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Massachusetts Bankruptcies are Down

The news about personal bankruptcy in Massachusetts is good. The number of people filing is down. Overall, across the US, the number of bankruptcy filings for the first half of the year was down from 725,000 in 2011 to 627,000 in 2012. This translates to a reduction to 9,188 Massachusetts bankruptcy filings for the first six months. That is a rate of 2.79 per 1,000 residents, verses 3.00 filings per 1,000 residents in 2011 and 3.52 filings in 2010.

While there are over 192,000 homes in foreclosure, the analysis seems to be that the foreclosure crisis is over and folks have decreased spending and increased saving. This is partly a function of lending practices: it’s far more difficult to get loans, for houses, cars, and even credit cards. With less borrowing, there are fewer bankruptcies.
 
On the other hand, many celebrities and other notable persons are filing for bankruptcy. For example, Olympic gold medal gymnast Gabby Douglas’ mother, Natalie Hawkins filed for personal bankruptcy, Chapter 13, in Virginia; Olympian Ryan Lochte’s parents were dealing with a foreclosure in Florida. A former Patriot wide receiver has been the subject of multiple (five) mortgage foreclosures. It’s not just athletes; since 2007, the rate of foreclosures on homes valued over $1 million has increased over 489%, while homes below $1 million had only increased 105%, according to RealtyTrac.
 
The real problem, from the vantage point of a Massachusetts bankruptcy attorney, is that our clients, regular folks, are still either underwater or living with close to no equity in their homes. We cited an AARP study in our Boston bankruptcy blog last month that gives some surprising statistics regarding foreclosures for “older” (over 50) folks. Folks that bought, or refinanced, taking cash out in the last 10 years, are the most vulnerable.
 
In other news, a debtor who filed a chapter 7 bankruptcy in Massachusetts was attempting a standard discharge from the Massachusetts Bankruptcy Court. However, one of his debtors who held a $35,200 judgment against him and scrutinized the bankruptcy Petition, Schedules and Statement of Financial Affairs, filed a claim. We stress to our clients that them must disclose everything; you can’t “keep that out” of the bankruptcy.
 
The creditor had multiple arguments for failing to disclose. Only two of those arguments worked, however: the creditor proved that debtor neglected to list his ownership in a small business and that there was an environmental notice against the debtor.
 
The Bankruptcy Court noted the omissions but determined that there was no material impact on the case, nor were they “knowingly and fraudulently” made or omitted from the Petition and Schedules. That is, to win on this type of claim, and deny the debtor a discharge under United States Bankruptcy Code Section 727(a)(4) you must prove that the debtor’s sworn Petition, Schedules, or testimony at the hearing(s) were made knowingly, fraudulently and with reckless indifference. This was not found by the Court here. See In re: Cogswell v. Dotson.
 
If you are considering filing for a personal chapter 7 bankruptcy in Boston you should contact an attorney with over 25 years of bankruptcy experience. Call 617-227-7423 for a free bankruptcy consultation.