Top Five Bankruptcy Myths in New York City

Many rumors about bankruptcy persist in New York City and for many New Yorkers bankruptcy is still seen as very negative. Bankruptcy is thought of by most consumers as a place you should never go and the thing that you should never talk about. While it’s true that bankruptcy is not for everyone in debt, the shadow of misconception around the bankruptcy process makes the difficult decision to file bankruptcy much harder. With the myth and stigma removed most people see that bankruptcy is not as bad as they thought, and may even be the best solution for their particular financial problems. Below are five of the most troubling rumors that we continue to hear, and that commonly prevent people from getting the bankruptcy help they needed sooner.

“I can’t file bankruptcy because I will lose all of my property”

Probably the most common and damaging bankruptcy myth is the idea that you will lose all of your possessions if you choose to file bankruptcy. In fact, our clients almost always keep their homes, cars and valuable possessions when filing. Only your non-exempt property is sold off, and with the New York State exemptions available to our clients, usually very little if any assets are liquidated to satisfy creditors. Every case is different, but the truth is that almost all of our clients keep all of their possessions when filing bankruptcy.

“Filing bankruptcy will ruin my credit forever”

Bankruptcy is not typically bad for your credit score, but it is also not as bad as public perception would have you believe. The truth is that millions of Americans file for bankruptcy protection every year, and while the word “bankruptcy” will appear on your credit report, future lenders will have no details about your debt history. You will have access to credit and an opportunity to start rebuilding your credit score typically in less than two years of your filing date. Clients usually receive new credit card offers before their case is finalized, and often from the same companies they are discharging a debt with. The good thing is that bankruptcy will provide a fresh start so you no longer need to rely on credit cards to make ends meet. You will be able to borrow money again but you may not want to do so, and it will probably be unnecessary for your post-bankruptcy lifestyle anyway.

“I don’t need an attorney to file bankruptcy”

Bankruptcy is a serious financial decision and a complicated process. Unprepared debtors can do more harm than good to their finances, and once you start down the bankruptcy road there is no turning back. There is a lot to know, and to get the best bankruptcy result in New York City you need a qualified bankruptcy attorney. All too often clients come to us after having already been unsuccessful in filing on their own. Choosing the right attorney makes a difference.

“Rent stabilized apartments are safe in bankruptcy in NYC”

Over the past several years a disturbing trend has taken hold in New York City where some bankruptcy trustees are now considering rent stabilized leases to be assets that can be sold to pay off the creditors in your case. While our clients are almost always able to save their homes, rent stabilized leases are a particularly tricky area of bankruptcy law that many attorneys in New York City are still unfamiliar with. The only sure fire way to save a rent stabilized lease in bankruptcy is to file Chapter 13 from the beginning. Don’t assume a rent stabilized lease will automatically be protected when filing Chapter 7.

“I can’t afford a bankruptcy attorney”

The bankruptcy assistance you need is surprisingly affordable. Depending on your specific needs your case could be started for as little as $500. Compared to the overwhelming debt relief you will be granted through bankruptcy even the more expensive cases are nothing compared to the debts that are eliminated. Don’t liquidate your bank accounts and retirement accounts in a desperate effort to pay down toxic debt before speaking to an attorney.

There are many myths about bankruptcy that prevent people from seeking the advice they need. Bankruptcy is a serious and somewhat complicated process that is not to be taken lightly, but if done correctly will provide the elimination of all of your bad debts while allowing you to protect nearly all of your valuable assets. Most of our clients are pleasantly surprised to hear what a bankruptcy can do for them. If you live in New York City contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation today. We only practice bankruptcy law and maintain a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16.

**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.