By Rob Abruzzese, Legal Editor Brooklyn Daily Eagle
The Brooklyn Bar Association (BBA) has many functions within the local community and one of them is to educate the public on their legal rights to issues facing them today.
As part of that community outreach, the Brooklyn Bar Association’s Foundation Law Committee hosted a public lecture titled, “Consumer Debt and Bankruptcy: The Process, Defenses, and Options,” during which attorney Richard Klass discussed rights of the consumer at the Brooklyn Bar Association in Brooklyn Heights on Tuesday.
“All of the Foundation Law programs are geared towards the public,” said Fern Finkel, chair of BBA’s Foundation Law Committee. “We’re privileged to have Richard Klass as the speaker because he is the quintessential Court Street Lawyer. For us at the Brooklyn Bar, we know Rich as someone who is very approachable, always willing to give advice. Anytime I’ve asked Rich to lecture he has done so willingly and done very well.”
Klass, who has given the lecture each year for the past seven years, spoke about the process of a typical consumer collection proceeding and defenses available to the consumer. He also spent a lot of the time answering questions posed by the roughly 45 community members in attendance.
Klass discussed a new requirement for filing for bankruptcy where debtors must take a credit counseling class before and after filing for bankruptcy.
“Before someone files for bankruptcy, they have to get credit counseling from a court approved provider,” said Klass. “You will get a certificate that you need to file with the bankruptcy petition.
After the bankruptcy is filed, the debtor has to take a second credit counseling course and that certificate has to be filed in order to get a discharge.”
He also laid out some positives and negatives to declaring bankruptcy. The negatives, it could affect job prospects in some, rare instances. The positives, though, could include an end to incessant debt collector’s phone calls as well as a higher credit score.
“There are adverse effects from filing bankruptcy and there are positive ones,” Klass said. “Generally the positives outweigh the negative. Stock brokers, people in fiduciary roles — it can be a big problem and it can go on your license. Apparently that doesn’t matter for the president of the United States.
“The positive is your credit score will improve,” he continued. “The ability to get new credit is there. Depending on the landlord, some won’t take people who file for bankruptcy, but that’s not generally the rule. It really depends, but for the most part, for most people bankruptcy is a good option, not a terrible one.”
Klass did mention that, in his experience, clients who have used debt-consolidation services or have gone to debt settlement companies haven’t fared well. Those companies often charge high fees and money paid to them will go to cover fees first before debts are covered, which can cause problems for some.
“Debt consolidators and debt settlement companies, people have come to me having paid thousands of dollars and that money first goes to their fees and you still have the debt,” Klass said. “I’m not saying they’re all scams, but the ones I’ve seen haven’t helped my clients.”