will usually not help you. Your creditors will not sit back and do nothing – they will most likely move forward in the collections process to try to get judgments against you and to enforce those judgments.
Some people believe that because they don’t own a house, car or bank account they are judgment proof. What is means to be judgment proof is that if a credit gets a judgment against you it will be unable to enforce the judgment because any income or assets is exempted and you are allowed by law to keep it. Examples are social security or social security disability, both of which are exempt from enforcement of judgment by creditors. The topic of exemptions is covered further on the Frequently Asked Questions on our website at https://www.starrandstarr.com.
Conclusion
For most people doing nothing will only make their financial problems worse and ultimately may result in judgments against them (which will be enforceable for 10 years and can be renewed for another 10 years).
For many people bankruptcy may provide a way to eliminate judgments without having to pay them off. A prior post on our blog New York Judgments and Personal Bankruptcy addresses this. Bankruptcy will also stop wage garnishment and bank account seizures.
There is a lot of misinformation regarding the 2005 amendments to the bankruptcy law. Many people are under the mistaken impression that they are not eligible for chapter 7 (liquidation), when in fact they are. A prior post on our blog New York Personal Bankruptcy — Am I Eligible to File? addresses this further.
The majority of the people who contact us for personal bankruptcy in New York are still eligible for chapter 7. Even if you are not eligible for chapter 7 bankruptcy, you are most likely eligible for chapter 13 bankruptcy.
If bankruptcy is an option you would like to pursue further please contact us at Starr & Starr, PLLC at 888-867-8165 to schedule a free initial consultation.