As a Massachusetts bankruptcy attorney, we get calls from clients and potential clients with mortgage questions all the time. Calls from folks who are refinancing in Massachusetts are perhaps the most common these days, but so are calls from folks who are buying their first house, including rental properties. Thus, we try to keep Massachusetts consumers apprised of new developments coming out of Washington or the Massachusetts State House. Fortunately, there is some good news in the name of public disclosures for consumer protection.
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As a Massachusetts bankruptcy lawyer, one of the most frequent questions we get is: how can I improve my credit following a personal bankruptcy in Massachusetts? Check out the Life After Massachusetts Bankruptcy section of our website. The following is news from the feds.
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People are wired differently. That is, the human brain’s “wires” are activated, or stimulated differently. In a study regarding credit cards and debt management undertaken by University of Michigan Ross School of Business Professor Scott Rick and others, the “insula” part of the brain had vastly different reactions to the same consumer stimuli. In controlled testing, about 30% experienced a “fired up” stimulation to the presentation of consumer products, while 50% had a “measured response” and 20% had a pleasure response. The “fired up insula” is analogous to a negative reaction to a smell, or injustice.
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Many folks come to us to discharge their debts in Massachusetts bankruptcy and get a fresh start. Often we see payday loans on their credit report. Massachusetts has very strict laws regarding payday loans. There are no actual payday lenders in Massachusetts, so folks often use the internet. However, in Massachusetts, payday loans require full documentation, the due date of the loan must be in writing, there cannot be any pre-payment penalties, the whole transaction must be complete within 14 days, and there are strict rules on how unpaid loans can be collected against. Of significance, interest rates cannot exceed 23%. These consumer protections are why we don’t see as many payday loans: they just are hard to get in Massachusetts. On the other hand, many of our clients have worked in other states, where the loans have become onerous.
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As a Massachusetts bankruptcy attorney, I regularly tell clients that a Chapter 7 bankruptcy discharge gives you a “fresh start” and that all dischargeable debts are discharged by federal law. Those debts include, but are not limited to, credit card bills, personal unsecured loans, and remaining balances on motor vehicles and home mortgages that have been returned to the lender. They don’t include student loans, some taxes, and numerous other protected debtors.
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Credit scores are important to Massachusetts legal consumers. Why? They have an effect on your ability to get good interest rates on vehicle loans, personal loans and home mortgages. They can even have an effect on getting hired for a job. However, in a recent Visa credit card study, a large percentage of those surveyed believed that age, race, language and gender factored into someone’s credit score. None of those attributes are a factor in determining credit score. Nor do address, assets, or employment history factor in to one’s credit score. Another misunderstood factor is when creditors take a credit counseling class.
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Back in early January 2011, we wrote about increasing your credit score after personal bankruptcy in Massachusetts. Secured credit cards are credit cards that look and work like credit cards, however, are not based on the issuer’s reliance on your credit, but based on “security” that is money, you have placed in an account with the issuer.
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Filing a Chapter 7 personal bankruptcy (generally) allows you to either keep your home or walk away from a home that is “underwater” in mortgage debt. On the other hand, if you don’t have a home, how soon after filing for bankruptcy protection will it take to be able to buy a home? Home ownership is 73% over the general population, 68% with those that filed bankruptcy over 15 years ago, and 50% for folks that have recently, according to a study by Ohio State Professor Jay Zagorsky regarding life after bankruptcy.
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With two million homes in foreclosure nationally, and another 2.2 million homes defined as at risk of foreclosure, a proposal being discussed in Washington this week seeks to help homeowners with new rules and regulations. Apparently Elizabeth Warren, the head of the newly established Federal Consumer Financial Bureau, is taking the lead on this program, which is backed by the Department of Justice, the Federal Trade Commission and Housing and Urban development. The perspective of a Massachusetts bankruptcy lawyer might be that this could help many families who want to save their home and could, with a modified mortgage. Supporters of the proposals say they would be fair and they would stabilize the housing market and countless neighborhoods.
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Have you received a Summons to appear in court because of outstanding debt? Credit card companies often resort to suing consumers in Massachusetts District Courts for the unpaid balances. While it may be too expensive to retain a Boston attorney, and you may not qualify or be interested in a Massachusetts bankruptcy, there are ways to defend yourself. The Massachusetts Courts Self Help Center is a helpful start, but we have some advice to offer, too.
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