Boston Bankruptcy Lawyer Blog

The U.S. Census Bureau's Median Family Income figures changed on March 15, 2010. This means that anyone filing Chapter 7 bankruptcy in Massachusetts after March 15, 2010 will have to use the new Median Family Income for the Means Test.

The new median income is $53,315 for a single person, $69,204 for two people, $82,297 for three people, and $99,293 for a family of four. From November 1, 2009 to March 14, 2010, the Means Test median income in for a single person nearly $200 more than the new standard.
Since the implementation of the bankruptcy Means Test in 2005, this is perhaps the first time that the Census Bureau's Median Family Income has decreased. Generally, the cost of living increases at a rate faster than people's income. However, the downward slide of housing costs may contribute to this year's decrease.

For most people filing bankruptcy, the $200 decrease in the median income should not be an issue. The majority of our clients for bankruptcy in Massachusetts have annual incomes significantly below the median figures.

Learn how the Census Bureau derives median income figures by reading their article on the American Community Survey.

Our clients often ask us about he United States Fair Debt Collection Practices Act 15 United States Code, Sections 1692-1692p. Our Massachusetts bankruptcy practice involves assisting clients who are victims of unfair debt collection. This blog article is an attempt to overview the situation for our clients.

First, what debts are covered under debt collection law? The law covers personal, family and household debts. This includes loans for personal motor vehicles, medical bills, credit card debt, insurance and personal loans. Note, the act does not cover business loans or business debt. Second, who is a debt collector? The statute is very clear that any person who uses the phone or the mail to attempt to collect a debt is a "debt collector." The FDCPA makes it very clear what the debt collectors may, and may not, do.

One important aspect of the law is to know your rights with respect to those pesky debt collectors. Absent consent from the consumer, a debt collector may not contact you at "inconvenient" times; after 8 p.m. and before 9 a.m. local time; if you have an attorney and the debt collector has knowledge of the attorney's name and phone number; at work, if the debt collector knows that your employer "prohibits" such communication. Furthermore, consumers have the right to simply write a letter to the debt collector asking that they cease all communications; the debt collector is then only allowed to communicate in a very limited fashion (to notify that they will indeed stop and to inform that they will attempt a specific remedy, such as filing a lawsuit.). See our model letter below.

Continue reading "Unfair Debt Collection Law's Application for Massachusetts Consumers" »

The Federal Housing Administration announced a new series of steps aimed to assist troubled homeowners. Our "exempt" home equity up to $125,000, and the new program deals with homeowners who are underwater in equity; they owe more than the house is valued in today's real estate market. Thus, now may be an excellent time to take advantage of this new federal program, regardless of filing for bankruptcy protection for your other consumer debts.

If you owe more than 115% of the value of your first mortgage, and your current mortgage payment is more than 31% of your family gross income, you may qualify. The program also deals with second mortgages, people who are unemployed and houses with negative equity. There are approximately 7,000,000 households that are behind on their mortgages. There are an additional 11,000,000 households where the mortgage owed is higher than the value of the house. The focus of the program is to help homeowners rewrite their mortgages with their lenders. The program also assists folks who are foreclosed upon to move, providing $3,000 in "relocation assistance."

And, the ultimate question our clients ask: how will this impact my credit history? Like usual, it is not completely clear. If your mortgage holder writes off some of the principal, it is not clear if this will adversely affect you. Folks taking advantage of the current loan assistance program have not had their credit scores reduced. This because the US Treasury and the Consumer Data Industry Association (the credit reporting agencies) have made a "deal" in which these transitions are not included in credit scores.

Cape Verdean Attorney Thiadora A. Pina, helped organize the fifth annual Cape Verdean-Jewish Seder at the St. Patrick's Church, in Roxbury, Massachusetts. Held on March 24, 2010, the Seder focused on bringing together the two communities which have a surprisingly interrelated history. Attorney Pina is Vice President of the Board of Directors for CVC Unido - Cape Verdean Community Unity. Formed in 1999 as The Cape Verdean Task Force, CVC Unido is the only Cape Verdean agency in the City of Boston. The personal injury and bankruptcy firm Law Office of Neil Burns was a Sponsor of the event. The Cape Verdean Consulate General was a sponsor and speaker. The Seder, a festive meal with prayer, songs and discussion, was attended by over 200 people, both Jewish and Cape Verdean.

The traditional Passover Seder, a Jewish holiday and ritual, is the story of freedom and rebellion against the brutal slavery of the Jews in Egypt. The Cape Verdean - Jewish Seder is a new ritual which celebrates the commonalities of the two groups; histories of enslavement and liberation, far-flung Diasporas, challenges of immigration to the United States, an heritages of prevailing over tremendous hardships. Further, when Cape Verde was a Portugese colony, Portugese Jews, facing oppression and the Inquisition, fled to Cape Verde in the 15th and 16th centruies. Apparently, the groups intermarried and ceased to exist separately. Today there are four Jewish cemeteries in Cape Verde.

In a case recently decided unanimously by the United States Supreme Court, Milavetz v. United States, and written by the new Justice, Sonia Sotomayor, it was decided that a new bankruptcy law may not restrict lawyers from giving full advice, including advice to take on more debt, to clients. The decision, while narrowly written, was made under the right to free speech. When clients see their personal bankruptcy lawyer they need "unfettered, candid advice" which may include taking on more debt through a mortgage or motor vehicle loan.

Continue reading "Massachusetts Bankruptcy Lawyers Given More Freedom to Advise Clients" »

Our clients often ask for personal investment advice regarding the assets they can protect in filing a Chapter 7 personal bankruptcy. Massachusetts investors need to know that they can exempt their qualified retirement accounts. In our September 1, 2009 blog article, we discussed asset allocation for our Boston, Massachusetts clients' qualified accounts. This article is merely an update; a reminder to check that you are making the most of your retirement, or other long term savings, investments. The US Securities and Exchange Commission offers a primer as well!

In a survey undertaken by Barrons, the 2010 recommendations of the 20 top money managers revealed some interesting trends. They recommended between 37% and 67% in equity (stock) investments; 15% to 45% in fixed income (bond); 8% to 33% in alternative (commodity etc.) investments; and 0% to 15% in cash. Of particular note was the renewed focus on non United States equity and debt. Barclays and Deutcsche Bank recommend that 22% of equity be invested oversees. Morgan Stanley puts the percentage at 24%

There are many other websites out there that will help you get started with investing.

The Massachusetts Department of Public Utilities announced plans to increase energy efficiency with a goal of saving Boston and Massachusetts electric and natural gas consumers over $6 billion per year over the next three years. We know our clients are looking to save money on natural gas and electric bills, and they may see real savings under the new energy policy: the Green Communities Act.

Essentially, the new law includes funding for the nations first carbon allowance auction, along with improved energy assessments of homes and incentives for the purchase of high efficiency lighting and appliances, heating and air conditioning and insulation. The plans require better multicultural and community based outreach. The requirements include a target of 2.4% savings in electricity costs, based on a decline in use of electricity, due to conservation. The Department of Public Utilities estimates that the law would add, or save, 4,000 jobs.

Continue reading "Massachusetts Consumers Will Reap Benefits of New Energy Policy " »

Our Massachusetts clients who are not covered by retirement plans (such as 401k's or 403b's) often request clarity regarding retirement account options. With April 15 just around the corner, we are glad to provide an update. First, we need to identify the various "vehicles" available. The basic plan is the Individual Retirement Account, or IRA. An IRA allows you to deposit up to $5,000 (or $6,000 if you are over 50) into a tax deferred account each year provided you meet certain criterion. The good news is that this reduces your taxable income by the amount you put in. Further, if you can pay the tax on the income, you can do a ROTH IRA, which has an income restriction for qualifying, however, has the added benefit of allowing tax free withdrawals - by you or your heirs. The monies can be invested in stocks, bonds, mutual funds, commodities, certificates of deposit or otherwise, so long as they stay within the host company's IRA account.

You are allowed to convert IRA investments into ROTH IRA investments, however, there are income restrictions for 2009. This changes in 2010. See our prior blog articles on Roth IRA conversions and Roth IRA planning for more details.

You can also open a ROLLOVER IRA, which is simply converting qualified retirement monies in a 401k, 403b or other retirement account, into an IRA that you now can control the investments in.

There are also SEP IRAs and SIMPLE IRA's for folks with their own businesses. They have various requirements, however, the SEP IRA allows up a contribution up to $49,000 and the SIMPLE IRA allows contributions up to $11,500 ($14,000 if over 50) The requirements and restrictions can seem daunting, however, T. Rowe Price, whose useful website I have included above, provides details for opening and funding each IRA. There are other helpful websites too: Charles Schwab and Company is excellent. Many of our clients' companies use Fidelity for their 401k or 403b plans. They have individual account services too. The lowest cost fund family is generally Vanguard. And, as we discussed in our earlier blog article on long term investment strategies, costs are critical because they create a drag on monies that are invested for the long term.

It should be noted that this article is not inclusive of all retirement plans. Many of our clients have Keough profit sharing plans, for example. This article is simply a reminder of the basic retirement vehicles out there for clients who don't have retirement plans at work. Nor is this article investment advice. We are simply reminding our clients to review their options with their tax investment professionals before April 15.

Bankruptcies were up 14% in February across the United States verses February 2009, and 9% above January 2009, according to the National Bankruptcy Research Center data. The federal government statistics, which were released on March 2, 2010 for 2009, indicated 1,473,675 bankruptcy filings in 2009, a 31.9% rise in filings for 2009 over the previous year. Chapter 7 personal bankruptcies were up 41% (from 744,364 in 2008 to 1,050,832 in 2009) We will continue to inform our clients of the trends in the federal bankruptcy courts, and especially in the Massachusetts district.

Those of us here in Boston and throughout Massachusetts went to bed last night with the sting of defeat from watching the Olympic Men's Ice Hockey Finals. Thus, it seemed like a good time to review our sister country to the north's personal bankruptcy situation.

According to Canadian statistics, like the US, 2009 was a record year for personal bankruptcy filings. The issue, like Massachusetts and the US, is debt: in Canada the level of "household credit per person" is up from just over $20,000 in 2001 to over $40,000 in 2009! At the end of the third quarter of 2009, an average Canadian had household debt of 140.8% of their personal disposable income!

Continue reading "US v. Canada - Ice Hockey, Bankruptcy, Massachusetts Winter Notes" »