Extra benefit from new Massachusetts bankruptcy exemption law

By doug | Published: January 10, 2011

Massachusetts legislators recently increased the bankruptcy exemption for automobiles, but the new law doesn’t stop there.

The new law, signed by the governor last week, and slated to take effect in early April, also allows debtors who use the Massachusetts bankruptcy exemptions to keep up to $2,500 in a savings or checking bank account when they file. This is an important advantage for debtors, because the current level is only $500.

What the lawmakers didn’t do, however, was create a true “wild-card” exemption under Mass. law, which would have allowed protection for any goods or investments a debtor holds at the time of a bankruptcy filing. Debtors who qualify to use the federal exemptions can exempt almost $12,000 in any type of property by using the federal “wild-card.”

This is not the time or place to quibble, however, as the new Massachusetts law will eventually provide a lot of real help to Mass. residents who need to file bankruptcy.

 

 

 

 

 

 

 

By Doug Beaton

Posted in Exemptions | Comments closed

Law boosting Massachusetts auto exemption will take effect in April

By doug | Published: January 8, 2011

Governor Deval Patrick has now signed into law a long awaited provision increasing the automobile exemption that Massachusetts debtors can claim when filing for bankruptcy.

Under the new law, Massachusetts debtors can keep automobiles in which they have up to $7, 500 in equity when they file a bankruptcy case. This is an increase from the current $700 level.

Debtors over the age of sixty get an extra benefit, as they can exempt an automobile worth up to $15, 000.

The new law takes effect on April 7, 2011.

 

By Doug Beaton

Posted in Exemptions | Comments closed

Changes in store for Massachusetts bankruptcy exemptions

By doug | Published: January 6, 2011

It’s not a done deal yet, but there are possible changes coming down the pike for Massachusetts debtors in the form of updated bankruptcy exemptions under state law.

The most important of the changes raises the exemption allowed for equity in an automobile from a measly $700 to a more modern level of $7,500. For debtors over the age of 60, the new exemption will be $15,000.

The state legislature approved the changes in the waning hours of 2010. All that is needed now is for Governor Deval Patrick to sign the bill in to law.

When and if that happens, I will let you know here on this page.

 

By Doug Beaton

Posted in Exemptions | Comments closed

Two takes on bankruptcy as a new year resolution

By doug | Published: January 5, 2011

It will never be a popular a losing weight, but filing for personal bankruptcy (and otherwise getting one’s financial house in order) is often a popular resolution at the start of the New Year.

Here are a couple of different takes on the idea of a resolution. First, California attorney Cathy Moran offers up the wisdom of Bishop John Vincent, pictured above. Cathy’s site is more geared to practicing attorneys who are handling bankruptcy cases, but hey, attorneys have to make their resolutions, too.

Next is attorney Dana Wilkinson, who offers some practical advice on whether filing a bankruptcy case makes a practical resolution.

Some of Wilkinson’s advice: check the “rule of five to seven.” If you have no definite workable plan for paying off all debts in that time, bankruptcy is worth considering. Also, check to see if you have any savings. Nothing in the piggy bank is a red flag because committing all your income to debt service is a proven recipe for disaster.

 

 

 

 

 

By Doug Beaton

Posted in Practical tips | Comments closed

Did you have a luxurious Christmas?

By doug | Published: January 4, 2011

Did you have a luxurious Christmas?

Before you laugh, you might want to consider the Bankruptcy Code definition of luxury purchases.

That would be more than $550 for luxury goods or services incurred within 90 days of filing a bankruptcy case. Alternatively, it can include cash advances aggregating $825 or more within 70 days of a bankruptcy filing.

“Luxury goods” would include most Christmas purchases, which are typically not necessary for anyone’s support or maintenance.

The bottom line is that non-essential credit card debt to any one creditor totaling $550 or made within 90 days of filing, or cash advances aggregating $825 are presumed non-dischargeable.

Which may mean that Christmas revelers might have to wait a while to file a case with the bankruptcy court.

 

By Doug Beaton

Posted in The Bankruptcy Code | Comments closed

Bankruptcy battle for your tax refunds begins

By doug | Published: January 3, 2011

The peaceful dawning of a new year belies a struggle about to begin amongst the various players in the bankruptcy system — the battle for your tax refund.

In corner number one sits yours truly, a hard fighting bankruptcy attorney looking for new clients. What better way, says I, to spend your refund than to use it to start the year with a clean financial slate? Refund money can be spent on bankruptcy filing fees, as well as legal fees in order to give you a fresh start. ‘Nuff said.

But wait! In the opposite corner, stands your bankruptcy trustee, should you go ahead and file a case. He or she views that same refund as an “account receivable,” which it is, and therefore part of your bankruptcy estate, which it is, and therefore possibly available to use to pay off your creditors.

How does the battle get resolved? Well, if you live in Massachusetts and can use the federal bankruptcy exemptions, you should be able to protect all of your refund, and use it to pay for your bankruptcy case. Ditto if you live in New Hampshire and use either the federal or state “wild-card” exemptions.

Those who need to use the Massachusetts state exemptions are in a tougher spot, however, since there is no wild-card available to them. These debtors may have to wait a bit, actually collecting the refund and paying it out to their attorney and the court, in order to avoid having a trustee unexpectedly seize it.

And there is even a third participant in this battle this year. The IRS is not going to be telling tax preparers when they clear refunds for payment anymore, meaning refund anticipation loans from providers like H & R Block may be tougher to get. Not good for Block’s business — take a look a how their stock has been battered by this news recently:

 

 

 

 

 

 

 

 

 

 

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed

Soon you will be able to literally file bankruptcy today . . .

By doug | Published: December 21, 2010

Since 2005, debtors have been required to take a short credit counseling session before they file bankruptcy cases. Not taking the counseling session is grounds for having a bankruptcy case thrown out of court . . . not a good outcome, considering it costs $299 just to file, and having a dismissed case locks you out of refiling for several weeks, and will have the judge looking at you sideways.

But for those folks in a big rush to file a case (foreclosure sale or lawsuit coming up, for instance), it will soon be clear that you can take the counseling session on the same day as you file the case with the court.

A bill to make this official has been passed by Congress, and is waiting for President Obama’s signature. Some judges around the country, but not all, had questioned whether the credit counseling certificate could be obtained on the same day as filing.

 

By Doug Beaton

Posted in Bankruptcy News, Practical tips | Comments closed

Important changes to the Massachusetts Homestead exemption

By doug | Published: December 18, 2010

We briefly interrupt your holiday preparations for breaking news — Massachusetts governor Deval Patrick has signed into law some of the biggest changes in the Massachusetts homestead exemption in many a year.

When the new law takes effect in mid-March of 2011, it will no longer be necessary for every homeowner contemplating a bankruptcy case to file a declaration of homestead at the county registry of deeds.

Instead, homeowners will automatically be able to protect up to $125,000 of home equity after they file bankruptcy, without filing any additional papers.

Homeowners who have more than $125,000 in home equity will still be able to protect up to $500,000 by filing the declaration with the registry in the usual way. But for homeowners who have small amounts of equity, a paperwork hassle will be avoided.

The new law also allows continuous homestead protection when real estate is transferred between relatives, when homeowners collect insurance proceeds after storms or fires, and after refinancing or placing a home in a trust for estate planning purposes.

Forward-thinking homeowners may wish to file the declaration of homestead anyway. If and when the real estate market rebounds, they will be automatically protected up to the maximum $500K amount without further worry; its the type of good financial planning move that debtors would be wise to take advantage of.

Debtors who live in Lawrence, North Andover, Andover, and Methuen file their homestead declarations with the registry of deeds in Lawrence. The filing fee is $35.

 

By Doug Beaton

Posted in Bankruptcy News, Exemptions, Real estate | Comments closed

Mortgage servicers might really be out to get you!

By doug | Published: December 16, 2010

Following up on a previous post, now even the government agrees that mortgage servicers might not be on the side of the homeowners they collect monthly payments from.

The Congressional Oversight Panel for the Troubled Asset Relief Program made public its findings yesterday.

Companies that manage mortgage loans can profit from foreclosure-related fees and are reluctant to participate in the Treasury program, the report found. In addition, many borrowers have second mortgages from lenders who might profit by blocking a loan modification.

The panel also found that homeowners are dropping out of the government’s mortgage loan modification program faster then they are joining it.

Bankruptcy filings, meanwhile, continue to rise.

 

By Doug Beaton

Posted in Real estate | Comments closed

Might your mortgage servicer be your enemy?

By doug | Published: December 15, 2010

Are the people who open up the envelope and cash your mortgage check each month out to get you?

Could be, at least according to syndicated finance guru Suze Orman.

Her point is that if you are asking for a loan modification, and they agree to arrange for a trial modification period, they could be setting you up for a trap.

If you go into modification status on a trial basis, and then a few months down the road they decide that you don’t qualify for the full deal, all the money you have been saving in the meantime becomes due, and if you can’t pay it, the mortgage holder can start foreclosure proceedings at that point.

Of course, you won’t owe the extra money if you decide to file a Chapter 7 bankruptcy case, but if your objective is to stay in your home and not abandon it, you need to be really careful when dealing with mortgage servicers offering “trial” loan modifications.

If you’re near Lawrence or Methuen and have questions about mortgages or bankruptcies, feel free to give me a call at (978) 975 – 2608.

 

By Doug Beaton

Posted in Real estate | Comments closed
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