Boston Bankruptcy Lawyer Blog

Now that Congress has passed the 2010 Consumer Financial Protection Act, our consumer clients ask how it will affect them, who will lead the agency, and when. Daily media reports indicate that while Harvard's Elizabeth Warren, the consumer champion, is still in the running, no decision has been by the Obama administration. While we agree that Warren's relentless push for consumers entitles her to full consideration, our desire is that the ultimate results of "reform" are consumer focused, and not, as in the prior 2005 Act, bank focused.

A quick review may be in order. In 1994, the National Bankruptcy Review Commission was established. The author of its report in 1997 was Elizabeth Warren. Ms. Warren's findings clearly indicated that mortgage lenders, and others, needed tighter regulation. Unfortunately, Congress rejected the proposals of the Commission and passed the 2005 Bankruptcy Abuse Prevention and consumer Protection Act. This law was written by and for the lenders and banks. Sure, it has reduced a few consumer bankruptcies. However, mostly it has increased costs to consumers: costs and interest rates to consumers went up, lending became looser, the financial crisis occurred, bankruptcies and foreclosures skyrocketed.

We are watching and waiting to see what the administration will do, what the new agency will do, and, most significantly, what the results will be.

Elizabeth Warren, Harvard Law School Professor and the champion of the Consumer Financial Protection Bureau law, passed by Congress and signed into law by President Obama, may be on the short list to lead the new agency. Warren was the Chairperson of the Federal Oversight Committee making recommendations to Congress Regardless of the president's final choice; Warren has been a champion for consumers like our clients who are filing bankruptcy in record numbers. The new law will have multiple consequences for consumers. We intend to write several articles to review the law.

In a ruling by the Federal District Court in Massachusetts, Judge Young held that when a consumer wins a Consumer Protection claim (93A case) and the Court orders that the defendant pay the consumer his or her attorney fees, interest on the attorney fees begins to accrue when the original judgment enters. In Massachusetts Courts court, the interest rate is one percent per month from the time suit is filed http://www.ncsconline.org/WC/Publications/KIS_PreCivPJIPub.pdf , however the federal court rate is 5.22% from the judgment date. This one reason why our clients appreciate having their consumer protection cases heard in state courts.

In this case, the plaintiffs were awarded a victory on the case and had to await some time before attorney fees were calculates. Apparently, the issue became when to start accruing the interest on the attorney fee portion of the judgment: from the time of the initial victory, or from the later time when Judge Young actually made his attorney fee finding. The Court decided that while the First Circuit has not made a determination, other Federal Circuit Courts have, and they go back to the date of the initial judgment.

In a recent study economists found a "large and statistically significant negative correlation" between financial literacy and subprime mortgage defaults. In our opinion, the ramifications run deeper than putting a new agency under the Federal Reserve Bank, the so called Financial Reform Act. Our clients, more and more, are asked to manage their retirement accounts (401k, 403b, IRA, etc.), and to make non-retirement savings decisions. Indeed, the economists stated: "Of even greater concern however, is that differences in financial literacy are correlated with consumption and savings decisions."

The study is replete with statistics and interesting findings. For example, the folks at the bottom 25% of calculation skills, 20% had been foreclosed on; whereas, only there were only 5% of foreclosures in the folks who scored in the top 25%. The work was published by the Federal Reserve Bank of Atlanta (with research from the Boston Federal Reserve Bank).

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

None of our clients enjoy paying taxes. Our personal injury clients do not pay taxes on their net recoveries, but they pay taxes! Our bankruptcy clients can discharge some older tax bills, but no recent taxes, and they know they will be paying their taxes in the future. However, like death, taxes come for us eventually. That said, there seems to be a lot of misconception out there about why pay and who pays what. Thus, we have checked with numbers from the non partisan Congressional Budget Office.

Families who earn between $35,400 and $52,000 (in 2006), the "middle fifth" income bracket, paid on average 3% of their income in taxes, but, they paid 9.5% in payroll taxes and 14.2% overall in federal taxes, according to the Congressional Budget Office. The CBO estimates that only about 10% of all households pay no federal taxes.

Continue reading "Taxes, Lies and Videotape... Ramblings of a Boston Personal Bankruptcy Lawyer " »

The Massachusetts Department of Public Utilities announced plans to increase energy efficiency with a goal of saving Boston and Massachusetts electric and natural gas consumers over $6 billion per year over the next three years. We know our clients are looking to save money on natural gas and electric bills, and they may see real savings under the new energy policy: the Green Communities Act.

Essentially, the new law includes funding for the nations first carbon allowance auction, along with improved energy assessments of homes and incentives for the purchase of high efficiency lighting and appliances, heating and air conditioning and insulation. The plans require better multicultural and community based outreach. The requirements include a target of 2.4% savings in electricity costs, based on a decline in use of electricity, due to conservation. The Department of Public Utilities estimates that the law would add, or save, 4,000 jobs.

Continue reading "Massachusetts Consumers Will Reap Benefits of New Energy Policy " »

The results are in for 2009: lenders filed a record 27,828 foreclosures in 2009, which is up from 2008. The jump was 28.1% according to the Warren Group, owner of Banker and Tradesman business newspaper. However, the number of "completed" foreclosures, is down 25.4% to 9,269. More than 2000 foreclosures were filed most months of 2009. In our bankruptcy practice, we have noticed a similar decrease in clients facing foreclosure.

The federal Department of Treasury announced new guidelines to streamline mortgage application processes for all mortgage applicants, including those in Boston and Massachusetts who apply for a mortgage associated with Fannie Mae or Freddie Mac. Our bankruptcy clients often are not able to save their homes because interest rates, and other costs, are just too high. http://www.neilburnslaw.com/lawyer-attorney-1397148.html

Beginning June 1, under the new regulations, the lenders will be required to obtain all necessary documentation at the outset, thus saving confusing and rejection later on. Further, some lenders require the collection of documents twice; this will save that step. The lenders will now require two pay stubs and a release so that the lender can go on-line and obtain a tax return from the IRS. Since the program began there have been 900,000 mortgage modification applications - unfortunately, only 1100,000 have been approved. December data shows an improvement in the rate of approvals.

Continue reading "Feds Streamline Mortgage Applications for Massachusetts Homeowners" »

The Massachusetts Department of Public Utilities announced plans to increase energy efficiency with a goal of saving Boston and Massachusetts consumers over $2 billion per year over the next three years. Our clients are looking to save money on natural gas and electric bills under the Green Communities Act.

Essentially, the new law includes funding for the nations first carbon allowance auction, along with improved energy assessments of homes and incentives for the purchase of high efficiency lighting and appliances, heating and air conditioning and insulation. The plans require better multicultural and community based outreach. The requirements include a target of 2.4% savings in electricity costs, based on a decline in use of electricity, due to conservation. The Department of Public Utilities estimates that the law would add, or save, 4,000 jobs.

Continue reading "Massachusetts Consumers Will Reap Benefits of New Energy Policy" »

Our personal bankruptcy clients often point out that they are being "harassed" by the collection agencies and lawyers, in Boston and throughout Massachusetts. One Boston area law firm uses the brother of the attorney as their attack dog - he implies he is the lawyer and his words are vicious.

Thus, it is important for consumers to know their rights. The Federal Fair Debt Collection Practices Act protects consumers from abuse by collection agencies and collection lawyers. Note, the federal law does not apply to the actual creditor, only to "third parties" such as the collection agencies and collection attorneys. The Massachusetts law, Chapter 93A, Section 49, Debt Collection in an Unfair, Deceptive or Unreasonable Manner gives Massachusetts consumers additional protections.

Continue reading "Massachusetts Consumers Need to Know Fair Debt Collection Laws" »

A client of ours had her wallet stolen recently on Newbury Street in Boston, Massachusetts. After commiserating with her and then looking around the web, we have come up with a few suggestions should the same happen to you.

1. Use only initials on your printed checks so a thief will not know how you sign your name. Do not have your phone number on your check. Never put your social security number on your checks.

2. Do not sign the back of your credit cards. Write "photographic identification required" in the signature spot.

3. When paying a credit card bill, only write the last four numbers of the credit card on the check.

4. Make a copy of each and every document in your wallet (front and back) and keep it in a safe place. You can also make a PDF file of these documents and have them available in a web based storage account. Be careful with passwords for that account, however. You can do the same with your passport.

Continue reading "Stolen Wallet Tips" »

Many of our Massachusetts bankruptcy clients who come in for a consultation say that they would be able to pay their bills if only the interest rate on their credit card hadn't jumped so high because of one late payment. The credit card "agreement" they signed has so many clauses that enable the banks to do whatever they wish, when they wish. There are very few contract clauses to help the consumer in these situations.

Harvard University's Elizabeth Warren, who grew up poor in Oklahoma, is a tenured professor at Harvard Law School and has been appointed to chair the Congressional Oversight Panel. She is charged with monitoring the federal bailout of the financial institutions; her task is to examine how they spent the $700 billion bailout. For many years, Ms. Warren has been advocating that we need a few federal agency: the Consumer Financial Product Safety Commission. The model for the new agency is the U.S. Consumer Product Safety Commission, an independent health and safety regulatory agency founded in 1972 by the Nixon Administration. Most folks would agree that this federal agency has added tremendous benefits to society. Since 2001, Canada has a financial products agency, which from all reports seems to be working quite well.

Continue reading "Do We Need a Consumer Financial Product Agency?" »

Notwithstanding all the rhetoric promulgated by the insurance companies and the corporate media, trial lawyers in Boston, throughout Massachusetts, and elsewhere, are actually consumer friendly. We are the ones representing the little guy against the insurance companies and other corporate interests.

Take the automobile collision resulting in injury or death. Who can afford to hire an experienced corporate attorney, qualified to go to court if necessary and who charges $300 - $500 per hour, to try to get your lost wages and your medical bills paid? Who even knows those lawyers in the towers overlooking the Boston Harbor? No normal folks. However, if you look in the phone book, online, or even on a billboard in town, there will be a personal injury attorney advertising that he or she will represent you on a contingent basis; you pay NOTHING until and unless you get a settlement. Then, you pay a contingent fee, usually one third. There is no chance for overreaching, no need for negotiating a bill, and, all along, you have an experienced attorney, that you chose, on your side representing your interests against the insurance company.

Continue reading "Trial Lawyers Help Massachusetts Consumers" »