Long Island & NYC
Debt Settlement Lawyer

Our efforts start by gathering as much information and documentation as possible at an intake appointment. Your point of view on the history of the debt, the hardship in payments, and the payment and negotiation history all matter to us — along with statements, invoices, letters, collection notices, and litigation documents. We also assess the household’s overall income, expenses, budget, and debt situation to determine what settlements you can afford and how they can be structured: a lump sum, installments, or a combination of the two.

We gather further information from legal, asset, and debt searches. We start with a credit report showing your debt and payment history. Where there is real property, we may run a lien search at different levels to assess judgment, tax, and mortgage liens. Other searches include a judgment search, a litigation search, and a bankruptcy search to assess past or current activity in the court system.

Often several parties contact you about one debt — the original creditor, a debt buyer, a servicer, a collections company, and/or an attorney. We determine who actually holds the authority to negotiate, since the original creditor may no longer own the debt and the attorney may not have settlement authority. We then write the proper party a letter explaining your hardship and why a negotiated resolution — even at a reduction — is the creditor’s best-case outcome given your financial situation and your legal alternatives of bankruptcy and litigation.

Once started, settlement may entail several rounds of offers and counteroffers. We offer an amount and payment term that is the lowest we can reasonably propose in a serious negotiation; the creditor counters, and after several rounds we arrive at the best available settlement. Where a creditor shows no interest in a reasonable settlement, we may pause and concentrate on creditors ready to engage — and come back later, since a creditor’s position often improves with time.

At the end we document the resolution with letters and a formal, stipulated settlement agreement signed by both parties. As long as you abide by the agreement, you are protected. It specifies how the creditor must notice you and our office if you default, and how many notices must be given. If you honor the agreement to the end of its term, the debt is permanently resolved.

A satisfaction-of-debt agreement is obtained, and where there is a judgment it is filed — or, in the case of real estate with liens, a release-of-liens document is executed and filed to clear title.

Chapter 7 can be filed only if income — averaged over the last six months and measured by household size — is below the New York State median. Certain protected spending items (insurance, mortgage arrears, daycare, support for an elderly or ill relative, secured-debt installments) can reduce counted income, but squeezing a client into Chapter 7 may not be advisable when income is more than $10,000–$15,000 above the median. Where neither Chapter 7 nor Chapter 13 is possible or desirable due to excess income, negotiation becomes a real solution to review.

Unprotected equity could be marshaled by a Chapter 7 trustee and sold to pay creditors. Secured liens and exemptions protect much of it — New York’s homestead exemption protects $204,825 per owner-occupant, and the federal scheme offers a “wildcard” of roughly $17,475 per debtor. Most clients keep everything they own if they stay current and do not hold too much unprotected equity. But where that equity would make a Chapter 7 too risky and a Chapter 13 too expensive, negotiation is a favored option.

Closely related to equity is the issue of avoidable transfers — “preferences” (payments to creditors within 90 days of filing, or one year for insiders) and “fraudulent transfers” (transfers for less than reasonable value within six years, usually to relatives). These are not always obvious; what looks innocent can be alleged as avoidable. Like unprotected equity, they can make a Chapter 7 too risky and a Chapter 13 too expensive, favoring negotiation.

Sometimes a client could file Chapter 7, or a low-percentage Chapter 13, but chooses not to because the debt is relatively small, the creditors few, or they are concerned about their credit report. A report entry showing “Settled Outside of Terms” may be preferable to a Chapter 7 discharge — but only if the client can comfortably and timely meet the settlement. Before embarking on settlement, it is important to confirm the financial resources to adhere to it.

Certain debts — student loans and some taxes — are inherently non-dischargeable and must be negotiated. Other debts may draw an objection where there was bad-faith spending, misrepresentation, or a large amount of recent cash advances or balance transfers before filing. Such an objection takes the form of an adversary proceeding — contested litigation inside the bankruptcy. Where the client has the resources to settle, that route may be preferable to risking an objection to discharge.