Southern Brooklyn

Credit Card Debt? Here Are Your Options


Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future. Today it comes on Wednesday. Live with it.

So you just got a summons on the door of your Sheepshead Bay apartment saying you owe $15,000 to a credit card from 2002. What are you going to do?

On my website, I’ve previously discussed what happens when you get sued by a creditor in New York and the available defenses you have. But let’s say the creditor served you correctly, and that you actually recognize the debt and it is an amount you owe. What in the world do you do now?

Two choices: you can either settle the debt, or you can file for Chapter 7 or Chapter 13 Bankruptcy in New York.

If you settle the debt it could take you months, and your credit will still be in rough shape. In other words, your life will consist of calling the collection firm on an almost daily basis and listening to the same schpiel from the “customer service representative.” They typically dont budge, no matter what reason you have for not paying it. They simply don’t care.  They’ll abuse, insult, threaten, harangue, etc.

They care less about your excuses than Ned does about those shopping carts he keeps taking pictures of. (That’s a poor analogy. They’re my friends! — Ed.) In addition, they can actually write off the debt and make you liable for a percentage of what you paid if you do actually settle.

But, putting that aside, the best thing to do is to be realistic. You’re not getting sued by a Creditor because you have a ton of cash lying around and you just dont feel like paying; you’re getting sued because you couldn’t, and likely can’t, afford to pay the damn debt in the first place. If that’s the case then why waste your money attempting to settle over a long period of time and paying thousands upon thousands of dollars when you have other credit card bills that you can’t afford to pay.

Here’s an example to illustrate:

You’re being sued for approximately $10,000. You decide to settle.  After weeks of negotiating, you settle for $6,000. You now have to make $600 monthly payments, further distressing the amount of money you have to use. Plus you now likely can’t afford to pay your other credit card bills. And to top it off, if you miss even one payment, the creditor can say, “No Deal, whole thing is now due.” And, by the way, you’re still in a ton of debt. Great work.


For about one-third of the price (approximately, and depends on each individual case) you can file Chapter 7 Bankruptcy and get rid of all of your debt in four to five months and keep the $600 a month from going to your creditors in the above situation.

Again, I am a bankruptcy lawyer so obviously I prefer that you file for bankruptcy. But it’s not self interest. It is because it’s the smart choice in this situation: you save thousands and don’t have to deal with the above nonsense.

Daniel Gershburg Esq., is a real estate and bankruptcy attorney with offices in Sheepshead Bay and Manhattan. The practice was specifically set up to change the way people view attorneys, by incorporating radical ideas like calling people back quickly, returning emails, giving clients ’round the clock access to their cases and charging low fees. For more information please visit Brooklyn Real Estate Attorney Daniel Gershburg‘s website.

Comment policy


  1. I’ll admit I had second thoughts about running this piece. But Daniel and I don’t go over topics before he writes them. It’s hard for him – or anyone – to come up with column ideas in a vacuum, and these are the issues his clients commonly wrestle with. Instead of snark, why don’t you submit a few questions you’d like him to help with, or suggestions for future posts?

  2. You can file bankruptcy WITHOUT any lawyers!
    I did it myself, got the papers from the court, went to a hearing, and that was all.
    All you need to do is list all your debtors and how much owed etc.
    Taxes and student loans are not included.
    Just remember that for 10 years (not 7 to popular belief) you will not be able to obtain a mortgage, loan, any decent credit card with a normal interest rate, it is a dark stain on your credit report and might cost you a job if you are hunting, especially in financial services industry, brokerage, insurance.

  3. Personally I think you’re crazy not to use an attorney for this. Bankruptcy will haunt you for at least 10 years. Why take a chance an screw it up?

  4. It is nearly impossible to screw it up if you follow procedure. Bankruptcy court outlines all procedures and what needs to be done. When you come in front of the judge they ask you questions that you need to answer and judge does not try to chew you up and spit you out. Bankruptcy should be absolutely the LAST RESORT and attitude “Let’s walk away from it all” is NOT going to benefit anyone in the long run, which is not what it looks like from the article. Smart decision would be to first try and talk to you creditors and see if you can get interest rates down to minimum while you are paying it. Smart decision would be to try and set yourself up into a debt management program where agent acts as your TPA or third party administrator and deducts amount of all the payments from your bank account and distributes it to your creditors. Although they do take a fee, it is one month’s worth of all the payments to creditors and they do reach an agreement with creditors on amount of payment and most importantly they try to get the lowest interest rate possible. While you can try to do it yourself by calling all your creditors and persuading them to lower your interest rates, if you do not want to spend working hours fighting your creditors then they take the steering wheel and do it for you. Your creditors might very well be willing to lower interest rates especially if you mention that you are about to file for Chapter 7, meaning they will loose their money for ever. Little black mail would not hurt in this case, even if you are not planning to file for Chapter 7.
    Only file for Ch.7 if you have no means to repay your debts. I had to file due to medical bills for my child which reached astronomical proportions when s/he fell. While insurance covered most, I owed still thousands of dollars in co pays for meds, hospital stays and anesthesia doctors who were not in network and rarely are in network, even if they work in the hospital that is in network itself. Anyway, if I could do without it, I would have I will not lie, while my debt dissolved, my credit history took a huge hit.

  5. I actually think Daniel’s opinion is under-represented in the field of debt repayment advice.

    What’s the usual argument for debt settlement or debt consolidation services? “Oh, but it will be a black mark on your credit record. A bankruptcy stays on your record for 10 years!” Be afraid!

    But when you’re on the hook for $10,000+ in credit card debt, and you’re paying it off for ten years at 10-to-20 percent interest or more, what’s the difference? As Daniel points out, it costs you a lot more over those ten years.

    At the height of my credit card debt, I figured out that paying it off would take about ten years to pay off. I had Excel charts out the wazoo… I could have told you how much I would be owing in 1 year, 2 years, 4 years and 8 months, etc, to within twenty bucks. I wish I had been that budget-smart BEFORE I got in that mess, but it was empowering in a way to have total knowledge of my fiscal future.

    I got really lucky – partway I got a much better paying job. I’ll be the first to admit that isn’t a realistic option for most people. In this economy, the reverse is far more likely.

    And besides, who are the people pushing the settlement and repayment options? So many of them are in financial services (who want their 10-to-20 percent or more in interest), or specifically the debt consolidation agencies (usually for-profit organizations that get a cut of your repayments). In both cases, there’s a profit motive to steer debtors away from bankruptcy.

    My point is, I don’t really think the ‘ambulance chaser’ comment is fair considering the motives of people on the other side of the advice table (hint: its their best interest, not yours).

    Disclaimer: my financial services employer would like me to remind you that this is my opinion only, and is not an expert opinion formed by my experience in the financial services industry (and not meant as defamation of the financial services industry), but rather my own personal experience and observation.

  6. Speaking of shopping carts, I expect to see one tomorrow morning. Don’t think we haven’t noticed.

  7. Debt settlement is always a good option, I went with ccs. I owed 20,000 in credit card debt and they settled for 10,000. Now I make a smaller monthly payment, and it doesn’t just go to paying the interest every month. Here’s the site if you want to check them out:

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