Bankruptcy is frequently perceived as a failure. As a bankruptcy law firm, our clients begin by saying they could not repay credit card debt or not be able to keep up with commercial loan payments. A consistent comment in our initial consultation is, “I tried, but I failed.” Individuals and entities turn to bankruptcy as a last resort, after efforts to solve financial problems faltered.
However, there is another side to bankruptcy in New York that is more important than the stigma of failure. Bankruptcy creates opportunities for a strong financial future and offers a chance to start over. As we look ahead to a new year in 2018, focusing on the outcomes and positive effects of bankruptcy could provide the push you need to change your financial situation.
Break the Cycle of Financial Mismanagement
Financial mismanagement is a cycle. People find themselves in extensive debt, without the means to repay an important loan or lender. To meet these financial obligations and buy some time, they look to a new lender. With this new loan or line of credit, it might even be possible to extinguish the old debt. However, soon payment on the new debt becomes due, and there still aren’t adequate financial resources. Another source of funds is necessary, and the cycle restarts.
Whether this chain of events begins because of a crisis, accident, unemployment, or mismanagement, it’s difficult to break the cycle. People find themselves in increasing amounts of debt and little hope of repaying everything that is owed. The pressure and stress of this situation are crushing.
For individuals and businesses facing these cyclical financial problems, bankruptcy is a break in the chain. In some instances, it’s appropriate to create a payment plan and manageable schedule for repayment, in other instances the harsher path of Chapter 7 bankruptcy in New York wipes the slate clean.
Find Emotional and Mental Relief
While bankruptcy in New York is focused on financial relief and recovery, the emotional and mental relief is just as important for an individual. The weight of debt is heavy and haunting. It impedes your everyday life, and eventually, the stress and anxiety of this debt are overwhelming. Bankruptcy is a proactive step away from this pressure.
Start New Financial Habits
Bankruptcy in New York requires adherence to strict and certain processes and court mandates. While it can be difficult to follow these directives, it’s also an opportunity to establish new financial habits. There are clear lessons on how to borrow appropriately and introduction to resources for tracking income, spending, and savings. For many people starting these habits is not an option, but a requirement, while going through bankruptcy.
In particular, Chapter 13 bankruptcy is focused on creating long-term, achievable, and healthy financial practices. Under this provision of the federal Bankruptcy Act, individuals are required to follow a three to a five-year repayment schedule. In return for undertaking this process, rather than immediately filing for Chapter 7 bankruptcy, the person doesn’t need to surrender assets and property. After this extensive rebuilding period in Chapter 13 bankruptcy, an individual understands how to make and meet payment goals and develop stringent financial practices.
Rebuild Your Credit After Bankruptcy
Bankruptcy is going to be a part of your credit history and impact your future credit score. A Chapter 13 bankruptcy in New York will remain on your credit report for seven years, while a Chapter 7 bankruptcy stays on the report for 10 years. Many people view these lengthy reporting periods as a substantial setback because lenders and credit card companies are unlikely to extend funds with a bankruptcy on your report. But it is possible to start rebuilding your credit immediately after a bankruptcy.
After your bankruptcy is discharged, certain lenders are willing to provide a line of credit to help rebuild your credit score. Typically, low credit limits are imposed and payment of monthly statements is strictly enforced. These limitations prevent further financial mismanagement and promote fiscally responsible habits.
Contact a Bankruptcy Attorney
If one of your goals for 2018 is financial stability and health, then it’s time to have a conversation about bankruptcy. When you contact our office at Simon Haysom, LLC, you’ll speak directly with an established bankruptcy attorney. This conversation and our free, initial consultation are pivotal for determining if bankruptcy in New York is the right path for you. Start the conversation today; call us at 845-294-3596.
The information in this blog post (“Post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this Post should be construed as legal advice from Simon Haysom, LLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter.
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