Boston Bankruptcy Lawyer Blog

Personal bankruptcy law gives the debtor a "fresh start." The bankruptcy petition will be denied, however, when the Trustee finds assets or a fraud in the Petition. In another case handed down this month by Federal Bankruptcy Judge Feeny, a lawyer attempting to discharge his debts had his bankruptcy case denied because he "concealed property of the [bankruptcy] estate, failed to maintain accurate, complete and reliable books and records, or made false oaths or accounts in connection with his case" such as bank accounts, investment accounts.

In this case, the lawyer debtor made false statements in his Petition, on his Petition Schedules, in oral testimony at the 341 Creditor's hearing, and that those false statements were "material and intended to mislead the Trustee and creditors." The attorney debtor also failed to disclose assets such as contingency fee cases, where a future settlement or judgment was clearly an asset. The debtor's defense was lack of intent, however, the Court found the opposite due to the "nature and extent of the inaccuracies."

This note is not intended as a primer on Social Security, but a brief essay, by a Boston bankruptcy attorney who regularly receives a host of questions from clients on where its going, where it came from, and what is does now. From its inception during the Great Depression in 1935, the Social Security Act was expected to "To provide for the general welfare by establishing a system of federal old-age benefits and by enabling the several states to make more adequate provision..." Essentially, the federal Act was intended to provide economic security for all; a matter too critical to be left to the several states and their various laws.

With the economy devastated by the Great Depression and no longer relying on local farming, there was need for a federal action. President Roosevelt established a Commission which modeled the Act on German leader Bismarck, who, in 1889 designed the contributory pension system. Most of Western Europe adopted some form of what we know as Social Security before 1935. The Act covered assistance to the states to provide for three basic needs: the aged, the blind and dependent children. The law has been amended and augmented numerous times since then. In 1965 Medicare was added, to provide for medical care for the aged and in 1972 the cost of living adjustments were added.

Continue reading "Social Security, Lies and Videotape - a Massachusetts Consumer Lawyer's Perspective" »

The Federal Bankruptcy Court in Boston handed down a decision sharply criticizing an attorney with 28 years of experience for putting his two clients, an elderly widow and her disabled daughter, through duplicative bankruptcy proceedings and attempting to collect excessive fees for both. Judge Boroff stated that it had "particular dismay with respect to the type of conduct" of the attorney. Based on the Court's decision, clients seeking personal bankruptcy attorneys in Boston need to be ever vigilant about the reasonableness of the recommendations by those attorneys.

The Court examined the Bankruptcy Petitions and determined that notwithstanding the Chapter 13 filings, the petitioners had simple, straight forward, Chapter 7 cases. Nevertheless, the attorney, in order to secure a fee, filed Chapter 13 petitions for the clients. The attorney's proposed Chapter 13 Plans called for the debtors to pay $7,918 ($3,959.00 each), or 94% of all distributions to the attorney himself! There was nominal monies going to the creditors and the Chapter 13 Trustee found that it did "not appear to be in the Debtor' best interest to be in a Chapter 13" proceeding.

Continue reading "Experienced Massachusetts Personal Bankruptcy Attorney Reprimanded" »

Many of our personal bankruptcy clients, now free of their debts, are looking for homes in this market. A problem for home buyers these days is that the FICO score has come to matter more and more following the credit crisis. Fannie Mae and Freddie Mac wont purchase a mortgage from the front line lenders if your credit score is below 620. This is notwithstanding the fact that many bankers will freely admit that the FICO score is not the best predictor of responsibility in consumer lending - home equity and debt to income ratio are far more significant. So is job stability and marketable assets.

We recommend that you work with lenders. Work on reestablishing your credit scores and research places where the magic cutoff number does not apply. The website Lending Art provides mortgage lenders credit score requirements.

Massachusetts consumers who file for personal bankruptcy protection are fortunate when it comes to protecting retirement accounts. This is because whether they use the bankruptcy state exemptions (generally used when protecting a home with equity) or the federal exemptions (more generous for other assets), retirement assets can be protected if the Bankruptcy Petition and Schedules are properly prepared and filed.

Most retirement accounts that are employer sponsored, such as 401(k) accounts are protected under the Employee Retirement Income Security Act (ERISA). In fact, other than domestic (divorce) or tax (IRS) actions, those assets are generally fully protected from creditors.

Individual Retirement Accounts (IRAs) are not protected under ERISA, however, they are protected in both the state and federal exemptions with certain restrictions.
These are general rules, and consumers should not transfer assets into our out of what they perceive to be a protected vehicle without first talking with an attorney.