Boston Bankruptcy Lawyer Blog

Massachusetts Bankruptcy Court hearings are generally open to the public, Boston bankruptcy lawyers,debtors, creditors and occasionally the media. Transcripts of the proceedings are generally available as well. Some content is generally redacted, or excluded, such as "social security numbers, financial account numbers and minors' names and birth dates." In a May 2, 2011 decision by Bankruptcy Judge Henry J. Boroff, the Court was asked to look at the rules for allowing a portion of a public hearing to be redacted from the transcript of the bankruptcy court record.

In a Chapter 7 case that would not normally get this level of judicial attention, Verizon violated the rules of the Bankruptcy Court Automatic Stay. That is, after someone files for Chapter 7 bankruptcy protection, a creditor, such as Verizon, cannot continue to attempt to collect a debt from the debtor. All lawsuits are "stayed." Creditors can file appropriate proceedings in the Bankruptcy Court, requesting a release from the automatic stay. This happens frequently in foreclosure cases, and sometimes in Massachusetts personal injury cases where insurance is involved.

In this case, Verizon violated the rule, numerous times, and continued to contact the debtor, over a $475.63 debt. They failed to stop contacting the debtor even after receiving a letter from debtor's counsel. Wherefore, the bankruptcy debtor, through his Massachusetts bankruptcy lawyer filed a motion for monetary sanctions against Verizon. After numerous hearings and wrangling, Verizon and the debtor entered into an agreement: Verizon would pay sanctions for their transgressions, so long as the payment amount would be kept confidential. The parties then moved to dismiss the case. The Court, however, refused to follow the agreement without the disclosure of the amount, notwithstanding the confidentiality agreement. Verizon disclosed the monetary amount they would pay in court, and a transcript was made. On February 10, 2011, when the official "Notice of Transcript" was issued, Verizon moved to redact the portion of the transcript regarding the sanctions they paid.

In a well reasoned decision dated May 2, 2011, Judge Boroff noted that the law regarding Public Access to Bankruptcy Records and Exceptions, Section 107 of the Code, gives the right of public access as "entrenched in this country's judicial system." The exceptions include a "trade secret or confidential research, development or commercial information" in subsection (b) and something that "would create undue risk of identity theft or other unlawful injury" in subsection (c). The Court pointed out that while stipulated dismissals are often used in Civil cases to ensure confidentiality, they cannot be used in the Bankruptcy Court context to circumvent the rules. The Court refused to accept Verizon's argument, stating that the automatic stay "upon the filing of a bankruptcy case is one of the 'cornerstones of bankruptcy law'" and that the facts in this case "contained serious allegations of Verizon's repeated violations of the automatic stay." The Court declared Verizon's motion a "backdoor attempt to seal the courtroom" and made it very clear that creditors that violate the automatic stay law will be sanctioned, and cannot simply pay undisclosed sums when they violate the law.

One lesson of this case is that consumers who file bankruptcies in Massachusetts should retain an aggressive Boston bankruptcy attorney because the creditors are often negligent and sometimes tenacious in pursuing debtors.

Massachusetts consumer advocate and Harvard bankruptcy law professor Elizabeth Warren was grilled by Representative McHenry, the North Carolina chair of a House subcommittee the other day. The testimony was supposed to be about the direction of the Consumer Financial Protection Bureau in a report to Congress. The Congressman, however, seemed less concerned with what Professor Warren had accomplished at the CFPB, and more focused on character assassination, actually calling her a liar regarding the simple matter of scheduling the hearing. A video of the exchange can be viewed. The CFPB, the brainchild of Ms. Warren after years of careful study and implemented by Congress following the financial crisis, has been under attack by various factions with allegiance to large financial institutions.

Ms. Warren is now in a political tug of war: Some want her to return to Massachusetts and run for Senate; others want her out of power altogether in Washington. Regardless of where she goes after her temporary appointment, we see her devotion to protecting consumers where they interact with the financial world: credit card rights, 401k disclosures and consumer banking disclosures. The partisan attacks in Washington remind us of President Obama's speech at the University of Michigan, last May, when he related a story of a letter written by a kindergartner asking, "Are people being nice?"

Continue reading "Elizabeth Warren: Consumer Protection Leader" »

According to a recent survey by Findlaw.com, 13% of all Americans have considered filing personal bankruptcy. The survey found that folks between 35 and 55 are more likely to consider bankruptcy than the 18-34 year old crowd. Only 7% of those over 65 have considered filing for bankruptcy protection. The survey, published May 19, 2011 by Findlaw points out that approximately 1.5 million have filed for bankruptcy in the past year.

When considering filing for bankruptcy in Massachusetts, we highly recommend you contact a qualified bankruptcy lawyer. Only someone with experience in the federal bankruptcy courts should be considered because the new 2005 law is more restrictive than the old law, the Petition and Schedules are complicated, the Unites States Trustees follow strict rules, and the whole process can be difficult. With an experienced bankruptcy lawyer, however, you can plan for the bankruptcy, the process can be significantly easier, and you will have someone to guide you every step of the way.

Massachusetts personal bankruptcy cases regarding student loans are guided by the strict law that says that there must be "undue hardship." In a case decided recently, the debtor claimed that her financial condition, which included homelessness and a minimum wage job, qualified her as having an undue hardship. Undue hardship, if found by the Court, will qualify a debtor for a discharge in student loans in a Massachusetts personal bankruptcy. Unfortunately, the case gives us no new guidance; both parties filed motions for summary judgment. The debtor lost her motion because of a technicality - failing to file an affidavit in a timely fashion, and the creditor, Educational Credit Management Corporation, lost its motion because it relied on the availability of the Income Based Repayment plan, which cannot be the only factor in consideration.

Our recent article about discharging student loans in bankruptcy talked about the burden of undue hardship. More importantly, it gave an outline of how to approach loans that were difficult to pay. There are ways to address them. One way not mentioned in our prior blog was the Educational Credit Management Corporation, which provides assistance in repayment.

Black communities in Cook County, Chicago, have a higher personal bankruptcy filing rate than white communities. It's even worse for women. A fascinating and extensive report published this month by the Woodstock Institute finds that in the period studied, 2006 to 2010, the rate of personal bankruptcies filed in predominantly African American communities was 5.2% versus 1.8% in predominantly white communities. Of further interest is that the rate for Chapter 13, or reorganization bankruptcies, was much higher for black communities, 32.8% of personal bankruptcies, than the 24% in white communities. Further, the personal bankruptcy rate for women overall was higher - 2.6% versus 2% for men; the rate for African American women was 5.1%, with the rate for white women at 1.2%. The overall increase in personal bankruptcies in Cook County was over 139% in those years.

The study is a must read for folks who find these numbers concerning. For example, because of the Chapter 13 numbers, the researchers wonder if black debtors are getting worse advice. Why reorganize if you can discharge? They further fear that when creditors know these facts, and surely they do before the studies come out, they will undertake predatory lending there.

Continue reading "Personal Bankruptcy Higher in Some Black Communities" »

In the context of our international personal bankruptcy tour, the Boston Bankruptcy Lawyer blog reports on news from Ireland. Apparently in Northern Ireland, there are record personal bankruptcies; the numbers was up 19% in 2010, from the prior year, and, in the first quarter of 2011, the numbers are up for the first one third of 2011 from 554 in 2010 to 692 in 2011. Of particular concern there is the fact that budget cuts because of the struggling economy will have the strongest hit on those on the brink of bankruptcy. As you can imagine, unemployment is also up in Northern Ireland. According to reports, there is no longer as much of a stigma about someone who filed for debt relief.

This blog post is intended to help show our Boston bankruptcy clients that Massachusetts bankruptcies in the context of the greater world around us. We posted about Russian bankruptcies recently, and Canadian bankruptcies and of course numerous articles about bankruptcies in other parts of the US. Keep a lookout for more bankruptcy news!

Boston bankruptcy lawyers must counsel clients regarding what to do when income and assets are insufficient to cover debts.
However, we rarely get a case like the one in Grand Rapids, Michigan, where a bank teller concocted an "elaborate scheme" to bilk a bank out of $578,836 in seven years. The money? It went to luxuries for her family and to gambling, including $134,000 to two casinos in 2009! There was a criminal case and following a guilty plea, the teller was ordered to pay restitution. On the other hand, the typical Boston bankruptcy case may involve a client who took a cash withdrawal and lost some money at Foxwoods. Absent fraud, many of such debts can be discharged in bankruptcy.

Filing for personal bankruptcy may help Jo Ann Wierenga, 48, discharge her credit card and other consumer debts. However, after her three years in jail, a personal bankruptcy discharge will not address the $500,000 federal restitution order. Bankruptcy discharge laws specifically exclude most criminal fines, and in particular fines relating to money obtained by "false pretenses...or actual fraud" under 11 U.S.C. 523(a).

A Revere bankruptcy attorney has been charged by the Massachusetts Attorney General with targeting low and moderate income Latino homeowners with unfair loan modification schemes. The Revere attorney was apparently preying on folks that need Massachusetts mortgage loan modifications. Attorney David Zac is being accused of taking money based on false promises. In Massachusetts, where 12,000 homes when into foreclosure last year, there are lots of scams going on, according to the Attorney General. Apparently, the Attorney General is claiming that Mr. Zac is in violation of a 2007 regulation that forbids anyone from profiting from "foreclosure-related services," and the Attorney General, and various non profit agencies, are calling Mr. Zac's advertisements and his fees into question.

One of the allegations is that the attorney would advise clients to stop paying the mortgage to "get their attention" and then negotiate from there. The "legal fee" was a multiple of the monthly mortgage payment. Folks were handing over their tax refunds and borrowing money to pay the "fee." Perhaps it worked sometimes. However, when it didn't work, he would ask for more money for a personal bankruptcy.

Continue reading "Revere Bankruptcy Attorney Antics" »

According to the 2005 federal bankruptcy law, consumers filing for bankruptcy in Massachusetts need to qualify, based in income. The law makes it more difficult to file for personal bankruptcy in Massachusetts. Massachusetts debtors may qualify by having an income below medium family income which set the bankruptcy guidelines, which are as follows: for a one-person household, $54,161; for a two-person household, a family income of $67,142; a three person family, $82,385; and a four person household, $100,482.

If you don't qualify under the Massachusetts medium income, you can complete the bankruptcy means test. This means test form requires details about your expenses and allows for some unusually large expenses, including regional extras such as heating fuel costs. The specific means test deductions include such things as health insurance and care for family members. This test is complicated and we recommend retaining a Massachusetts bankruptcy lawyer.

Continue reading "Maximum Earnings for Personal Bankruptcies in Massachusetts" »

Bottom line: it is very hard to discharge student loans in Massachusetts bankruptcy. The law requires that you affirmatively prove an "undue hardship" and it's hard to prove unless you are permanently disabled. The following is an outline of what steps you can undertake, however. We have previously written about a financial education and this article is an overview of what to do to get started. Note that student loans may not be dischargeable in bankruptcy in Massachusetts, but you can still file for bankruptcy protection and get a fresh start by getting rid of all your credit card debt.

In 2008, 7% of those that were to begin paying back student loans defaulted. Thus, don't take out more student loans than you can reasonably foresee paying back This may seem simple, however, just because they are available, does not mean you should avail yourself of the privilege. Since they are hard to discharge in bankruptcy, they will stick with you forever. Unpaid student loans can even reduce your Social Security benefits when you retire! Financial planners often suggest community colleges for a year or two and then state schools to reduce the ultimate student debt.

Continue reading "Student Loans and Massachusetts Bankruptcy" »