Boston Bankruptcy Lawyer Blog

Many of our Massachusetts bankruptcy clients ask us, how do we do it right this time? How can we budget so that we don't end up this way again? We have searched numerous books and blogs and there is ample information out there for creating budgets following bankruptcy. Perhaps the most important thing is to be totally devoted to making it work. Change your money management habits in order to avoid bankruptcy.

The experts all seem to agree on several points:

Continue reading "Creating a Budget After Bankruptcy in Massachusetts" »

By Samantha Taylor, guest author

Any petition for a Massachusetts bankruptcy is filled so that you, the debtor can come out of your financial crisis and can start afresh. Most of your assets are likely exempt from your creditors. Thus your debt is discharged. It usually works best for those who have a large amount of unsecured debts. It does not pardon mortgage payments or other secured debts, however, the Massachusetts homestead law protects most homes. If you are not able to make mortgage payments, however, you need a lawyer to determine how to proceed. If you home is underwater, you may be able to allow a foreclosure and walk away without owning anything to the lender, or you may qualify for a mortgage modification.

There are many advantages and disadvantages of Chapter 7 bankruptcy. They are as follows.

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In March 2009, Congress passed the HAMP, the Home Affordable Modifications Program, in an attempt to assist folks refinance and modify their mortgages. Recently, in Boston, lawyers representing home owners who were denied access to the program filed suit in federal court asking the court to stop foreclosures of those homes. If successful, the lawsuit could affect thousands of homeowners throughout Massachusetts.

The program is designed to be a debt reduction mechanism, with the federal government and the mortgage lender each contributing. The math works like this: successful applicants will have to pay no more than 38% of their monthly income for principal, mortgage interest, taxes and condo fees. Then the US Treasury Department will match any additional reductions down to 31% of your household income. Further, if the above reduces the payments by 6% or more, you get $1000 per year (up to five years) towards reducing the principal loan. While the benefits for homeowners is a monthly reduction in expenses, the benefit to lenders is clear too: they do not have to go through the costs of foreclosure and taking the likely loss on the mortgage, and, they get $1,000 per year from the government for participating.

Continue reading "Home Affordable Modifications Program Lawsuit in Boston" »

Boston bankruptcy lawyer Neil Burns reveals that credit issuers reported a decline in the number of credit card holders who are delinquent, indicating strength in the upcoming black Friday and the holiday season. The Wall Street Journal compiled official filings from banks which show a decline in loan delinquency rates, especially credit card rates, to the lowest in 2010.

While delinquencies are loans that are behind, and may eventually be charged off, actual charges offs are loans that the lenders and banks have determined are not collectable. The rate of charge offs, as reported to the Security and Exchange Commission, was also reduced in recent filings.

Continue reading "Massachusetts Holiday Season Expected to be Better in 2010 Due to Credit" »

October numbers are in and the news is that national filings are up 1.4%, according to the American Bankruptcy Institute. However, the numbers were down compared to October 2009. There were 130,329 filings in September and 132,173 cases in October. The ABI research team predicts 1.6 million consumer bankruptcies in 2010. Chapter 7 personal bankruptcy filings are approximately 70% of those cases. The Wall Street Journal reports that the "trend points to another year of rising bankruptcy cases."

Massachusetts personal bankruptcy rates are typically low. Nevertheless, as we reported in an earlier article, Massachusetts bankruptcy rates were up 35% for the first half of 2010. With the ABI numbers through October and their predictions based on numbers throughout the country, the rate of filings in Massachusetts should be up overall this year.

College students may have the second highest personal bankruptcy rate in the US. When you add credit card debt taken on by parents to help fund their children's education, which we see often in our Boston personal bankruptcy practice, this is a scary statistic. In a national study, the EDSA Group determined that while 28% of college students that dropped out of school for academic reasons, 38% of college dropouts left for financial reasons. The actual reasons may be related to the way college is now paid for - more work study and fewer grants, more students and parents using credit cards to finance education, and more student loans. In Massachusetts, the trend is up for student loan defaults.

Wherefore, students (and parents) need to know how to succeed with the tremendous financial undertaking they are attempting in getting a college degree. The educators at EDSA conclude that students should have a financial education before college if possible but that it should "should be mandatory" at the university level, if for no other reason than to keep students in school to achieve graduation. The EDSA concluded that students need budgeting stills and to learn about goal setting. Furthermore, students need an education about student loans. While students don't plan to file bankruptcy, the fact that discharging student loans in bankruptcy is very difficult adds to the problem of educating students on financial matters.

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One of the most frequently asked questions from our Massachusetts personal bankruptcy clients is, "Can I keep my car?" The answer, generally, is yes. However, in a Chapter 7 personal bankruptcy case in Omaha, an heir to a fortune filed for personal bankruptcy protection last month and had to surrender his Maserati, which was sold by the Bankruptcy Trustee for $58,500. In that case, Ted Baer's vehicle was sold and the proceeds went to pay off the vehicle loan, the secured creditor, and the remaining balance was added to the bankruptcy estate. Nevertheless, most of our clients don't have a Maserati, or another extravagant vehicle. They simply have a vehicle that they need to go to work and to get around. When using the federal bankruptcy exemptions, our clients keep up to $7,500 of equity in their vehicle.

More importantly, the federal bankruptcy exemptions allow debtors to combine exemptions if they do not use all of one exemption. In addition, the Massachusetts state exemptions, which allow for a significant homestead exemption of up to $500,000, also allow an exemption for motor vehicles, albeit a much smaller exemption.

Continue reading "Massachusetts Consumers Keep Vehicles in Bankruptcy" »