Boston Bankruptcy Lawyer Blog

With the end of the second quarter imminent, Massachusetts consumers continue to file personal bankruptcy at a rate higher than the national average. The rate for this quarter will not be known for a while, but the numbers for the first quarter, 272,048 Chapter Seven filings, and 373,551 total filings. Those numbers indicate that over 72% of the filings are Chapter Seven. In Massachusetts, the percentage is higher: 22,249 total filings with 17,714 Chapter 7 personal bankruptcies: almost 80% Chapter Seven personal bankruptcies.

Nationally, the rate of personal bankruptcies has reached close to 7,000 per day. The federal court statistics analyzed by AACER, noted that the numbers were higher than before the October 2005 bankruptcy law change, and that bankruptcies typically peak between 6 and 18 and months after the bust in an economic cycle.

Many of our Chapter 7 personal bankruptcy clients are living on Social Security. When their family members come in to our office, or to court, supporting them, they ask: will Social Security still be around when they need it...next year, in twenty years? We don't know, but we intend to provide significant information when we can. In a clear and concise analysis, Bob LeClaire in his Finance and Markets Newsletter for the week ending June 12, 2010 came up with a host of recommended solutions and the percentage reduction of the Social Security deficit. For example, increasing the contribution rate from the current 6.2% to 7.3%, would reduce the future Social Security deficit 100%.

The chart below gives us other ideas.

In our bankruptcy blog, we try to inform our clients of an array of consumer issues that will have an impact on their finances and investments. Many of our Boston area clients, in and around Boston, have homes; many of those homes are their largest investment. With the economy precarious, and the job situation bleak, we hear some of our clients talking about voting against Proposition 2 ½ overrides. A new study by Northeastern Professor Barry Bluestone, Dean of the School of Public Policy and Urban Affairs, clearly indicates that, in the long run, voting in favor of overrides, notwithstanding the increased taxes, has a direct correlation to enhancing home, therefore investment, value.

The study compares 176 towns in the Commonwealth using SAT scores and per pupil spending on the one hand and housing values on the other. In Hull, for example, the proposed tax increase would have cost the average household $506 per year, or $2,530 over five years; however, the home value, according to the statistics metric, would have increased $9,970.

The study, undertaken with Ph.D. candidate Anna Gartsman, indicates that consumers, and especially homeowners, need to look at the long term consequences of these important decisions. In Massachusetts, there have been 389 override votes, with 165 rejected.

According to data released recently nationwide more people than ever are not paying their mortgages. Nationwide there are more than 650,000 households that are over 18 months Email This Post

Posted In: Random Consumer Issues

The Federal Trade Commission is coming down hard on the folks at freecreditreport.com because, well, because, it's not free! The three main credit bureaus will forward your credit score each month for a fee of $15, however, personal bankruptcy attorneys don't generally recommend these costs. After all, for the $180 you would pay them each year, you could work on reducing debt! The various credit bureaus will let you know of possible fraud activity, however, absent a notion of expected fraud, we question the cost. With respect to the score, the only time our clients really need their actual score is when they are applying for a loan and they need to be above a certain score to get approved. Perhaps then the associated costs are valid.

That said, as we have written before, getting a free copy of your credit report from each agency, each year, is advisable. For Equifax, click here. For TransUnion, click here. And, for Experian, click here. http://www.experian.com/ You can check all activity and write to the agencies if there are inaccuracies.

Our personal bankruptcy clients in Boston seem more confident of their ability to get a "fresh start." However,

In New England the housing construction boom was less extreme than some parts of the country. Further, with a Massachusetts economy more reliant on less cyclical industries, such as education, health care and defense, the optimism levels are even higher.

In a case where the bankruptcy debtor omitted assets and income on her federal bankruptcy petition, the United Bankruptcy Court revoked the discharge. We advise our clients that dishonesty is one of the biggest reasons for failures to secure discharge, problems and additional costs and attorney fees in Chapter 7 personal bankruptcy.

In the case that came down from the Court recently, the debtor significantly misstated the value of her checking account (over $8,000), omitted her monthly alimony ($13,000), gave false testimony about her income, misstated her annual income for 2004 by over $48,000, and misstated her income for a period of 2005 by over $40,000. The Petition, Schedules, and testimony under oath seems fraught with misstatements, misrepresentations and with income grossly undervalued. The Court found that the False Statements were "relating to a material fact."

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