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Massachusetts Student Loan Defaults Up – Not Dischargeable in Bankruptcy

According to statistics out this week from the US Department of Education, the rate of student loan defaults is trending up. This is likely a result of the “economic downturn” in Massachusetts, according to the Secretary of Education. This is a website to vent about the problems with student loans in Massachusetts.
Many of our Boston clients are students or former students. They often have student loans in addition to outstanding credit card debt, car loans, and monthly bills to pay. Unfortunately, student loans are not dischargeable in bankruptcy. This includes both public and “private” student loans.

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Massachusetts Homestead Bankruptcy Law – a simple approach for clients

Many of our clients in Massachusetts have lost their homes. Many others have no equity in their homes. Some of our clients, however, have significant equity in their homes. Nevertheless, there debt is daunting and they consider filing for personal bankruptcy.
One of the bankruptcy exemptions in the law is the family home. There are two laws we follow to exempt clients homes from creditors in bankruptcy.
First, there is the federal bankruptcy law: 11 United States Code, Section 522(d)(1). That law currently exempts $20,200 in equity in the home. The Massachusetts Trustees will look for proof of the value of your home and the outstanding mortgage(s).
If the equity is less than $22,000, we can use the federal exemptions: you can keep your home and we can use the more generous federal exemptions so you can usually keep your other assets.
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Divorce Results in Bankruptcy for Many in Massachusetts

While child support and most alimony orders are not dischargeable in bankruptcy, many times it results in our clients not being able to pay their other obligations. Thus, they come to us for a personal bankruptcy. This is especially true when someone loses a job and can’t afford a lawyer to go back to court to modify an existing order.
Clients who fail to pay support sometimes end up in jail. More often, however, they end up in Bankruptcy Court.
The State House will finally hear from those struggling to balance their obligations when the Joint Committee of the Judiciary will take testimony on September 17, 2009. The Massachusetts Alimony Reform association will have their members present to testify about their experiences with this system.
The Joint Committee will be reviewing House Bill Number 1785. This proposed law would change alimony laws in Massachusetts.

Massachusetts Bankruptcy Filings Up in 2009

We have filed a record number of bankruptcies for our clients in 2009. Many ask questions before, during and after our representation. When the bankruptcy laws changed in October 2005, we filed what was at that time our record high number of bankruptcies, however, unfortunately, we are seeing even more this year.
Thus, to better serve our clients, we are initiating this blog: Boston Bankruptcy Lawyer Blog or
One look at the Federal Reserve Bank of Boston’s statistics bears this out: in the first two quarters of 2008, there were 8,137 bankruptcies filed in Massachusetts – in the first two quarters of 2009, the number is 10,185. This is a significant increase.
We feel it may be related to foreclosures, which, according to the Federal Reserve Bank of Boston’s statistics, 2008 was the high-water mark for foreclosures in Massachusetts: .57% of all houses (the former peak was 1992 with .52%). Their figures for 2009 are not out; however, the trend is against our clients. Our goal is to provide our clients with the most effective advice regarding filing a personal Chapter 7.