New York Bankruptcy

It’s surprisingly common for people exiting New York bankruptcy to see their credit scores improve. This phenomenon is generally attributed to the fact that debtors have taken the responsible course of action with their debts, rather than letting them spiral into default. Alternatively, creditors may be interested in taking advantage of former debtors’ inability to discharge their debts again for a few years, depending on the chapter they used.

Despite the benefits of filing bankruptcy to one’s credit score, many debtors don’t want to see it on their credit reports. Unfortunately, there’s little they can do about it—at first. The Fair Credit Reporting Act (FCRA) allows credit reporting agencies to keep a bankruptcy filing on a credit report for no fewer than ten years, and it requires them to disclose the chapter debtors filed in provided they are informed of it. However, there are ways consumers can try to lift a bankruptcy filing from their credit reports.

(1) Ask them. Seriously, sometimes the credit reporting agencies will remove a bankruptcy if they are asked to do so. They’re more likely to agree if it was a chapter 13 filing, and the bureau might agree after seven years rather than demanding the full ten.

(2) Make them. This only works if there’s an inaccuracy on the credit report, such as a bankruptcy the consumer never filed or one that has been on the report for longer than ten years. Consumers can directly challenge the credit bureaus if they can show there is an error.

(3) Notify them that the bankruptcy filing was withdrawn. Doing this won’t lift the bankruptcy from the report, but it will clarify it. The clock for the ten-year limit on the credit report begins when the bankruptcy case is filed, not when the case is closed. That means credit bureaus will include a bankruptcy filing even for debtors who do not receive a discharge. The FCRA, though, allows debtors to require the credit agencies to note that the filing was withdrawn. This can be beneficial for debtors whose debts may not have been dischargeable, for example, but who nevertheless began successfully paying down their debts outside of bankruptcy.

Although it’s a slightly separate topic, errors on credit reports can be corrected, and for New Yorkers, it’s now easier to do. Credit scores are not the be-all-end-all of credit access, but they can be important. Fortunately, the FCRA gives consumers (and former bankruptcy debtors) some tools to ensure their creditworthiness is properly reported. For people who have significant debts, it’s helpful to hire an experienced New York bankruptcy lawyer to handle the matter. It’ll be better for a credit score than defaulting.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

A reverse mortgage is when a homeowner who owns a property free of any other mortgages and is at

least 62 years old borrows money against the home’s equity. It’s “reverse” in the sense that the home’s equity decreases as the money is paid out to the homeowner instead of rising with each mortgage payment. Eventually, the homeowner is expected to make monthly payments or sell the home to repay the bank. Reverse mortgages stated purpose is to allow older Americans who have little income to use their equity for consumption purposes.

Whether they work as intended is disputable, and there are legitimate fears that a reverse mortgage can lead a homeowner to New York bankruptcy for a few reasons: One, reverse mortgages can come with high fees, and interest on the unpaid balance can accumulate. Although, they sometimes cannot rise higher than the value of the property. At some point, however, the lender expects to make a profit on the loan. Because homeowners will often no longer be working, it usually won’t be feasible to file a chapter 13 bankruptcy, and homeowners might need to sell the home.

Two, the full balance of a reverse mortgage can become due under several circumstances: the

Three, even if their purposes are to help elderly homeowners, reverse mortgages have a reputation for being scam financial vehicles. Usually this involves handing the mortgage proceeds to a third party and never paying the homeowner. Being the victim of a scam can also lead to a bankruptcy filing.

There can be times when a reverse mortgage by an honest broker can help homeowners, like paying for a vacation a few years before a sale or helping a family member through medical problems, but they do have New York bankruptcy implications homeowners (and sometimes their heirs) should be aware of.

borrower sells the property; moves out for 12 months; fails to pay property taxes or homeowner’s insurance; or dies. The first circumstance is probably the easiest to handle, since it largely reflects the benefit of a reverse mortgage: tapping equity to pay for present consumption rather than using it for future saving. The next two situations can lead to insolvency by the homeowner, which might require a bankruptcy filing, while the third can result in the homeowner’s probate estate having less equity to satisfy other debts.