Category: Bankruptcy Issues

US v. Canada – Ice Hockey, Bankruptcy, Massachusetts Winter Notes

Those of us here in Boston and throughout Massachusetts went to bed last night with the sting of defeat from watching the Olympic Men’s Ice Hockey Finals. Thus, it seemed like a good time to review our sister country to the north’s personal bankruptcy situation.   According to Canadian statistics, like the US, 2009 was a record year for personal bankruptcy filings. The issue, like Massachusetts and the US, is debt: in Canada the level of “household credit per person” is up from just over $20,000 in 2001 to over $40,000 in 2009! At the end of the third quarter of 2009, an average Canadian had household debt of 140.8% of their personal disposable income!

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Massachusetts Consumers Need to Know Fair Debt Collection Laws

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.   What to do? First, get the information. You are entitled to the written details of the creditor, the amount due, all penalties, interest, and an explanation of your rights. Ask for the name, company and address of the person you are talking to.   Second, if there is a mistake in the amount, or the penalties, send a detailed letter explaining your position. Remember, often collection agencies, and their associated law firms, have “purchased” your debt and have no idea of the real terms of the original debt.   Third, do not accept harassment. Collection agencies are prohibited from calling between 9 pm and 8 am. They are prohibited from using abusive or threatening language. You may also write a letter to the agency stating that you do not want to be called or contacted in writing, and they must abide by this written request; although they are allowed one more letter stating their plan. If they do not adhere to the law, contact the Federal Trade Commission and contact the Massachusetts Attorney General’s Office.   Fourth, if the debt is in fact yours, and the amount is correct, work it out. They are often willing to take a percentage on the dollar, and to accept a monthly payment plan. If you propose a plan you can truly do, and it is acceptable, the case is closed. They would love to close the file and accept the agreed upon payments. If you fail to make an agreed upon payment, contact them and work it out; otherwise, their automatic collection system will restart.   Finally, there is always litigation. The law provides for damages and attorney fees. This can be expensive and time consuming, however, it is sometimes necessary with the worst offenders.

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Can Universities in Boston or Massachusetts Discriminate Against Bankruptcy Filers?

Clients and potential clients in Massachusetts sometimes ask us if filing for a Chapter 7 Personal Bankruptcy will have any adverse effect on their current or future student loans. The answer is fairly clear: no. In 1978, Congress passed a law which prevented various types of discrimination against folks who filed for bankruptcy protection. With respect to denying student loans, the law states that a governmental unit “may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act.”

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Bankruptcy Numbers Up in Boston and Across Massachusetts

According to initial numbers posted by the National Bankruptcy Research Center, there were over 1,410,000 personal bankruptcies filed in 2009. The total is up 32% from 2008. We have found that the number of clients qualifying for Chapter 7 personal bankruptcy, in which you discharge all of your unsecured and non priority debt has increased as well. The number of personal bankruptcies are the highest since the new, stricter, bankruptcy law went into effect in October, 2005.

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Can Massachusetts Employers Fire You for Filing for Bankruptcy?

Clients and potential clients in Massachusetts sometimes ask us if filing for a Chapter 7 Personal Bankruptcy will have any adverse effect on their employment status. The answer is fairly clear: no. In 1978, Congress passed a law which prevented various types of discrimination against folks who filed for bankruptcy protection. With respect to denying employment, that law states that an employer cannot “deny employment to, terminate the employment of, or discriminate with respect to employment against” anyone simply because he or she has filed for personal bankruptcy.

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Massachusetts Foreclosures Trending Down

While end of year statistics are not yet in, the good news for our Massachusetts clients is that the number of foreclosures is trending down. There were 27.3% fewer foreclosures through October 2009 (7,707) than the same period a year earlier (10,603). The auction numbers were down 9.8% for that time period. Statistics just out from Banker and Tradesman shows that November foreclosures are down as well.   Another good statistic is that the number of actual foreclosure deeds, which represents foreclosures that conclude (the property is not reclaimed by the owner) is also down significantly: 26.8% for the first 11 months of 2009.

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Surprising Drop in Consumer Bankruptcies November 2009

While it still feels like Massachusetts consumers are filing bankruptcies at record rates, the statistics may be encouraging right now.   Consumers filed 112,152 personal bankruptcies in November, 2009. This was a decrease of 18% from the October 2009 numbers.   Nevertheless, the numbers are up 12% from the previous year. These figures are from the American Bankruptcy Institute.

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Brigham’s Files for Bankruptcy Protection in Massachusetts

Boston attorney Thiadora Pina appeared in Suffolk Superior Court on behalf of the owner of Brigham’s Ice Cream stores on November 18, 2009. We represented the owner, Luke Cooper, individually, as a vendor filing suit against Brigham’s Ice Cream’s holding companies, including Deal Metrics, LLC.   The vendor alleged that Brigham’s Ice Cream owed them a considerable amount of money. In their suit to collect that money directly from the bank holding Brigham’s Ice Cream’s funds, the vendor sought to also collect money directly from Luke Cooper. Attorney Pina argued on behalf of Mr. Cooper in an effort to deny the vendor the right to attach his personal bank accounts. She successfully presented her argument to the Suffolk Superior Court and the vendor’s Motion was denied as to Luke Cooper, individually.

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Massachusetts Bankruptcy Fraud Notes

Clients often ask us if their personal bankruptcy will be successful. Of course, we can’t guarantee results. However, one thing we can guarantee is that any misstatements on the Petition or Schedules will result in increased scrutiny and likely no discharge.   In a recent case in Louisiana, a married couple were charged criminally for giving a false statement in bankruptcy proceedings and fraud; they “knowingly and fraudulently devised and intending to devise a scheme and artifice to defraud and for the purpose of executing and concealing such a scheme and artifice.” Essentially, they failed to list properties they owned or had a legal interest in. Initially, the proceedings were in the bankruptcy court.   Eventually, the proceedings landed in federal criminal court because they failed to disclose the sale of a business and the sale of a home and made such false statements on their bankruptcy petition, under the pains and penalties of perjury.   What happens to the Louisiana couple is of less importance to us than the fact that we must rigorously maintain the integrity of our clients’ bankruptcy petitions. This is the reason we insist on meeting with all clients personally for a full intake interview, and the reason we ask for so many documents before filing the bankruptcy.

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