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Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
CALL FOR A FREE CONSULTATION
Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
Our law firm can aggressively settle most debts, as settlements are often mutually beneficial, particularly when creditors are faced with the alternatives of a negotiated resolution, bankruptcy, or litigation.
The purpose of federal bankruptcy laws, also known as Title 11 of the United States Code or the “Bankruptcy Code,” is to offer a chance for financial reorganization or a fresh start for legitimate debtors who cannot meet their financial obligations. This goal is achieved through bankruptcy law, which provides debtors with a legal mechanism to: (1) eliminate, reduce, reorganize, and/or extend most of their debts; and (2) protect themselves from creditor harassment and actions during the bankruptcy process, subject to certain restrictions. In addition to helping the debtor, bankruptcy law also seeks to ensure fair treatment of creditors in the following ways: (A) protecting them from fraudulent actions; (B) ensuring equal treatment of creditors in similar situations; (C) requiring the debtor to disclose details about their assets, income, and debts to confirm eligibility for bankruptcy; and (D) giving creditors regular notice and an opportunity to participate in the process.
Clients frequently hire the Law Office of Ronald D. Weiss, P.C. to assist with negotiations with banks, mortgage holders, credit card issuers, auto financing providers, landlords, tax authorities, and other creditors. Our firm significantly strengthens the client’s ability to negotiate and reach settlements with creditors due to:
a) Extensive Experience: Our firm’s years of experience in handling creditor negotiations.
b) Specialized Expertise: We have specialized knowledge in debtor-creditor relations, allowing us to effectively advocate for our clients.
c) Alternative Threats: We can present bankruptcy and litigation as viable alternatives, providing leverage in negotiations.
We work closely with clients to determine the most effective approach, offering counsel on how much can realistically be negotiated and how much creditors may accept in a settlement. Our team ensures that clients are kept informed throughout the process, providing updates on the status of negotiations and our ongoing efforts to reach a resolution in the client’s favor.
Once a settlement is reached, we formalize the agreement with the creditor and ensure that additional documentation is prepared to confirm the settlement. Some of the debts we often successfully negotiate and settle include:
a) Credit Cards – Unsecured personal loans and credit card debt are common and often a significant burden for clients.
b) Tax Debt – Money owed to the New York State Department of Taxation and Finance (“NYS”) and the Internal Revenue Service (“IRS”).
c) Student Loans – Settlements can be negotiated for both private and government-backed student loans.
d) Business Debt – For individuals wishing to close or restructure their businesses, we can help negotiate business-related debts.
e) Medical Debt – For those without health insurance, or those whose insurance has either expired or did not cover all medical costs.
f) Credit Repair – We assist in correcting inaccurate, misleading, or taken-out-of-context information on clients’ credit reports.
g) Non-retention Options – These are alternatives for distressed real estate where the client either cannot or does not wish to keep the property and is looking for solutions that provide some benefit to the debtor. Unlike retention options (discussed in the previous section on mortgage modifications and other retention alternatives), non-retention options focus on avoiding the responsibility of holding onto the property, while still potentially securing some form of benefit or limiting liability. This section explores the following non-retention options:
(i) Third Party Short Sales – In a third-party short sale, the homeowner sells the property for less than the amount owed on the mortgage, with the approval of the lender. The lender agrees to accept the proceeds from the sale as full satisfaction of the debt, even if they are less than the outstanding loan balance. This can be a beneficial option for homeowners who are unable to afford their mortgage and wish to avoid foreclosure.
(ii) Deed in Lieu Agreements – A deed in lieu agreement involves the homeowner voluntarily transferring ownership of the property to the lender to satisfy the debt. This can be an alternative to foreclosure, where the homeowner gives up their property in exchange for the lender agreeing to release them from the mortgage obligations. It can be less damaging to the homeowner’s credit than a foreclosure.
(iii) Cash for Keys Agreements – In a cash for keys agreement, the lender offers the homeowner a lump sum payment in exchange for the homeowner vacating the property and returning the keys. This option allows the homeowner to avoid foreclosure and move on from the property, while also providing financial assistance to help them transition to a new living situation.
(iv) Consent to Judgment Agreements – In a consent to judgment agreement, the homeowner and lender agree to a judgment that can allow the homeowner to remain in the property for a specified period while working out a repayment plan or another alternative solution. This can sometimes provide the homeowner with more time to resolve their financial issues without immediately facing eviction or foreclosure.
Since bankruptcy solutions are often comprehensive, certain, and effective in eliminating, reducing, or reorganizing debt, many clients who come to our office with credit card debt and other unsecured obligations (such as personal loans, medical bills, and miscellaneous debts) are initially interested in filing for bankruptcy. However, while bankruptcy is a powerful tool for debt relief, negotiated debt settlements are also highly valuable. In many cases, clients may be too wealthy to qualify for Chapter 7 bankruptcy or may have too many assets, making bankruptcy an impractical option for addressing their debt. Certain debts are either completely non-dischargeable by law or carry a significant risk of objections to discharge during bankruptcy proceedings. In other instances, clients may be better off negotiating a manageable payment for their debt instead of filing for bankruptcy, especially if the debt is not overwhelming enough to justify such a measure.
Our strategy for negotiations and settlements includes:
This approach provides a practical and essential debt relief tool, thanks to our well-coordinated and sophisticated methods for debt negotiations and settlements.
Due to the fact that many of our clients come to us with numerous personal debts that need to be negotiated, we create individual files for each creditor. These files include all relevant details such as payment history, negotiation history, contact information, and loan specifics. By organizing these files, we can systematically reach out to each creditor, ensuring that we track the progress of negotiations effectively and keep our clients updated on developments. This structured approach helps us navigate settlement efforts efficiently.
We use our knowledge of bankruptcy law and litigation defense to notify creditors that if a mutually agreeable settlement cannot be reached, our clients may pursue bankruptcy or legal action. This strategy empowers us to negotiate from a position of strength, offering clients leverage in these discussions.
Our debt negotiators use their expertise and legal background to secure the best possible outcomes for each debt. Whether it’s credit card debt or loans, we have successfully represented clients in Queens and New York throughout the negotiation process.
Here is a breakdown of our method:
Client Information and Documentation: The process begins with an “intake” meeting where our paralegals collect all relevant information and documentation from the client. This includes debt statements, invoices, letters, emails, collection notifications, and any litigation documents. We also gather financial details like income, expenses, and overall debt situations to determine what the client can afford and how settlements can be structured (installments, lump sum, or a hybrid of both).
Searches: We continue gathering records through asset and debt searches, along with legal inquiries, to gain additional insight into the client’s situation. This includes obtaining a credit report to review debt and payment history, and conducting lien searches on real estate properties for judgment or tax liens.
Contact with the Creditor: Next, we identify the correct legal contact for the creditor. Since a debt may be sold to a collection agency or another party, we need to determine who has the authority to negotiate. Once we identify the correct party, we send them a written letter explaining our client’s financial difficulties and why a negotiated settlement is in the creditor’s best interest. We aim to show them that a settlement, even though it reduces the debt, is still the most advantageous option compared to pursuing legal actions like bankruptcy.
Several Offers: Once negotiations begin, there are often multiple rounds of offers and counteroffers. We present the creditor with our ideal offer, as well as the lowest amount we can reasonably propose, and suggest the length of the payment term. If a creditor counteroffers, we continue to negotiate, and over several rounds, we work toward securing the best possible deal. If a creditor is unwilling to engage, we may pause negotiations with that creditor and focus on others who are more open to discussion.
Settlement Agreement: Once a settlement is reached, we ensure the agreement is documented through written communication or emails that clearly outline the terms. Both parties then sign a formal settlement agreement. This agreement ensures that the creditor cannot seek further legal action as long as the client adheres to the settlement terms. If the client defaults, the creditor has the right to notify both the client and our office, but if the terms are met, the debt will be fully settled by the end of the agreement.
Satisfaction of Debt or Judgment and/or Release of Lien: For real estate-related debts, we ensure that a release of lien document is executed and submitted. If there is a judgment, we work to secure and file a satisfaction of debt agreement.
Our law firm has a distinct advantage in debt negotiations because we can leverage our other services, such as bankruptcy and litigation, to secure better deals by informing creditors that if a reasonable resolution isn’t reached, our clients may need to consider bankruptcy or litigation. We show creditors that these alternatives are real, actionable options that carry more significant consequences for all parties involved, rather than just threats.
Creditors may view a negotiated settlement more favorably when they realize that a client could file for Chapter 7 bankruptcy, potentially eliminating most or all of their debts—often without making any payments.
Filing for Chapter 7 bankruptcy discharges most of a client’s debts, giving them a fresh financial start. It’s especially beneficial for those struggling with credit card debt and other unsecured obligations such as personal loans and medical bills. If a client cannot meet their current obligations and is dealing with creditor harassment, collection actions, or damaged credit, a Chapter 7 filing can be a powerful solution.
The process of filing a Chapter 7 bankruptcy involves submitting the petition, schedules, and a statement of financial affairs to the court, which outlines the client’s financial situation, including assets, liabilities, income, and expenses. Our firm assists clients by gathering relevant documents, conducting an intake session to understand their financial situation, and running credit and lien searches to ensure all debts and creditors are disclosed accurately.
Once filed, an “automatic stay” halts all collection actions, including wage garnishments and bank levies, providing immediate relief. A discharge order is typically granted within three to four months, provided the case is straightforward.
For clients whose income or assets are too high for Chapter 7, a Chapter 13 bankruptcy might be an option. Chapter 13 allows for debt to be reorganized into manageable payments over 60 months, with most of the debt being paid with no interest.
Therefore, the threat of bankruptcy can be a powerful tool in negotiating settlements for credit card and unsecured debts. If negotiations fail, bankruptcy remains a viable solution that can help restructure or eliminate debt.
2. Litigation as a Threat and/or Alternative
Creditors are more likely to accept a negotiated settlement when they know a client can contest the debt through litigation, asserting their rights in court.
Many debtors assume they cannot contest credit card debts, so creditors often don’t anticipate a legal defense. However, litigation defense serves as a deterrent, as the creditor may be unwilling to engage in a lengthy, costly, and unpredictable court battle. By threatening legal action, we can present a settlement offer as the better option for the creditor, who would prefer to avoid the uncertainty and expenses of litigation.
In litigation defense, the client can raise various defenses, such as improper debt collection practices or disputes over how the debt was incurred. Creditors usually prefer to resolve these issues outside of court, as they are not accustomed to fighting debt collection cases in court.
The real threat of litigation, supported by our firm’s experience in litigation defense, can lead to more favorable negotiated settlements for credit card and other unsecured debts. Litigation is a practical option that can be pursued if the threat of litigation fails to yield an acceptable settlement.
When a debtor’s income exceeds the limit to file for Chapter 7 bankruptcy, debt negotiations become a consideration. To qualify for Chapter 7, a debtor’s income must fall below a specific threshold based on household size, which is determined by the average gross income of the last six months. The median income for New York State is calculated for different family sizes, and you can view the
Certain expenses can reduce the income considered, potentially making a debtor eligible for Chapter 7, even if their income is higher than the median. These expenses include costs such as insurance, mortgage arrears, child care, or support for elderly or ill family members, along with payments for secured debts. However, if a debtor’s income is significantly higher than the median—typically over $10,000 to $15,000 above the limit—they may not qualify for Chapter 7.
Before proceeding with Chapter 7, it’s important to carefully analyze the debtor’s income relative to family size and essential expenses. For example, Queens has a higher average household income than many other areas in New York, so income above the median may still be considered based on necessary deductions. There’s also a “budget test” that examines monthly expenses versus income.
If Chapter 7 isn’t an option, Chapter 13 could be a solution, as it allows debt restructuring for clients who fail the means or budget tests for Chapter 7. Negotiation could be explored if neither Chapter 7 nor Chapter 13 are suitable due to excess income.
When a client has too much unprotected equity in their assets, filing Chapter 7 may not be a good option. The Chapter 7 trustee can liquidate unprotected assets to repay creditors. However, exemptions under state or federal law can protect some of the client’s equity. The client must attend a creditors’ meeting, where the trustee will determine if any assets can be sold to satisfy debts.
Most Chapter 7 cases are “no asset” cases, meaning there is little to no non-exempt property to sell. Liens for secured debts, such as mortgages or auto loans, and exemptions (like the homestead exemption in New York, which protects a primary residence up to $170,825 per owner) usually shield assets. New York residents can also choose between state and federal exemptions, with the federal exemption offering protections such as a “wildcard” exemption for personal property like vehicles, tax refunds, or bank accounts.
When the client’s unprotected equity makes Chapter 7 risky, and Chapter 13 is too costly, negotiations are typically the preferred method of resolving the debt.
The issue of “avoidable transfers” is linked to potential equity in assets. These may include “preferences”—payments to creditors within 90 days before the bankruptcy filing—or “fraudulent transfers” to family members or friends within six years. Avoidable transfers are not always obvious, but bankruptcy law allows these transfers to be challenged. If a debtor has made such transfers, it could make filing Chapter 7 too risky, and filing Chapter 13 may become too expensive.
In such cases, negotiation is often the best option to settle debt instead of risking complications with bankruptcy.
Sometimes, clients with low debt or few creditors may be reluctant to file for bankruptcy, even though they might qualify. While some clients may prefer to handle their debt outside of bankruptcy to avoid a discharge, bankruptcy is often a simpler, quicker solution for clients facing smaller debts. In these cases, settling the debt might also improve the client’s credit report faster than filing for bankruptcy.
It’s important for clients to be sure they can meet the terms of a negotiated settlement before pursuing this route. Bankruptcy may be preferable if the client has little debt but cannot afford a settlement agreement.
Some debts, such as student loans or certain tax debts, are non-dischargeable in bankruptcy. In addition, creditors may object to discharging other debts if fraud or bad faith spending is involved. If a client faces these risks, it’s important to assess the likelihood of objections and the ability to defend against them. These objections could result in an adversary proceeding within the bankruptcy case, which could lead to further litigation.
Creditors may also challenge debts incurred through significant cash advances or balance transfers just before filing for bankruptcy. In such cases, it may be prudent for clients to make a set number of payments before filing for bankruptcy.
In cases where a debt is non-dischargeable or likely to face objections, Chapter 13 or Chapter 11 reorganization may be a better alternative, as it would allow creditors to receive partial payment while reducing the likelihood of objections. If bankruptcy presents too many risks, negotiating settlements could be a preferable solution for the client, provided they have the financial means to settle.
Conversely, there are situations where bankruptcy may be a better option than negotiating, particularly when the client lacks the necessary financial resources or negotiation skills:
Inability to Negotiate a Settlement – We need to present an offer to the creditor, either as a lump sum or in installments. If the client has little to no ability to negotiate, it may be more efficient to file for bankruptcy.
Desire for a Quick Debt Elimination – Even if the client could potentially negotiate some or all of their debt, Chapter 7 is often a better option. A discharge under Chapter 7 is completed in just a few months, and most Chapter 7 cases are “no asset” cases, meaning the client does not make payments to creditors or the trustee, and the debt is discharged. Compared to negotiating multiple settlements that require payments over time, bankruptcy is quicker, less expensive, and more effective.
Negotiations May Lead to Unwanted Taxes – Outside of bankruptcy, debt forgiveness is considered taxable, as any savings from a negotiated deal are treated as “income.” This can result in significant taxes. In contrast, debt elimination through bankruptcy is not taxable. However, there are exceptions to this rule, including cases where the individual was insolvent at the time. In such instances, they may qualify for tax relief, such as: a) debt cancellation up to the amount of the insolvency, b) debt cancellation as a gift, or c) forgiven interest that would otherwise have been deductible.
Fragmented or Hard-to-Contact Debts – When negotiating settlements proves difficult due to fragmented debt or hard-to-reach creditors, bankruptcy becomes the preferred option. Even debts the client was unaware of would be discharged in a Chapter 7 case. Fragmented debts are challenging to resolve through negotiation, but are easy to eliminate through bankruptcy.
When there are few points of contention and the debt isn’t overly large, such as with credit cards, negotiations are generally preferred. However, if the debts are more complex, significant in size, and heavily disputed, litigation may initially seem like a better option. Yet, in most credit card cases, litigation is a risky approach, typically used to buy time or create leverage. Therefore, in situations like these, negotiation is usually preferable to litigation:
Undisputed Debt, Not Subject to Litigation Defense – Litigation may be appropriate if the debt is contested or was acquired through unlawful means, assuming the client understands the risks, costs, and limitations of the legal process. However, if the debt is uncontested with minimal disputes and bankruptcy is not an option, negotiations should be the priority.
Litigation is Expensive, Lengthy, and Complicated – Litigation is generally avoided when the client’s finances are already stretched, there are many creditors, and the debts are not particularly large, even if there are legal issues. In cases where the debt is concentrated and highly disputed, litigation may be more effective. However, litigation should only be pursued when the potential benefits clearly outweigh the considerable costs, time, and effort involved.
Leverage from Available Options – Even if bankruptcy or litigation may not be realistic options in some situations, keeping them as potential threats during negotiations can be valuable. This lets the creditor know that if a fair settlement can’t be reached, more drastic measures, like bankruptcy or litigation, are available.
1. Debt Consolidation – Debt consolidation is a widely promoted but limited strategy. It primarily reduces interest rates rather than addressing the principal balance. A large administrative team manages this process, focusing on lowering monthly payments by consolidating all debts into a single payment with a lower interest rate. However, it often fails to reduce the overall debt, as some credit card companies may not agree to lower their rates. This method can result in partial solutions, as certain debts may be left off the plan, and clients may experience delays or misallocations, either due to the consolidation company or miscommunication with creditors. Ultimately, clients may find this approach inadequate after a few years, especially since “settled not according to terms” may appear on credit reports.
2. Debt Reduction – Debt reduction services promise to lower the principal amount owed, but they come with many challenges. These companies often use deceptive marketing tactics, convincing clients to pay them for months while accumulating lump sums. After that, they try to negotiate reduced payments with creditors. However, they usually only manage to settle one or two debts at a time, leaving the client’s other creditors in collections or even court. Most clients realize after some time that these services don’t resolve all their debt issues.
3. Our Approach to Debt Negotiations and Settlements – Unlike debt consolidation, our method focuses on reducing debt in two key ways: eliminating interest rather than just lowering it, and working toward significant principal reductions. In contrast to debt reduction companies, we negotiate with all creditors at once, instead of handling them one by one. This comprehensive approach prevents missed or neglected payments and mitigates the risk of lawsuits. We also offer flexible options, such as hybrid or installment payment agreements, if the client is unable to pay in full upfront. Essentially, we combine the best features of both debt consolidation and debt reduction, while avoiding their shortcomings.
4. Our High-Level Negotiation Team – Our small, highly skilled Negotiations Department sets us apart from larger debt relief companies. Unlike those that employ many secretaries and use automated processes, we prioritize personalized attention to each client’s case. Our negotiators, who have legal or advanced educational backgrounds, focus on creating tailored strategies for every settlement. We aim to provide customized solutions, ensuring the best possible outcomes for our clients. When negotiations become complex, our experienced team works together to devise additional strategies, offering a level of individualized attention that larger firms cannot match.
When seeking relief from credit card debt and other unsecured obligations, the outcome largely depends on the expertise of the lawyer representing the client. Since 1993, we’ve successfully helped thousands of residents in Brooklyn and Queens debt relief from unsecured debts. Many have been able to eliminate their unsecured debt and regain financial stability with our assistance. It’s crucial to thoroughly explore all legal options available when dealing with unsecured debt, including a) negotiated settlements, b) bankruptcy, and/or c) litigation defense. Let us help you protect your home with our affordable and experienced legal support.
Our consultations are free, but our legal advice can be priceless.
Call us at (631) 570-8742, or email us at weiss@ny-bankruptcy.com for a free consultation at our Queens office to discuss your debt negotiation options in greater detail.
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