Protecting 401(k) and IRA Monies from Creditors in Massachusetts

We are seeing more and more personal bankruptcy clients in Boston who have withdrawn monies from their 401k and IRA accounts prematurely and have paid the taxes and penalties. Unfortunately, many have used the monies to pay creditors and they still did not get a fresh start. Either the amount was insufficient or the creditors jacked up the interest rates anyways. They learn too late that the Bankruptcy code protects these retirement accounts. Yes, United States Code, Title 11, Chapter 5, Section 522(d) (10) (E) is a wonderful aid for those filing personal bankruptcy because it allows you to “exempt” all of those hard earned retirement savings.

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Massachusetts Bankruptcy Filings Up in March

April Fools Day brought in more than pranks and notions of springtime: the number of official federal bankruptcies was reported to have increased. There were over 158,000 bankruptcy filings in March, a rise of 35% over February, 2010. Chapter 7 personal bankruptcy numbers in Boston are not available as of this posting, but antidotal evidence is that the national numbers are consistent with local numbers. The numbers for March are considered to be the highest monthly filings since Congress overhauled the Federal Bankruptcy laws, effective October,2005.

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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.

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Cape Verdean Passover Seder in Boston

Cape Verdean Attorney Thiadora A. Pina, helped organize the fifth annual Cape Verdean-Jewish Seder at the St. Patrick’s Church, in Roxbury, Massachusetts. Held on March 24, 2010, the Seder focused on bringing together the two communities which have a surprisingly interrelated history. Attorney Pina is Vice President of the Board of Directors for CVC Unido – Cape Verdean Community Unity. Formed in 1999 as The Cape Verdean Task Force, CVC Unido is the only Cape Verdean agency in the City of Boston. The personal injury and bankruptcy firm Law Office of Neil Burns was a Sponsor of the event. The Cape Verdean Consulate General was a sponsor and speaker. The Seder, a festive meal with prayer, songs and discussion, was attended by over 200 people, both Jewish and Cape Verdean. Attorney Thiadora Pina and a fellow volunteer register guests at the fifth annual Cape Verdean-Jewish Seder in Roxbury, Massachusetts. The traditional Passover Seder, a Jewish holiday and ritual, is the story of freedom and rebellion against the brutal slavery of the Jews in Egypt. The Cape Verdean – Jewish Seder is a new ritual which celebrates the commonalities of the two groups; histories of enslavement and liberation, far-flung Diasporas, challenges of immigration to the United States, an heritages of prevailing over tremendous hardships. Further, when Cape Verde was a Portugese colony, Portugese Jews, facing oppression and the Inquisition, fled to Cape Verde in the 15th and 16th centruies. Apparently, the groups intermarried and ceased to exist separately. Today there are four Jewish cemeteries in Cape Verde.

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Massachusetts Bankruptcy Lawyers Given More Freedom to Advise Clients

In a case recently decided unanimously by the United States Supreme Court, Milavetz v. United States, and written by the new Justice, Sonia Sotomayor, it was decided that a new bankruptcy law may not restrict lawyers from giving full advice, including advice to take on more debt, to clients. The decision, while narrowly written, was made under the right to free speech. When clients see their personal bankruptcy lawyer they need “unfettered, candid advice” which may include taking on more debt through a mortgage or motor vehicle loan.

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Taxes, 401(k) allocations a Massachusetts Consumer Update

Our clients often ask for personal investment advice regarding the assets they can protect in filing a Chapter 7 personal bankruptcy. Massachusetts investors need to know that they can exempt their qualified retirement accounts. In our September 1, 2009 blog article, we discussed asset allocation for our Boston, Massachusetts clients’ qualified accounts. This article is merely an update; a reminder to check that you are making the most of your retirement, or other long term savings, investments. The US Securities and Exchange Commission offers a primer as well!   In a survey undertaken by Barrons, the 2010 recommendations of the 20 top money managers revealed some interesting trends. They recommended between 37% and 67% in equity (stock) investments; 15% to 45% in fixed income (bond); 8% to 33% in alternative (commodity etc.) investments; and 0% to 15% in cash. Of particular note was the renewed focus on non United States equity and debt. Barclays and Deutcsche Bank recommend that 22% of equity be invested oversees. Morgan Stanley puts the percentage at 24%   There are many other websites out there that will help you get started with investing.

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Massachusetts Consumers Will Reap Benefits of New Energy Policy

The Massachusetts Department of Public Utilities announced plans to increase energy efficiency with a goal of saving Boston and Massachusetts electric and natural gas consumers over $6 billion per year over the next three years. We know our clients are looking to save money on natural gas and electric bills, and they may see real savings under the new energy policy: the Green Communities Act. Essentially, the new law includes funding for the nations first carbon allowance auction, along with improved energy assessments of homes and incentives for the purchase of high efficiency lighting and appliances, heating and air conditioning and insulation. The plans require better multicultural and community based outreach. The requirements include a target of 2.4% savings in electricity costs, based on a decline in use of electricity, due to conservation. The Department of Public Utilities estimates that the law would add, or save, 4,000 jobs.

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