New wave of foreclosures may hit Massachusetts

By doug | Published: March 13, 2010

A second wave of foreclosures is ready to hit Massachusetts, and banks dump the properties they own in to an already weak market.

There are at least 33,000 homes in Massachusetts behind at least 90 days in payments, 4, 077 homes already owned by lenders, and more than 26,000 in foreclosure. A recent surge in completed auctions of foreclosed real estate threatens to hit areas like Lawrence especially hard.

“The number of auctions is off the chart,’’ Northeastern University dean Barry Bluestone told Jenifer McKim at the Boston Globe. “It can have the effect of continuing to depress prices just as they are continuing to come back.’’

Chapter 13 bankruptcy filings can prevent losing a home to a foreclosure sale.

Posted in Foreclosure | Leave a comment

Polly wants a lawyer!

By doug | Published: March 13, 2010

One side effect form the fallout from Bank of America’s announcement earlier this week concerning the demise of overdraft charges is a renewed spotlight on a Pennsylvania woman who came home from work to find her house padlocked, wrongfully foreclosed on by BOA, and her pet parrot (actually named Luke instead of Polly) taken away to boot.

An editorial in the Boston Globe tells the story:

Luke belongs to Angela Iannelli, a part-time bartender and diner owner in Pennsylvania, who even though she had not defaulted on her mortgage payments, returned home one day in October to find the bank had mistakenly sent someone to turn off the electricity and padlock the door — and that he’d also taken her pet parrot. Iannelli filed a lawsuit against Bank of America this week, in part to compensate for the anxiety she suffered being separated from her pet for more than a week.

The lawsuit may seem dramatic, but with all the mortgage foreclosures underway, it’s not that rare for lenders or their contractors to mix-up addresses as seems to have happened in Iannelli’s case. The errors are humiliating for everyone involved, and should be a priority for mortgage lenders to fix.

Still, the collective squawking over the plight of the pet parrot seems to be drowning out the debit card policy change, which deserves scrutiny. Most banks make serious money off their overdraft fees.It remains to be seen whether Bank of America will compensate for the loss of that income with higher fees for other aspects of banking. The bank’s customers would do well to keep a watchful eye on its next moves — whether they are checking account holders or borrowers who leave much-loved pets at home.

My interest in the Globe is usually limited to whether it arrives before 6:00 AM (good) or afterwards (bad), but in this case I think their editorial is spot-on!

Posted in Credit cards | Comments closed

What papers do you need to file for bankruptcy?

By doug | Published: March 12, 2010

The mailbox is stuffed with bills. Your desk is overflowing. The deputy sheriff is knocking on the door with a fresh stack of litigation. You have thought about declaring bankruptcy, and are ready to call a lawyer for help. But how do you start organizing this stuff?

For a simple Chapter 7 case, (the most common form of bankruptcy, for example to eliminate credit card debt), here is what to find, and the order in which to find it:

1. Your social security card. Your attorney will need to know that he is putting you into bankruptcy, not someone else. You will also need it later on, at the meeting of creditors.

2. Your paystubs for the past six months. “Wait a minute,” you ask, “I’m swimming in debt, but what does my job have to do with it?” This is all about the “means test,” as your attorney will have to use the payroll information to determine if you are making an above-average income for the state you live in. Even if you are sure you are not close to that mark, most filers still have to complete the means test paperwork. Have your lawyer do it for you. But make it easy on him by rounding up your paystubs. If you are collecting unemployment, just bring in your last statement.

3. Your most recent tax returns. Three years worth is preferable, two sufficient, the last one absolutely required. Wait, you say. “I thought I was going to see a lawyer, not H & R Block.” Again, this is a means test check on your income level. People filing for bankruptcy in Massachusetts only have to bring in the federal return.

4. Paper copies of the bills that are troubling you. Bring in the entire bill, not just the top stub. That’s because your attorney will probably be more interested in the addresses on the back than the balance on the front. Accurate addresses get creditors to stop bugging you faster. If you are a fan of online commerce, print out a statement for each account.

5. Paper copies of the bills that aren’t troubling you. In other words, if you are caught up on the mortgage and car loans, bring in the latest statements anyway. Your lawyer will use these to determine how much equity, if any, you have in these assets.

6. If you own a home in Massachusetts, a copy of a Declaration of Homestead, if one has been filed. If you don’t have this handy, don’t worry about it.

7. Any written letters from collection agencies. Shut-off and eviction notices too.

8. Anything and everything related to lawsuits and litigation. Your attorney will be keenly interested in almost any paper that has come from a court or sheriff. Just pile ’em up and bring ’em in. If you are the plaintiff in a case (i.e. suing someone else) bring those in too.

9. Credit reports if you have them. Don’t spend any more money on credit reports though. If one is needed for your case we will get it through the office.

10. Bank account statements. Online bankers should print out a copy or, (if you trust the internet) e-mail a copy to me. Don’t forget closed accounts that might have a negative balance — I can write them off for you.

Individual cases may require more documentation (especially if you run a small business), but the papers on this list are plenty to get an attorney started on your case. Plus its a good feeling to plop this stuff off in someone else’s lap, knowing you are finally on the road to a comeback!

Posted in Practical tips | Comments closed

A good review of the new bank overdraft regulations

By doug | Published: March 11, 2010

By this time, most people are getting enough change notices from banks and credit card companies to make their head spin. And now comes the news that new regulations on bank overdraft fees are in the works.

To lessen the confusion, the Federal Reserve has a good overview of the overdraft regulations, in simple everyday language, that you can read here.

Remember, no matter what the bank might tell you, overdrafted accounts are dischargable in Chapter 7 bankruptcy cases.

Posted in Bankruptcy News | Comments closed

Tackling the foreclosure crisis with faith based activism

By doug | Published: March 10, 2010

Faith-based activism is becoming more prominent in the battle against the foreclosure crisis.

As one example, Jenifer B. Kim reports in the Boston Globe that Brockton, Massachusetts housing actvist Katie Sandford met yesterday with Federal Reserve chairman Ben Bernanke to discuss how a rash or foreclosures are affecting her city. Sandford is a leader of the Brockton Interfaith Community.

Sandford and a dozen other faith leaders urged Bernanke to make big banks give more foreclosure assistance, and to crack down on payday lending, which involves charging sky-high interest for quick loans.

The group would also like to see more effective loan modification programs, and regulation to prevent future predatory lending problems.

The Brockton group was joined by religious leaders from Chicago and California in their quest to press Bernanke for reform.

Posted in Bankruptcy News, Foreclosure | Comments closed

Foreclosure assistance programs ranked as one of the top consumer complaints in Massachusetts

By admin | Published: March 10, 2010

According to the Massachusetts Office of Consumer Affairs, foreclosure assistance programs ranked as the fifth most common source of consumer complaints in the past year.

The foreclosure programs, many of which are outright scams, drew more complaints than timeshare resellers. The top four categories of complaints on the list were against home improvement contractors, auto insurers, health insurers, and used car dealers, according to the Boston Globe.

Homeowners with foreclosure problems are better served by speaking with a qualified bankruptcy attorney. Most offices, including mine, will give you a free consultation to discuss basic options.

Posted in Bankruptcy News, Foreclosure | Leave a comment

Bank of America will no longer allow debit overdrafts

By doug | Published: March 10, 2010

The Bank of America has announced that it will soon stop permitting its customers to make overdrafts on their debit cards. The new policy will be phased in over the summer of 2010.

The move comes on the heels of new federal regulations that limit bank fees on overdrafts. The new regulations require a bank to get its customer’s permission before allowing an overdraft transaction with a fee to go through.

For ATM transactions, customers will soon have to explicitly agree agree to a $35 fee before they can withdraw more than their balance.

Because there is no fixed mechanism to get a customer to agree to a penalty fee while they are at a store register, attempted debit card overdrafts will simply be declined.

Consumers typically despise the debit fees, at least when they are imposed on minor purchases of a few dollars. People are more willing to pay the fees when the overdraft is to make a mortgage or car loan payment.

The fees are big money-makers for the banking industry, though, which now has to adjust to a new era of regulation. Acording to the Associated Press, banking analyst Robert Meara predicts that the banks next move may be to eliminate free checking accounts in order to make up for the lost fee revenue.

Bank overdraft fees are completely dischargable in a Chapter 7 bankruptcy case, so if you are continuallt incurring them, you might want to consider a consultaton with a bankruptcy attorney.

Posted in Bankruptcy News, Chapter 7 | Comments closed

Bankruptcy can help reduce the foreclosure rate

By doug | Published: March 9, 2010

With most of the government efforts to stem forclosures having failed miserably, bankruptcy law has probably prevented a crisis on the scale of the Great Depression or worse. Congress should embrace the power of the bankruptcy law if it really wants to get a handle on the problem.

Here are some of the ways that bankruptcy can help reduce the foreclosure rate:

* Bankruptcy forces mortgage companies to the negotiating table. have you tried to re-negotiate your loan outside of bankruptcy and run in to a wall of resistance? Millions of Americans have. But the threat of a bankruptcy case makes mortgage companies at least consider alternatives to foreclosure.

* Bankrutpcy gives homeowners the time to think through their situation. Because all foreclosure proceedings are “stayed” (at least for a while) during bankruptcy, debtors can buy time to deal with the mortgage company without the fear that they will be immediately thrown on the street. This alone can help them think through their situation more clearly.

* Bankruptcy gives homeowners the chance to catch up on missed payments and bring their mortgage balance current. Outside of bankruptcy, it can be almost impossible to convince a lender to agree to reasonable terms, but through a Chapter 13 filing, homeowners can catch up on their delinquent payments over a three to five year period.

Posted in Chapter 13 | Comments closed

More trouble at the races — Hoosier Park files for bankruptcy

By doug | Published: March 8, 2010

Right on the heels of the news about the bankruptcy of one thoroughbred racing’s most prominent horse owners, comes the news that an entire racetrack has sought bankruptcy protection.

Matt Hegarty of the Daily Racing Form reported that the parent company of Hoosier Park filed a Chapter 11 case this morning, after failing to make $13.4M in payments to its two biggest creditors last fall.

The bankruptcy comes as a surprise, since the central Indiana track has been operating 2,000 slot machines as well as owning a casino in Colorado, in addition to hosting flat and harness racing.

Although slot licenses, similar to those proposed for Massachusetts and New Hampshire racetracks, typically provide a buffer against hard times, Hoosier’s filing underscores how deeply consumers are cutting back on gambling as a form of discretionary entertainment as the recession rolls on and on.

Posted in Bankruptcy News | Comments closed

What is the bankruptcy exemption for an automobile?

By doug | Published: March 8, 2010

Many persons contemplating bankruptcy wonder about the effect of filing a bankruptcy case on the car (or cars) that they own.

Starting April 1st, the federal bankruptcy exemption for equity in an automobile will be raised to $3400. (Until then, it is slightly less).

Please remember that this exemption only applies to your equity interest in a vehicle. If you owe more than the car is worth, there is no need to claim an exemption, and you can continue to drive the car as long as you are willing to stay current on the payments.

Automobile exemptions can be split up among two or more vehicles as the debtor sees fit — you could use $2200 of your federal allotment on one car, $500 on another, and so on. If the $3400 federal exemption isn’t enough to cover your equity, you can use some of your “wildcard” exemption to attempt to cover the rest. And married folks filing jointly get double the exemption amounts.

Problems tend to crop up when debtors choose to use state exemption schemes instead. The Massachusetts state exemption for an auto is a miserly $700, not enough to cover even a rusty jalopy.

So why would anyone choose the Massachusetts version over the federal? The most common reason is that they own real estate, and want to use the generous Massachusetts homestead exemptions to protect their home equity. Usually it is a smart idea to protect your investment in a home before worrying about a depreciating asset like a car, but the $700 Mass. limit sometimes forces debtors to pay their bankruptcy trustee the difference in order to keep driving. This is a situation that should be fixed by the Massachusetts legislature, but don’t hold your breath waiting for reform to emerge from that less-than-distinguished body.

Drivers using the New Hampshire state exemptions have it a little better; the auto exemption in New Hampshire is a more realistic $4000 in the Granite State.

Posted in Secured loans, The Bankruptcy Code | Comments closed
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