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Good News for Credit After Bankruptcy in Massachusetts

The Federal Reserve Board released recently released requirements that should help businesspersons, even following personal bankruptcy in Massachusetts. In essence, the “Interagency Statement” requires banks to “understand the long-term viability of the borrower’s business, and focus on the strength of a borrower’s business plan, including its plan for the use and repayment of borrowed funds.” The regulations require that the lenders focus on local, not national, trends. Massachusetts debtors who have received a fresh start from bankruptcy should review the Fed’s directives when seeking loans.
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Free Credit Reports for Boston Personal Bankruptcy Clients

We warn our Chapter 7 no asset personal bankruptcy clients in Boston that the free credit reports advertised are in fact, not free. Experian paid over one million dollars in fines for their misleading advertising and now charges $1. More importantly, if you sign up and fail to disengage your membership during the “trial” period, you can be charged up to $14.95 per month!
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New Federal Mortgage Relief Program for Massachusetts Consumers: Impacts on Bankruptcy

The Federal Housing Administration announced a new series of steps aimed to assist troubled homeowners. Our Massachusetts bankruptcy clients are likely to ask how qualifying for this program will effect their potential personal bankruptcy cases. The short answer is, for most people, this should not have any adverse impact. This is because the bankruptcy code allows consumers to “exempt” home equity up to $125,000, and the new program deals with homeowners who are underwater in equity; they owe more than the house is valued in today’s real estate market. Thus, now may be an excellent time to take advantage of this new federal program, regardless of filing for bankruptcy protection for your other consumer debts.

If you owe more than 115% of the value of your first mortgage, and your current mortgage payment is more than 31% of your family gross income, you may qualify. The program also deals with second mortgages, people who are unemployed and houses with negative equity. There are approximately 7,000,000 households that are behind on their mortgages. There are an additional 11,000,000 households where the mortgage owed is higher than the value of the house. The focus of the program is to help homeowners rewrite their mortgages with their lenders. The program also assists folks who are foreclosed upon to move, providing $3,000 in “relocation assistance.”

And, the ultimate question our clients ask: how will this impact my credit history? Like usual, it is not completely clear. If your mortgage holder writes off some of the principal, it is not clear if this will adversely affect you. Folks taking advantage of the current loan assistance program have not had their credit scores reduced. This because the US Treasury and the Consumer Data Industry Association (the credit reporting agencies) have made a “deal” in which these transitions are not included in credit scores.

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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Credit Report Check Ups for Massachusetts Bankruptcy Clients

Updated 9/21/16

Clients regularly ask us about their credit score. We are always on the lookout for information that will help our clients understand and upgrade their score. Recently, we have learned of new websites that may be useful to determine your credit scores. The following are a few we have found:

Credit Karma, owned by TransUnion, provides a credit score which is NOT your actual FICO score, but claims to be an indication of your FICO score. For no cost, the website provides helpful information for increasing your score. A nice feature is that you can check your scores as often as you wish. The fun part of this site is that you can simulate future events to determine how they would effect your credit score.

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Stolen Wallet Tips

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.
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Massachusetts Credit Score Notes

Our clients often ask us about their credit scores before and after bankruptcy. We are compiling a survey of clients following bankruptcy to see what practical tips they can provide. In general it works like ABC: Go to that website which will provide you with information to get free credit reports from the three main credit reporting companies: TransUnion, Equifax and Experian. You can also get your FICO score, named for the Fair Isaac Company, by going to; this only helps if you undertake this exercise regularly to make comparisons.
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