Boston Bankruptcy Lawyer Blog

Have you received a Summons to appear in court because of outstanding debt? Credit card companies often resort to suing consumers in Massachusetts District Courts for the unpaid balances. While it may be too expensive to retain a Boston attorney, and you may not qualify or be interested in a Massachusetts bankruptcy, there are ways to defend yourself. The Massachusetts Courts Self Help Center is a helpful start, but we have some advice to offer, too.

See our recent article called Massachusetts Consumers Can Represent Themselves Against Credit Card Companies in Massachusetts Courts. In this article, we explain which documents you'll need to file in a collection lawsuit, and we provide examples of forms for your reference.

Retirement accounts held by Massachusetts consumers, including the IRAs, Roth IRA, 401ks and 403b plans, are critical for our long term financial security in this day and age. Retirement accounts are protected from creditors and in Massachusetts bankruptcy. But can you and your spouse agree on how to invest? A "Love and Money" survey by financial services company PNC show that couples are "split" on how to plan their finances. While the retirement account may be in one name, the plan for the family should be undertaken jointly. The late 2010 survey, indicates that following the "great recession" a majority of men say they are planning their financial affairs better than before, while women disagree. Women also worry more than men about the recession, inflation and having sufficient money to support their lifestyle. Now could be a good time to come together.

Perhaps most concerning in the study was that the majority of men claim to be in charge of their financial decision making, 53%, whereas only 15% of women claim to be the ones mostly responsible. Furthermore, men claim to be higher risk investors than the women surveyed.

Fortunately, of the parents surveyed, there seemed to be an equal understanding about how the recession affected their children. The recession caused more parents to discuss finances with their children. Unfortunately, a higher percentage of parents are worried about their children's futures, versus a 2006 study. The PNC folks stress talking to children "earlier and more often about money, starting as early as the first grade."

In a developing area of law, a Massachusetts Superior Court judge ruled that Citibank (South Dakota) was charging an unconscionable rate of interest against a Massachusetts credit card user. The Court pointed out that "the general public is drowning in credit card debt" and that "unregulated interest rates and hidden fees the credit card companies charge..make it impossible for consumers to get out from under these debts." Notwithstanding the agreement or "contract" between the credit card issuer and the consumer, the Court noted the one "sided nature" of those credit card contracts.

Once the interest rate is over 18%, "individuals must make monthly payments for years before putting a dent in their debt" wrote Judge Robert A. Cornetta, sitting in the Superior Court in Essex County, Massachusetts. "With interest rates as high as forty and fifty percent, a significant portion of the [defendant] debtor's monthly payment goes toward paying interest without touching the underlying debt," the Court stated.

Continue reading "Credit Card Interest Rates Ruled Too High by Massachusetts Judge" »

There are hearings in Washington to explore giving Bankruptcy judges more power in rewriting mortgages. This could have a dramatic effect on defaulting Massachusetts homeowners, especially those that file for personal bankruptcy in Massachusetts. Rhode Island Senator Sheldon Whitehouse and the Senate Judiciary Committee, held hearings regarding allowing bankruptcy judges to modify mortgages. http://c-span.org/Events/Senate-Judiciary-Cmte-Hearing-on-Foreclosure-Mediation-Programs/10737419295/

The Home Affordable Modification Program (HAMP) which is the current mortgage program is not available for chapter 7 bankruptcy filers. This program was designed to help over three million homeowners, however, to date, has been used by only about 500,000 homeowners. This program is being criticized by both sides on Capitol Hill. At the recent hearings, it was pointed out that the program is more bureaucracy than effective legislation.
While we are not confident that this will pass anytime soon, we are pleased that the Congress is addressing a problem affecting so many folks in Massachusetts. Further, in Bankruptcy Court, we can't do anything about mortgages that are current, albeit at a high interest rate.

According to preliminary numbers from the American Bankruptcy Institute, consumer bankruptcies are down 22% nationwide in January. The initial press release does not include a breakdown for Massachusetts bankruptcies, but, antidotal evidence in this office and in other bankruptcy law offices in Massachusetts, comes to the same conclusion. The number of filings were 92,669, down from 118,146 in December, 2010. Nevertheless, the ABI predicts that filings will increase in 2011, noting that consumer bankruptcy filings have increased each year since the law changed considerably in 2005.

It should be noted that monthly bankruptcy numbers are adjusted by the ABI for seasonal swings, holidays etc. The Wall Street Journal bankruptcy reporting indicates that the ABI is encouraged by the news. However, as indicated above, the ABI's own poll, published only days earlier, indicates that personal bankruptcy filings will increase this year.