24 June 2010
The answer to this question is hard to predict until a proper analysis is completed. This analysis is based on applying the law to each person’s unique financial circumstances. Everyone’s payment amount is different. As I write, I am aware of one plan proposing to pay $78.00/month, another paying $130.00/month, and another paying about $700.00/month…
Initially, realize that many people do not qualify for a chapter 13 because of various factors including the availability of disposable income. But assuming they do, here are some of the factors used to determine what the payment will be:
First, the “means test.” This is the product of the new bankruptcy laws passed in 2005 when George W. Bush was President and the Republicans controlled Congress. It was designed to drive high-income debtors away from chapter 7 and into chapter 13. It was and remains to be highly criticized. What I can tell you is this, if you earn above the median income of your particular area, you may need to pay your disposable income for 5 years instead of 3. Also, your plan payment will be based on a statutory formula, with the possibility of an alteration, as opposed to being based on what you have left over after deducting your expenses at the end of the month.
Second, is the “best-interest of creditors test.” This test provides that a creditor must make out better in chapter 13 than they would under a hypothetical chapter 7. Its affect is to make you pay over the life of your plan the amount equal to the value of the assets (those that you want to keep) that exceeds your exemptions. This takes some understanding of what an exemption is. An exemption is a certain amount of value in an asset that the law allows you to keep from creditors, and even if you file for bankruptcy. For example, you’re allowed to retain $X amount of value in an automobile or $Y amount in a retirement account. So, in a chapter 13 plan, if you have for example $20,000 in total assets and the law allows you to retain (exempt) $19,000.00 of the value of those assets, you would have to pay $1,000.00 for those assets over the life of your plan. Many people that file for chapter 13 do not have any amount of value of their assets that exceeds the amount of their exemptions, so this test does not require them to pay anything more. (Remember, this is only one part of the plan payment amount.)
Third, you must pay your projected disposable income. Basically, you add up your income and deduct your expenses (except the debt you are seeking to discharge). Generally, what is left over you must pay into the plan. One exception is when you have income above the median income, as stated above (means test), in which case your plan payment will be dictated by a specified formula (at least for the most part).
Fourth, some debts, deemed “priority debts” and “administrative debts” must be paid in full during the course of the plan. This can make a chapter 13 impracticable for some.
Lastly, it matters what you decide to pay through the plan and what you decide to pay directly to creditors. The more items in your budget you pay directly, the less the amount your plan payment will be.
As you can see, calculation of the plan payment is a complicated process and really can only be arrived at after some significant number crunching. If you think filing chapter 13 may be advantageous to you, feel free to give this office a call.
Contact: George E. Bourguignon, Jr.
Phone: (413) 746-8008
Email: gbourguignon@bourguignonlaw.com
Website: www.bourguignonlaw.com
Plan payment in chapter 13/how much will I have to pay during a chapter 13/how does chapter 13 work/monthly payment in chapter 13/monthly payment during chapter 13/can I afford a monthly payment in chapter 13/benefits of chapter 13/is a chapter 13 better than a chapter 7
Tuesday, June 22, 2010
My ex-husband/ex-wife filed for bankruptcy, what do I do?
23 June 2010
There are many concerns that can arise when an ex-spouse files for bankruptcy —too many to address in one or even a few blogs— and every situation is different anyways. So, if you’re in this situation you should immediately meet with a competent bankruptcy lawyer who includes creditor representation as part of his practice (yes, you are likely considered a creditor, and possibly a co-debtor to some debts as well, or at least a “party in interest” in bankruptcy terms).
One concern that absolutely requires assessment by a competent bankruptcy attorney is the property settlement v. support issue. This is important because if your ex-spouse files a chapter 13, they may be trying to discharge (eliminate their personal responsibility for) an obligation they are calling a “property settlement.” You see, an obligation arising from a “property settlement” is dischargeable in a chapter 13, but one arising from a “domestic support obligation” is not dischargeable. So it will be advantageous for them to take the position that the obligation to you arises from a “property settlement” as opposed to a “domestic support obligation.” You may now be pulling your divorce order out to see how the obligation(s) to you are termed. But that will not be the end of it. A bankruptcy court is not controlled by how a state court characterized the obligation(s), but assesses the question according to federal bankruptcy law. In re Peter, No. 02-6295-AA, 2002 U.S. Dist. LEXIS 27329, at * 5 (Bankr. D. Or. Nov. 26, 2002). So, even if your divorce order describes an obligation as a property settlement (or as alimony or some other term). The bankruptcy court may not see it that way. This can make all the difference to you; the difference between receiving all of what is due to you, or just a fraction of it.
A few more suggestions; timing, do not wait. Not only are there important deadlines to meet in bankruptcy, but bankruptcy cases generally move faster than other types of legal cases or proceedings. One other suggestion is, do not rely on your divorce lawyer (usually) to properly assess the ramifications of a bankruptcy filing by your ex-spouse. Typically, a divorce lawyer only has a rudimentary knowledge of bankruptcy, as opposed to someone practicing in the field regularly.
If your ex-spouse just filed bankruptcy and you need some help, or you just finished a divorce and have some bankruptcy concerns, feel free to give us a call.
There are many concerns that can arise when an ex-spouse files for bankruptcy —too many to address in one or even a few blogs— and every situation is different anyways. So, if you’re in this situation you should immediately meet with a competent bankruptcy lawyer who includes creditor representation as part of his practice (yes, you are likely considered a creditor, and possibly a co-debtor to some debts as well, or at least a “party in interest” in bankruptcy terms).
One concern that absolutely requires assessment by a competent bankruptcy attorney is the property settlement v. support issue. This is important because if your ex-spouse files a chapter 13, they may be trying to discharge (eliminate their personal responsibility for) an obligation they are calling a “property settlement.” You see, an obligation arising from a “property settlement” is dischargeable in a chapter 13, but one arising from a “domestic support obligation” is not dischargeable. So it will be advantageous for them to take the position that the obligation to you arises from a “property settlement” as opposed to a “domestic support obligation.” You may now be pulling your divorce order out to see how the obligation(s) to you are termed. But that will not be the end of it. A bankruptcy court is not controlled by how a state court characterized the obligation(s), but assesses the question according to federal bankruptcy law. In re Peter, No. 02-6295-AA, 2002 U.S. Dist. LEXIS 27329, at * 5 (Bankr. D. Or. Nov. 26, 2002). So, even if your divorce order describes an obligation as a property settlement (or as alimony or some other term). The bankruptcy court may not see it that way. This can make all the difference to you; the difference between receiving all of what is due to you, or just a fraction of it.
A few more suggestions; timing, do not wait. Not only are there important deadlines to meet in bankruptcy, but bankruptcy cases generally move faster than other types of legal cases or proceedings. One other suggestion is, do not rely on your divorce lawyer (usually) to properly assess the ramifications of a bankruptcy filing by your ex-spouse. Typically, a divorce lawyer only has a rudimentary knowledge of bankruptcy, as opposed to someone practicing in the field regularly.
If your ex-spouse just filed bankruptcy and you need some help, or you just finished a divorce and have some bankruptcy concerns, feel free to give us a call.
Wednesday, June 16, 2010
What is feasibility in a chapter 13 and why is it important?
18 June 2010
In order to accurately understand the concept of feasibility, it is important to start with a discussion of the basics of filing a chapter 13 bankruptcy. In chapter 13, the debtor needs to present a plan for approval by the bankruptcy court. It is a personal reorganization plan so to speak. Generally, it will include a monthly payment that the debtor must pay to the chapter 13 trustee, who in turn makes payments to creditors, albeit usually less than what creditors would like. Once the plan is approved, the monthly amount will not change unless the debtor’s circumstances change.
One of the many requirements of a chapter 13 debtor, with some unlikely exceptions, is that he must pay all of his disposable income to the chapter 13 trustee for the duration of the plan. For those with income below their area’s median income, which is most debtors, this means deducting the total of their monthly expenses from the total of their monthly income, and paying what remains. Most plans will be three years, but cannot be more than five years. If a debtor does not have disposable income to pay to the trustee, he cannot present a confirmable chapter 13 plan (there are some exceptions to this rule, however, these exceptions are not available in Massachusetts or Connecticut).
Assuming that a debtor does have disposable income, as described above, the plan must be feasible. In other words, “a debtor’s plan must have a reasonable likelihood of success, i.e., that it is likely that the debtor will have the necessary resources to make all payments as directed by the plan.” In re Fantasia, 211 B.R. 420, 423 (B.A.P. 1st Cir. 1997). When a creditor objects to a debtor’s plan, the debtor has the burden of proof to show his plan is feasible. Id. Failing to explain discrepancies that appear in bankruptcy filings can constitute grounds to deny approval of the plan. In re Scott, No. 98-1866, 1999 WL 644380, at *1 (6th Cir. Aug. 13, 1999). In addition, having unrealistic expenses, like not budgeting for commonly expected expenses, or amounts that are too low, can be grounds for denial as well. In re Hockaday, 3 B.R. 254, 255-56 (Bankr. S.D. Cal. 1980).
Empirical evidence shows that some debtors, in hopes of attaining the benefits of chapter 13, present plans, and sometimes are even successful in having them approved, that are not realistic. They likely have unrealistic expectations of living within a budget that they believe, in their exuberance for a successful chapter 13 plan, is possible. Sometimes it is idealistic income expectations, sometimes unrealistic expense expectations. This is why most plans fail, as the debtor does not reach the end of the plan.
If you are interested in the benefits of chapter 13 and want to be successful, or if you are involved in a chapter 13 that you think may not be feasible, please feel free to call.
In order to accurately understand the concept of feasibility, it is important to start with a discussion of the basics of filing a chapter 13 bankruptcy. In chapter 13, the debtor needs to present a plan for approval by the bankruptcy court. It is a personal reorganization plan so to speak. Generally, it will include a monthly payment that the debtor must pay to the chapter 13 trustee, who in turn makes payments to creditors, albeit usually less than what creditors would like. Once the plan is approved, the monthly amount will not change unless the debtor’s circumstances change.
One of the many requirements of a chapter 13 debtor, with some unlikely exceptions, is that he must pay all of his disposable income to the chapter 13 trustee for the duration of the plan. For those with income below their area’s median income, which is most debtors, this means deducting the total of their monthly expenses from the total of their monthly income, and paying what remains. Most plans will be three years, but cannot be more than five years. If a debtor does not have disposable income to pay to the trustee, he cannot present a confirmable chapter 13 plan (there are some exceptions to this rule, however, these exceptions are not available in Massachusetts or Connecticut).
Assuming that a debtor does have disposable income, as described above, the plan must be feasible. In other words, “a debtor’s plan must have a reasonable likelihood of success, i.e., that it is likely that the debtor will have the necessary resources to make all payments as directed by the plan.” In re Fantasia, 211 B.R. 420, 423 (B.A.P. 1st Cir. 1997). When a creditor objects to a debtor’s plan, the debtor has the burden of proof to show his plan is feasible. Id. Failing to explain discrepancies that appear in bankruptcy filings can constitute grounds to deny approval of the plan. In re Scott, No. 98-1866, 1999 WL 644380, at *1 (6th Cir. Aug. 13, 1999). In addition, having unrealistic expenses, like not budgeting for commonly expected expenses, or amounts that are too low, can be grounds for denial as well. In re Hockaday, 3 B.R. 254, 255-56 (Bankr. S.D. Cal. 1980).
Empirical evidence shows that some debtors, in hopes of attaining the benefits of chapter 13, present plans, and sometimes are even successful in having them approved, that are not realistic. They likely have unrealistic expectations of living within a budget that they believe, in their exuberance for a successful chapter 13 plan, is possible. Sometimes it is idealistic income expectations, sometimes unrealistic expense expectations. This is why most plans fail, as the debtor does not reach the end of the plan.
If you are interested in the benefits of chapter 13 and want to be successful, or if you are involved in a chapter 13 that you think may not be feasible, please feel free to call.
Tuesday, June 15, 2010
What is good faith and why is it important in a chapter 13 bankruptcy?
17 June 2010
The term “good faith” is not defined in the bankruptcy code. Nonetheless, the code expressly requires that your chapter 13 petition be filed in “good faith” and that your chapter 13 plan be proposed in “good faith” (your petition is different than your plan); and your case may be dismissed if a creditor can show that you have not operated in good faith. Needless to say, good faith is required every step of the way in bankruptcy. It is becoming so important that there is a trend in bankruptcy law to not allow a chapter 13 debtor to exercise certain rights expressly stated in the code, that we used to take for granted, unless they are operating in good faith. For example, the code says that a chapter 13 debtor has the right to dismiss the case at any time. That used to mean if circumstances changed so that the chapter 13 was no longer beneficial to you, then you could dismiss it and carry on without the benefits (or obligations under your changed financial circumstances) of chapter 13. But if not operating in good faith, this trend indicates that these rights may no longer be available to you. What does that really mean? It could mean that you will not be allowed to dismiss the case and have to stay in chapter 13, or worse, you may have to convert to chapter 7. Why does it matter if you have to convert to chapter 7? Well the reason many people file a chapter 13 is because they get to keep their non-exempt assets, which is not permitted in chapter 7. Also, many people file a chapter 13 to save their homes from foreclosure, and chapter 7 does not contain the same protections to make that possible. So, failing to operate in good faith in chapter 13 could have devastating consequences.
OK, so it’s important, but what is it? Initially, understand that good faith includes both pre- and post-filing acts. Some factors that are considered include: accuracy in stating debts and expenses, lack of effort/ability to pay debts, honesty in disclosing assets and financial affairs (no surprise), manipulation of the bankruptcy code, the type of debts, the motivation, the amount proposed to be paid to creditors, and prior filings. Courts have generally employed a “totality of the circumstances approach.” In re Sullivan, 326 B.R. 204, 211 (B.A.P. 1st Cir. 2005). That is legal speak for “we will consider just about anything reasonable and use our commonsense.” But, the determination about whether good faith is lacking still needs to be made by an experienced practitioner. This is for many reasons, including that many people feel that bankruptcy is inherently unfair, so a lay person may not be able to put aside those feelings from their analysis. Also, an experienced judge will make the decision if good faith is challenged. So, it pays to consult a trained eye to discern what a court could determine is not good faith, and what is permitted under the law.
If you are planning on filing a chapter 13 and would like to meet the requirements, including good faith, or if you have become involved in a chapter 13 someone else has filed and think it is not done in good faith, feel free to give us a call for a free initial consultation.
The term “good faith” is not defined in the bankruptcy code. Nonetheless, the code expressly requires that your chapter 13 petition be filed in “good faith” and that your chapter 13 plan be proposed in “good faith” (your petition is different than your plan); and your case may be dismissed if a creditor can show that you have not operated in good faith. Needless to say, good faith is required every step of the way in bankruptcy. It is becoming so important that there is a trend in bankruptcy law to not allow a chapter 13 debtor to exercise certain rights expressly stated in the code, that we used to take for granted, unless they are operating in good faith. For example, the code says that a chapter 13 debtor has the right to dismiss the case at any time. That used to mean if circumstances changed so that the chapter 13 was no longer beneficial to you, then you could dismiss it and carry on without the benefits (or obligations under your changed financial circumstances) of chapter 13. But if not operating in good faith, this trend indicates that these rights may no longer be available to you. What does that really mean? It could mean that you will not be allowed to dismiss the case and have to stay in chapter 13, or worse, you may have to convert to chapter 7. Why does it matter if you have to convert to chapter 7? Well the reason many people file a chapter 13 is because they get to keep their non-exempt assets, which is not permitted in chapter 7. Also, many people file a chapter 13 to save their homes from foreclosure, and chapter 7 does not contain the same protections to make that possible. So, failing to operate in good faith in chapter 13 could have devastating consequences.
OK, so it’s important, but what is it? Initially, understand that good faith includes both pre- and post-filing acts. Some factors that are considered include: accuracy in stating debts and expenses, lack of effort/ability to pay debts, honesty in disclosing assets and financial affairs (no surprise), manipulation of the bankruptcy code, the type of debts, the motivation, the amount proposed to be paid to creditors, and prior filings. Courts have generally employed a “totality of the circumstances approach.” In re Sullivan, 326 B.R. 204, 211 (B.A.P. 1st Cir. 2005). That is legal speak for “we will consider just about anything reasonable and use our commonsense.” But, the determination about whether good faith is lacking still needs to be made by an experienced practitioner. This is for many reasons, including that many people feel that bankruptcy is inherently unfair, so a lay person may not be able to put aside those feelings from their analysis. Also, an experienced judge will make the decision if good faith is challenged. So, it pays to consult a trained eye to discern what a court could determine is not good faith, and what is permitted under the law.
If you are planning on filing a chapter 13 and would like to meet the requirements, including good faith, or if you have become involved in a chapter 13 someone else has filed and think it is not done in good faith, feel free to give us a call for a free initial consultation.
Thursday, February 25, 2010
Should I file a chapter 13 plan by myself?
26 February 2010
No. The first reason is because a chapter 13 is a complex legal and financial arrangement. Generally, it is more complicated than a chapter 7. In fact, most lawyers would consider themselves unqualified to assist a client in filing a chapter 7, and even more a chapter 13, and they would be right. The second reason is that the bankruptcy practice is a specialty. This means there are few people out there who are able to give you accurate advice if you are attempting to glean information from those who are knowledgeable. The rest of the information is garbled, off-point, or just flat out wrong. A third reason, related to the second, is that chapter 13 practice, and thus what you need to do, varies substantially from region to region. This means if you are gathering information from the internet or books or pamphlets, if it isn’t geared for your specific locality, its value is decreased. Another reason is that the fail rate for attorney assisted chapter 13 plans ranges roughly between 2/3 and 3/4. The failure rate for pro se filed chapter 13’s approaches 100%. In fact, it is a rarity for the pro se proposed plan to even be confirmed. (Do you know what that means?) Finally, in all likelihood, because of the failure rate, you will waste money, which is probably exactly the opposite of what you are trying to accomplish by filing without the assistance of a qualified attorney.
Let me give you an illustration of the complexity, and thus the danger of filing a chapter 13. A debtor filed a chapter 13, had their plan confirmed, and (after a few bumps in the road) completed the plan all the way to its completion. A success, right? So far I would say yes, and statistically it would be better than about 99% of pro se filers, and even better than the large majority of filers that have the assistance of counsel. But here is what happened.
After the initial filing, but while the chapter 13 plan was underway, the debtor attained a legal claim. After the plan was completed, the debtor sought to pursue the legal claim she obtained while she was completing their plan. The defendant argued successfully that the debtor was barred to pursue the legal claim under the doctrine of judicial estoppel. What happened is that the debtor lost her legal claim because she did not amend her bankruptcy papers while the plan was underway. Robinson v Tyson Foods, Inc., No. 08-14991, 2010 WL 396130 (11th Cir. Feb. 5, 2010).
If after reading this blog you don’t have an idea why the debtor lost her legal claim or what judicial estoppel means, then you shouldn’t file alone. But if you do, when you realize you need help, feel free to give this office a call. However, it would be best to call before trying to do it yourself.
No. The first reason is because a chapter 13 is a complex legal and financial arrangement. Generally, it is more complicated than a chapter 7. In fact, most lawyers would consider themselves unqualified to assist a client in filing a chapter 7, and even more a chapter 13, and they would be right. The second reason is that the bankruptcy practice is a specialty. This means there are few people out there who are able to give you accurate advice if you are attempting to glean information from those who are knowledgeable. The rest of the information is garbled, off-point, or just flat out wrong. A third reason, related to the second, is that chapter 13 practice, and thus what you need to do, varies substantially from region to region. This means if you are gathering information from the internet or books or pamphlets, if it isn’t geared for your specific locality, its value is decreased. Another reason is that the fail rate for attorney assisted chapter 13 plans ranges roughly between 2/3 and 3/4. The failure rate for pro se filed chapter 13’s approaches 100%. In fact, it is a rarity for the pro se proposed plan to even be confirmed. (Do you know what that means?) Finally, in all likelihood, because of the failure rate, you will waste money, which is probably exactly the opposite of what you are trying to accomplish by filing without the assistance of a qualified attorney.
Let me give you an illustration of the complexity, and thus the danger of filing a chapter 13. A debtor filed a chapter 13, had their plan confirmed, and (after a few bumps in the road) completed the plan all the way to its completion. A success, right? So far I would say yes, and statistically it would be better than about 99% of pro se filers, and even better than the large majority of filers that have the assistance of counsel. But here is what happened.
After the initial filing, but while the chapter 13 plan was underway, the debtor attained a legal claim. After the plan was completed, the debtor sought to pursue the legal claim she obtained while she was completing their plan. The defendant argued successfully that the debtor was barred to pursue the legal claim under the doctrine of judicial estoppel. What happened is that the debtor lost her legal claim because she did not amend her bankruptcy papers while the plan was underway. Robinson v Tyson Foods, Inc., No. 08-14991, 2010 WL 396130 (11th Cir. Feb. 5, 2010).
If after reading this blog you don’t have an idea why the debtor lost her legal claim or what judicial estoppel means, then you shouldn’t file alone. But if you do, when you realize you need help, feel free to give this office a call. However, it would be best to call before trying to do it yourself.
Wednesday, February 24, 2010
Is the arbitration clause in my credit card agreement enforceable?
24 February 2010
It depends on where you live, how the card is used (commercial or personal), and what kind of claim you seek to bring. For example, if you live in Massachusetts (or otherwise Massachusetts law applies), use your card primarily as a consumer, and seek to bring a claim under the Massachusetts Consumer Protection Act (Mass. Gen. Laws ch. 93A, § 9) then the answer is that the arbitration clause is not enforceable. Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826 (1982). Again in Massachusetts, if you are either a business or consumer, and wish to bring a class action for entities that would otherwise have insignificant actual damages individually, once more, the arbitration clause is not enforceable. Feeney v. Dell, Inc., 454 Mass. 192 (2009). There are also other types of claims in Massachusetts where an arbitration clause would presumably not be enforceable, or at least would require a heightened degree of notice for the waiver of rights before they are. See e.g., Warfield v. Beth Israel Deaconess Medical Center, 454 Mass. 390 (2009) (finding arbitration clause in employer-employee contract not enforceable against employee’s gender discrimination claim because the employee’s agreement to the clause was not expressed clearly enough).
However, generally, both the United States Supreme Court and the Supreme Judicial Court in Massachusetts have expressed a presumption in favor of arbitration. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (Federal); Miller v. Cotter, 448 Mass. 671, 676 (2007) (Massachusetts). So, in most other cases, an arbitration clause is probably enforceable. In those situations, you must decide if you want to try to be a trailblazer and appeal the matter to the highest court possible to establish new law.
Why does this matter? This is because the arbitration forum has traditionally been thought to favor the credit industry and award conservative amounts of damages to plaintiffs.
There are federal and state statutory schemes dedicated to the application and governance of arbitration. (9 U.S.C. §§ 1 et seq.); (Mass. Gen. Laws ch. 251, §§1 et seq.). The question of whether an arbitration clause is enforceable, or under what specific circumstances it might be, has been a frequent question posed to the courts throughout this country over the past number of decades. Many of these court decisions have been contradictory, which suggests that presenting a sound, strong argument could make the difference between winning and losing. If you are facing the question of whether an arbitration clause applies in a particular situation, we suggest you engage competent counsel, and invite you to contact our office for a consultation.
It depends on where you live, how the card is used (commercial or personal), and what kind of claim you seek to bring. For example, if you live in Massachusetts (or otherwise Massachusetts law applies), use your card primarily as a consumer, and seek to bring a claim under the Massachusetts Consumer Protection Act (Mass. Gen. Laws ch. 93A, § 9) then the answer is that the arbitration clause is not enforceable. Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826 (1982). Again in Massachusetts, if you are either a business or consumer, and wish to bring a class action for entities that would otherwise have insignificant actual damages individually, once more, the arbitration clause is not enforceable. Feeney v. Dell, Inc., 454 Mass. 192 (2009). There are also other types of claims in Massachusetts where an arbitration clause would presumably not be enforceable, or at least would require a heightened degree of notice for the waiver of rights before they are. See e.g., Warfield v. Beth Israel Deaconess Medical Center, 454 Mass. 390 (2009) (finding arbitration clause in employer-employee contract not enforceable against employee’s gender discrimination claim because the employee’s agreement to the clause was not expressed clearly enough).
However, generally, both the United States Supreme Court and the Supreme Judicial Court in Massachusetts have expressed a presumption in favor of arbitration. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (Federal); Miller v. Cotter, 448 Mass. 671, 676 (2007) (Massachusetts). So, in most other cases, an arbitration clause is probably enforceable. In those situations, you must decide if you want to try to be a trailblazer and appeal the matter to the highest court possible to establish new law.
Why does this matter? This is because the arbitration forum has traditionally been thought to favor the credit industry and award conservative amounts of damages to plaintiffs.
There are federal and state statutory schemes dedicated to the application and governance of arbitration. (9 U.S.C. §§ 1 et seq.); (Mass. Gen. Laws ch. 251, §§1 et seq.). The question of whether an arbitration clause is enforceable, or under what specific circumstances it might be, has been a frequent question posed to the courts throughout this country over the past number of decades. Many of these court decisions have been contradictory, which suggests that presenting a sound, strong argument could make the difference between winning and losing. If you are facing the question of whether an arbitration clause applies in a particular situation, we suggest you engage competent counsel, and invite you to contact our office for a consultation.
Thursday, February 11, 2010
Is it OK to file legal pleadings secretly prepared by an attorney?
11 February 2010
For the attorney, this is called ghostwriting. Whether it is allowed depends on the jurisdiction and the specific court. For instance, in Massachusetts it has been allowed in the probate and family court in certain counties since 1 November 2006. When this ghostwriting is done, the filing must state it was “Prepared with the assistance of counsel” conspicuously. However, it is not allowed in other courts in Massachusetts. It is also not permitted in any federal court in Massachusetts, and presumably none in the entire country. Ellis v. Maine, 448 F.2d 1325, 1328 (1st Cir. 1971) (requiring any brief prepared in substantial part by an attorney to be signed by him); Durran v. Carris, 238 F. 3d 1268, 1273 (10th Cir. 2001) (same); Clarke v. United States, 955 F. Supp. 593, 598 (E.D. Va. 1997); United States v. Eleven Vehicles, 966 F. Supp. 361, 367 (E.D. Pa. 1997).
What is the concern about ghostwriting anyway? There are more than a few. First, rule 11 of the Federal Rules of Civil Procedure, and almost all equivalent state rules, requires that every pleading filed with the court to be signed by the attorney of record, if the party is represented, or the party himself if unrepresented. The rule also acts as a certification that the pleading/filing is not presented for an improper purpose, that the claims presented are warranted, and that the allegations made have evidentiary support. So when an attorney prepares the pleading but the pro se party (pro se means representing themselves) signs it, the attorney is allowed to skirt the requirements of rule 11. Another problem is that generally pleadings filed by pro se parties are held to a less stringent standard than those filed by attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972). So ghostwritten pleadings masquerading as ones being prepared by a pro se will be scrutinized under the less stringent standard for pro se prepared pleadings, which they do not deserve. Another issue is that the practice of ghostwriting allows lawyers to circumvent the rules covering their appearances and withdrawals from cases.
Some courts have taken a hard stance against ghostwriting and warned that not only will the offending attorney be subject to sanctions or discipline, but the pro se filer himself. Duran, 238 F.3d at 1272 (considering a ghostwritten pleading a misrepresentation by the pro se party as well as attorney); In re Mungo, 305 B.R. 762, 770 fn.2 (Bankr. D. S.C. 2003)(warning the ghostwritten pleadings filed by pro se parties could be stricken). So if you are considering filing a ghostwritten pleading, you should make sure that it is permitted in the particular jurisdiction and court you plan to file the pleading in.
For the attorney, this is called ghostwriting. Whether it is allowed depends on the jurisdiction and the specific court. For instance, in Massachusetts it has been allowed in the probate and family court in certain counties since 1 November 2006. When this ghostwriting is done, the filing must state it was “Prepared with the assistance of counsel” conspicuously. However, it is not allowed in other courts in Massachusetts. It is also not permitted in any federal court in Massachusetts, and presumably none in the entire country. Ellis v. Maine, 448 F.2d 1325, 1328 (1st Cir. 1971) (requiring any brief prepared in substantial part by an attorney to be signed by him); Durran v. Carris, 238 F. 3d 1268, 1273 (10th Cir. 2001) (same); Clarke v. United States, 955 F. Supp. 593, 598 (E.D. Va. 1997); United States v. Eleven Vehicles, 966 F. Supp. 361, 367 (E.D. Pa. 1997).
What is the concern about ghostwriting anyway? There are more than a few. First, rule 11 of the Federal Rules of Civil Procedure, and almost all equivalent state rules, requires that every pleading filed with the court to be signed by the attorney of record, if the party is represented, or the party himself if unrepresented. The rule also acts as a certification that the pleading/filing is not presented for an improper purpose, that the claims presented are warranted, and that the allegations made have evidentiary support. So when an attorney prepares the pleading but the pro se party (pro se means representing themselves) signs it, the attorney is allowed to skirt the requirements of rule 11. Another problem is that generally pleadings filed by pro se parties are held to a less stringent standard than those filed by attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972). So ghostwritten pleadings masquerading as ones being prepared by a pro se will be scrutinized under the less stringent standard for pro se prepared pleadings, which they do not deserve. Another issue is that the practice of ghostwriting allows lawyers to circumvent the rules covering their appearances and withdrawals from cases.
Some courts have taken a hard stance against ghostwriting and warned that not only will the offending attorney be subject to sanctions or discipline, but the pro se filer himself. Duran, 238 F.3d at 1272 (considering a ghostwritten pleading a misrepresentation by the pro se party as well as attorney); In re Mungo, 305 B.R. 762, 770 fn.2 (Bankr. D. S.C. 2003)(warning the ghostwritten pleadings filed by pro se parties could be stricken). So if you are considering filing a ghostwritten pleading, you should make sure that it is permitted in the particular jurisdiction and court you plan to file the pleading in.
How do I find an ethical and reputable attorney?
11 February 2010
People usually hire an attorney without inquiring of others whether the attorney has a good reputation and simply assume that the attorney they end up speaking to is ethical. It is hard to learn of a bad egg partly because other lawyers are reluctant to state a negative opinion in fear of the potential fallout stemming from an honest one. Safer to say everyone is great, and let you take your chances with who you hire. So what can you do?
Some ways to find the right attorney is to obtain a referral. But the weight you should give a referral depends on how well the referring entity really knows the attorney, and of his day-to-day practice. Another is to simply ask questions of a prospective attorney, but this too may be a rather limited way to learn of the ethics or reputation of an attorney. It may provide some insight, but it is the walk and not the talk that matters. Another way is to check with the state bar association whether the attorney is in good standing and/or whether he carries malpractice insurance.
Now let’s say you hired the attorney. Now you can try and keep a look out for what you consider ethical behavior. Some items to look for are: 1) Did the attorney carefully screen the claim or facts you presented? In other words, did he seek to make sure the facts and/or claim you presented was indeed truthful or accurate? It may be nice to have a sympathetic ear, but your lawyer should keep you grounded, and not simply tell you what you may be indicating, knowingly or not, what you want to hear. 2) Does the attorney warn you of potential issues or problems that could arise? This includes expenses; how expensive are certain tasks to complete, just how expensive could the pursuit of a certain course of action become? 3) If you filed a complaint in litigation or a petition in bankruptcy, did he provide you a copy and/or review it with you before it was filed? It is a no-no to do otherwise. United States Trustee v. Lynn (In re Bellows-Fairchild), 322 B.R. 675, 677-82 (Bankr. D. Or. 2005)(petitioner signing bankruptcy schedules prior to their completion found to be serious ethical breach and resulted in attorney being enjoined from practicing in bankruptcy court).
Some items that are not good indicators of an ethical attorney are: 1) How much advertising they purchase. Advertising does not make someone ethical. 2) Whether he agrees with you about everything, including your subjective opinions. A good lawyer will play devil’s advocate and probe for problems or potential weaknesses in your case, and will be weary of overconfidence. 3) Whether he promises results or creates for you expectations of favorable outcomes. It may sound great to hear you’re going to win the case or have no problems in your legal endeavor, but it doesn’t indicate you have an ethical or even competent lawyer. 4) A willingness, sometime an over-willingness, to take your case. A cautious lawyer typically indicates an ethical one. If they are too eager for your business, they may not be careful or cautious enough or really care what the merits of the case are.
Through all your trial and error, when you do find an ethical and reputable attorney (and maybe even capable), hold on. A lawyer who is willing to go the extra mile for you is worth his weight in gold. Typically, developing a good working relationship with a lawyer breeds trust, which enhances the attorney-client relationship. There is something to be said for the saying ‘everyone needs a lawyer in the family.’ So, you may not have an attorney in the family, but having an established working relationship with an attorney is a valuable asset for anyone.
People usually hire an attorney without inquiring of others whether the attorney has a good reputation and simply assume that the attorney they end up speaking to is ethical. It is hard to learn of a bad egg partly because other lawyers are reluctant to state a negative opinion in fear of the potential fallout stemming from an honest one. Safer to say everyone is great, and let you take your chances with who you hire. So what can you do?
Some ways to find the right attorney is to obtain a referral. But the weight you should give a referral depends on how well the referring entity really knows the attorney, and of his day-to-day practice. Another is to simply ask questions of a prospective attorney, but this too may be a rather limited way to learn of the ethics or reputation of an attorney. It may provide some insight, but it is the walk and not the talk that matters. Another way is to check with the state bar association whether the attorney is in good standing and/or whether he carries malpractice insurance.
Now let’s say you hired the attorney. Now you can try and keep a look out for what you consider ethical behavior. Some items to look for are: 1) Did the attorney carefully screen the claim or facts you presented? In other words, did he seek to make sure the facts and/or claim you presented was indeed truthful or accurate? It may be nice to have a sympathetic ear, but your lawyer should keep you grounded, and not simply tell you what you may be indicating, knowingly or not, what you want to hear. 2) Does the attorney warn you of potential issues or problems that could arise? This includes expenses; how expensive are certain tasks to complete, just how expensive could the pursuit of a certain course of action become? 3) If you filed a complaint in litigation or a petition in bankruptcy, did he provide you a copy and/or review it with you before it was filed? It is a no-no to do otherwise. United States Trustee v. Lynn (In re Bellows-Fairchild), 322 B.R. 675, 677-82 (Bankr. D. Or. 2005)(petitioner signing bankruptcy schedules prior to their completion found to be serious ethical breach and resulted in attorney being enjoined from practicing in bankruptcy court).
Some items that are not good indicators of an ethical attorney are: 1) How much advertising they purchase. Advertising does not make someone ethical. 2) Whether he agrees with you about everything, including your subjective opinions. A good lawyer will play devil’s advocate and probe for problems or potential weaknesses in your case, and will be weary of overconfidence. 3) Whether he promises results or creates for you expectations of favorable outcomes. It may sound great to hear you’re going to win the case or have no problems in your legal endeavor, but it doesn’t indicate you have an ethical or even competent lawyer. 4) A willingness, sometime an over-willingness, to take your case. A cautious lawyer typically indicates an ethical one. If they are too eager for your business, they may not be careful or cautious enough or really care what the merits of the case are.
Through all your trial and error, when you do find an ethical and reputable attorney (and maybe even capable), hold on. A lawyer who is willing to go the extra mile for you is worth his weight in gold. Typically, developing a good working relationship with a lawyer breeds trust, which enhances the attorney-client relationship. There is something to be said for the saying ‘everyone needs a lawyer in the family.’ So, you may not have an attorney in the family, but having an established working relationship with an attorney is a valuable asset for anyone.
Thursday, January 28, 2010
Can I eliminate my student loans in bankruptcy?
28 January 2010
Probably not. Most unsecured garden variety loans can be wiped out, or “discharged” in a bankruptcy. This means that the bankruptcy court enters an injunction on the collection of the debt from your person. In other words, your personal responsibility for the loan is eliminated. (Creditors still may have their rights to any collateral that secures the loan.) However, despite not all unsecured debts are dischargeable. Student loans are one of the types of obligations that are (almost) non-dischargeable. The student loan exception appears in Section 523(a) (8) of the bankruptcy code. The exception applies to:
• an educational benefit, overpayment or loan, made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or a nonprofit institution; or
• for an obligation to repay funds received as an educational benefit, scholarship or stipend; or
• any other education loan that is a qualified education loan, as defined in section 221(d)(1) of the federal tax code.
Without traversing the different laws that define the scope of the definition of a student loan in the bankruptcy code, suffice it to say, it is really almost any loan related to education. Including even books, supplies, transportation expenses, etc. as long as they are incurred by eligible students to attend eligible education institution, which is almost any education program.
It is possible to discharge student loans if they represent an “undue hardship.” However, this is been construed by the courts to be a very, very high hurdle. It must be compelling. The burden is on the debtor, the person seeking discharge. In re Kopf, 245 B.R. 731(Bankr. D. Me. 2000). It has been said that some courts are so strict that the debtor must be severely disabled to even be considered. However, there are different competing tests the courts can apply. One of the most popular is the “totality of the circumstances.” Some of the factors are: “the debtor’s past, present, and reasonably reliable future financial resources; 2) calculation of the debtor’s and his dependents’ reasonable necessary living expenses; and 3) any other relevant facts and circumstances surrounding that particular bankruptcy case.” In re Andresen, 232 B.R. 127, 139 (B.A.P. 8th Cir. 1999).
A practical consideration is how to afford to present the argument in the first place. First, one must file the bankruptcy, which theoretically can be done pro se in payments or possibly even waived. However, most people file using the services of an attorney, which is wise, but comes with a cost. Then after the bankruptcy is filed, an adversary proceeding must be filed. This is essentially a separate law suit in the bankruptcy case. Also, presentation of an undue hardship argument is not a simple endeavor. Facts must be gathered and analyzed. An argument must be developed, research must be done, and it must be thought though. Not to mention the creditor may pose a worthy opponent. So, if you are wondering if you can discharge your student loans, know that you face a high hurdle and significant practical considerations.
Probably not. Most unsecured garden variety loans can be wiped out, or “discharged” in a bankruptcy. This means that the bankruptcy court enters an injunction on the collection of the debt from your person. In other words, your personal responsibility for the loan is eliminated. (Creditors still may have their rights to any collateral that secures the loan.) However, despite not all unsecured debts are dischargeable. Student loans are one of the types of obligations that are (almost) non-dischargeable. The student loan exception appears in Section 523(a) (8) of the bankruptcy code. The exception applies to:
• an educational benefit, overpayment or loan, made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or a nonprofit institution; or
• for an obligation to repay funds received as an educational benefit, scholarship or stipend; or
• any other education loan that is a qualified education loan, as defined in section 221(d)(1) of the federal tax code.
Without traversing the different laws that define the scope of the definition of a student loan in the bankruptcy code, suffice it to say, it is really almost any loan related to education. Including even books, supplies, transportation expenses, etc. as long as they are incurred by eligible students to attend eligible education institution, which is almost any education program.
It is possible to discharge student loans if they represent an “undue hardship.” However, this is been construed by the courts to be a very, very high hurdle. It must be compelling. The burden is on the debtor, the person seeking discharge. In re Kopf, 245 B.R. 731(Bankr. D. Me. 2000). It has been said that some courts are so strict that the debtor must be severely disabled to even be considered. However, there are different competing tests the courts can apply. One of the most popular is the “totality of the circumstances.” Some of the factors are: “the debtor’s past, present, and reasonably reliable future financial resources; 2) calculation of the debtor’s and his dependents’ reasonable necessary living expenses; and 3) any other relevant facts and circumstances surrounding that particular bankruptcy case.” In re Andresen, 232 B.R. 127, 139 (B.A.P. 8th Cir. 1999).
A practical consideration is how to afford to present the argument in the first place. First, one must file the bankruptcy, which theoretically can be done pro se in payments or possibly even waived. However, most people file using the services of an attorney, which is wise, but comes with a cost. Then after the bankruptcy is filed, an adversary proceeding must be filed. This is essentially a separate law suit in the bankruptcy case. Also, presentation of an undue hardship argument is not a simple endeavor. Facts must be gathered and analyzed. An argument must be developed, research must be done, and it must be thought though. Not to mention the creditor may pose a worthy opponent. So, if you are wondering if you can discharge your student loans, know that you face a high hurdle and significant practical considerations.
My car was repossessed? Can I get it back if I file for bankruptcy?
Saturday 19 December 2009
It depends on whether the repossession company or creditor still has the car and hasn’t sold it. If the creditor still has the auto, it will most likely be deemed that it is still property of the bankruptcy estate (that means it is property subject to the bankruptcy court’s jurisdiction) and the bank simply holds it as a custodian. See In re Pluta, 200 B.R. 740 (Bankr. Mass. 1996). Your lawyer can then possibly demand the auto be returned to you after you file bankruptcy.
However, this begs the question whether you want it back. It is quite common for people to have the desire to retain their automobile, but an objective outlook is necessary. Is your car a benefit to your financial balance sheet or not? Does the car have equity? In other words, is the auto worth more than the amount owed to the lender? If it was repossessed than there was a loan that was probably in the arrears, and it is unlikely there is equity. And if not, it is a negative on your balance sheet, and probably not worth keeping. But, there may be a way a bankruptcy lawyer can eliminate the excess debt through a chapter 13 plan. Also, there may be a way to keep the car through alternative financing. Lastly, there is a possibility that you could obtain financing for a different car through one of the lenders that specialize in post-bankruptcy financing. In any event, it behooves you to consult an experienced bankruptcy attorney to learn the options available to you under bankruptcy or a different alternative.
It depends on whether the repossession company or creditor still has the car and hasn’t sold it. If the creditor still has the auto, it will most likely be deemed that it is still property of the bankruptcy estate (that means it is property subject to the bankruptcy court’s jurisdiction) and the bank simply holds it as a custodian. See In re Pluta, 200 B.R. 740 (Bankr. Mass. 1996). Your lawyer can then possibly demand the auto be returned to you after you file bankruptcy.
However, this begs the question whether you want it back. It is quite common for people to have the desire to retain their automobile, but an objective outlook is necessary. Is your car a benefit to your financial balance sheet or not? Does the car have equity? In other words, is the auto worth more than the amount owed to the lender? If it was repossessed than there was a loan that was probably in the arrears, and it is unlikely there is equity. And if not, it is a negative on your balance sheet, and probably not worth keeping. But, there may be a way a bankruptcy lawyer can eliminate the excess debt through a chapter 13 plan. Also, there may be a way to keep the car through alternative financing. Lastly, there is a possibility that you could obtain financing for a different car through one of the lenders that specialize in post-bankruptcy financing. In any event, it behooves you to consult an experienced bankruptcy attorney to learn the options available to you under bankruptcy or a different alternative.
What is so good about an LLC?
Wednesday 16 December 2009
Typically one thinks of being able to shield personal assets from creditors that arise from their business activity (“inside liability”) as the main reason to create a business entity. Once the decision to create a business entity is made, the type of entity, corporation (Inc.), professional corporation (P.C.), limited partnership (L.P.), or limited liability company (“LLC”) is based on the corporate structure desired or other considerations. But there is one feature of the LLC that should be considered when making this decision; the shielding of the corporation from liability arising from personal acts (“outside liability”). Yes, it is important to consider outside liability in addition to inside liability when deciding the right business entity form to choose.
Understand, that no corporate entity can shield the corporation in all aspects, but the LLC has an advantage over other business entities in these situations. When a personal creditor seeks to take corporate assets from a (non LLC) corporate owner, he can take ownership of the stock. If it is a majority of the stock, generally, then this creditor will be able to run the company. Now, corporate agreements can be made to create the opportunity to prevent the creditor from taking control, like allowing the minority shareholder the option of buying the creditor out before exerting control. However, one may forget to import these clauses, or other shareholders may not be able to exercise them when it happens.
With the LLC, the creditor does not obtain the voting or management rights of the entity, but only a “charging order” that allows the creditor’s judgment to be satisfied by the LLC member’s interest. The major benefit is that the creditor never gets to run the company, and you maintain control. The creditor will be able to take corporate distributions, and although distributions should not be withheld in bad faith, it is still a decision the company (that includes you) makes. The reason behind this difference is that other members of the LLC should be protected from the other member’s creditors.
A few caveats though; one is that although Massachusetts recognizes single member LLC’s , there is an argument that single member LLC’s should not receive its special protection. At least one out-of-state court has ruled that way. In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003). Another caveat is that when bankruptcy is involved, new considerations may alter these basic rules. Finally, when seeking to protect anything from a creditor in the corporate setting, you must follow the proper corporate rules and structure to ensure the creditor does not successfully “pierce the corporate veil.” In closing, we urge you to consider the benefits of an LLC when making the decision what business form to start.
Typically one thinks of being able to shield personal assets from creditors that arise from their business activity (“inside liability”) as the main reason to create a business entity. Once the decision to create a business entity is made, the type of entity, corporation (Inc.), professional corporation (P.C.), limited partnership (L.P.), or limited liability company (“LLC”) is based on the corporate structure desired or other considerations. But there is one feature of the LLC that should be considered when making this decision; the shielding of the corporation from liability arising from personal acts (“outside liability”). Yes, it is important to consider outside liability in addition to inside liability when deciding the right business entity form to choose.
Understand, that no corporate entity can shield the corporation in all aspects, but the LLC has an advantage over other business entities in these situations. When a personal creditor seeks to take corporate assets from a (non LLC) corporate owner, he can take ownership of the stock. If it is a majority of the stock, generally, then this creditor will be able to run the company. Now, corporate agreements can be made to create the opportunity to prevent the creditor from taking control, like allowing the minority shareholder the option of buying the creditor out before exerting control. However, one may forget to import these clauses, or other shareholders may not be able to exercise them when it happens.
With the LLC, the creditor does not obtain the voting or management rights of the entity, but only a “charging order” that allows the creditor’s judgment to be satisfied by the LLC member’s interest. The major benefit is that the creditor never gets to run the company, and you maintain control. The creditor will be able to take corporate distributions, and although distributions should not be withheld in bad faith, it is still a decision the company (that includes you) makes. The reason behind this difference is that other members of the LLC should be protected from the other member’s creditors.
A few caveats though; one is that although Massachusetts recognizes single member LLC’s , there is an argument that single member LLC’s should not receive its special protection. At least one out-of-state court has ruled that way. In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003). Another caveat is that when bankruptcy is involved, new considerations may alter these basic rules. Finally, when seeking to protect anything from a creditor in the corporate setting, you must follow the proper corporate rules and structure to ensure the creditor does not successfully “pierce the corporate veil.” In closing, we urge you to consider the benefits of an LLC when making the decision what business form to start.
What are the requirements to obtain a reverse mortgage, and should I get one?
Saturday, 12 December 2009
The most prevalent and only recommended type of reverse mortgage is the Home Equity Conversion Mortgage (“HECM”) (the acronym is pronounced heck um). HECM’s are insured by the United States Department of Housing and Urban Development (HUD). Some of the basic requirements for a reverse mortgage in Massachusetts are:
1) the mortgage must be granted in your primary residence(annual certifications of this fact will be conducted);
2) you must complete a counseling program that is approved by the Executive Office of Elder Affairs (associated with the Massachusetts Division of Banks);
3) the loan you apply for must be approved by the Massachusetts Division of Banks
4) the dwelling type must meet eligibility requirements, generally single family homes, owner-occupied (2-4) family homes, condos (additional details apply), manufactured homes (additional details apply), and Planned Unit Development(s) are acceptable;
5) the dwelling itself must be approved on the basis of safety and structural integrity, and the repairs deemed necessary may not exceed 15% of the value of the property;
6) the borrower(s) must be 62 years or older; and
7) (other more detailed requirements apply).
If a dwelling is found to need repairs, one can still obtain the loan before the repairs are made. A repair estimate must be provided. The lender then can set aside 150% of the repair estimate, and the loan can close. The borrower will have 6 months to make the necessary repairs, and upon successful inspection of the repairs, the remaining funds can be disbursed.
Some myths that do not matter are, the borrowers’: 1) income; 2) generally, their credit (with some exceptions); 3) liquid assets; and 4) physical health.
How much can I borrow? The maximum loan amount (known as “maximum claim amount” by insiders) is determined by a formula that considers the borrowers’ age, the maximum claim amount, and the expected applicable interest rate. However, it will not be more than the lesser of: 1) the fair market value of the dwelling; or $625,500.
The most basic, attractive feature of the reverse mortgage is that no payments are required during the life of the borrowers. This allows a person to use the equity usually built up over many years, without the requirement of periodic payments that a senior person may not be able to make. (However, property taxes or insurance will likely need to be made.) Further, they are non-recourse, which means that the lender can only seek repayment from the collateral, the dwelling itself.
Disbursements can be made in the following ways: 1) lump sum; 2) fixed monthly payments (for a time or as long as the borrower lives in the dwelling); 3) open access to a credit line; and 4) some mix of a credit line and monthly payments.
Can I use a reverse mortgage to purchase a new home? Yes, the mortgage is granted in the dwelling the borrower is purchasing. The funds are used to purchase the home, and the borrower must move in within 60 days and maintain residency. The property must be inspected, and any required repairs must be completed prior to closing. There is no other financing allowed in the transaction. So, any funds needed in addition to the reverse mortgage must come from the borrower. Other conditions apply.
When is the loan required to be paid back? When one of the following occurs:
1) All of the borrowers have died;
2) all of the borrowers have transferred their interest in the dwelling;
3) the borrowers move;
4) the property is deemed in need of repairs that the borrow refuses to make; or 5) a condition/covenant of the mortgage is violated.
Some major considerations are the cost and estate planning ramifications. Bottom line, reverse mortgages are expensive. You will give a significant amount of the equity in the home in upfront costs/fees, insurance fees/costs, monthly service fees, and continuing interest. Also, consider that the expected beneficiaries of the dwelling will have a significant loss of the value to be received. Further, the heirs of the borrowers’ will need to ensure the re-payment of the loan after the borrowers’ pass away. This is usually done by the sale of the residence, but must be completed in a timely manner.
If you are considering a reverse mortgage, we suggest obtaining counsel from an attorney with experience in financial and/or elder law matters.
The most prevalent and only recommended type of reverse mortgage is the Home Equity Conversion Mortgage (“HECM”) (the acronym is pronounced heck um). HECM’s are insured by the United States Department of Housing and Urban Development (HUD). Some of the basic requirements for a reverse mortgage in Massachusetts are:
1) the mortgage must be granted in your primary residence(annual certifications of this fact will be conducted);
2) you must complete a counseling program that is approved by the Executive Office of Elder Affairs (associated with the Massachusetts Division of Banks);
3) the loan you apply for must be approved by the Massachusetts Division of Banks
4) the dwelling type must meet eligibility requirements, generally single family homes, owner-occupied (2-4) family homes, condos (additional details apply), manufactured homes (additional details apply), and Planned Unit Development(s) are acceptable;
5) the dwelling itself must be approved on the basis of safety and structural integrity, and the repairs deemed necessary may not exceed 15% of the value of the property;
6) the borrower(s) must be 62 years or older; and
7) (other more detailed requirements apply).
If a dwelling is found to need repairs, one can still obtain the loan before the repairs are made. A repair estimate must be provided. The lender then can set aside 150% of the repair estimate, and the loan can close. The borrower will have 6 months to make the necessary repairs, and upon successful inspection of the repairs, the remaining funds can be disbursed.
Some myths that do not matter are, the borrowers’: 1) income; 2) generally, their credit (with some exceptions); 3) liquid assets; and 4) physical health.
How much can I borrow? The maximum loan amount (known as “maximum claim amount” by insiders) is determined by a formula that considers the borrowers’ age, the maximum claim amount, and the expected applicable interest rate. However, it will not be more than the lesser of: 1) the fair market value of the dwelling; or $625,500.
The most basic, attractive feature of the reverse mortgage is that no payments are required during the life of the borrowers. This allows a person to use the equity usually built up over many years, without the requirement of periodic payments that a senior person may not be able to make. (However, property taxes or insurance will likely need to be made.) Further, they are non-recourse, which means that the lender can only seek repayment from the collateral, the dwelling itself.
Disbursements can be made in the following ways: 1) lump sum; 2) fixed monthly payments (for a time or as long as the borrower lives in the dwelling); 3) open access to a credit line; and 4) some mix of a credit line and monthly payments.
Can I use a reverse mortgage to purchase a new home? Yes, the mortgage is granted in the dwelling the borrower is purchasing. The funds are used to purchase the home, and the borrower must move in within 60 days and maintain residency. The property must be inspected, and any required repairs must be completed prior to closing. There is no other financing allowed in the transaction. So, any funds needed in addition to the reverse mortgage must come from the borrower. Other conditions apply.
When is the loan required to be paid back? When one of the following occurs:
1) All of the borrowers have died;
2) all of the borrowers have transferred their interest in the dwelling;
3) the borrowers move;
4) the property is deemed in need of repairs that the borrow refuses to make; or 5) a condition/covenant of the mortgage is violated.
Some major considerations are the cost and estate planning ramifications. Bottom line, reverse mortgages are expensive. You will give a significant amount of the equity in the home in upfront costs/fees, insurance fees/costs, monthly service fees, and continuing interest. Also, consider that the expected beneficiaries of the dwelling will have a significant loss of the value to be received. Further, the heirs of the borrowers’ will need to ensure the re-payment of the loan after the borrowers’ pass away. This is usually done by the sale of the residence, but must be completed in a timely manner.
If you are considering a reverse mortgage, we suggest obtaining counsel from an attorney with experience in financial and/or elder law matters.
Can my (private) employer fire me for filing for bankruptcy?
Friday, 11 December 2009
The answer is No. It is plainly stated in the bankruptcy code that:
11 U.S.C. 525 . . .
(b)No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt— (1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
This may beg the question what a prospective employer can do when confronted with an applicant who has filed bankruptcy. Some commentators take the position that the answer whether discrimination on this basis is allowed is no. However, almost all of the cases that have interpreted this provision have ruled that it only applies to the debtor's current employer. In re Hardy, 209 B.R. 371, 374-376 (Bankr. E.D. Va. 1997); In re Merriweather, 185 B.R. 235 (Bankr.S.D.TX 1995); In re Briggs, 143 B.R. 438 (Bankr.E.D.MI 1992). But see In re McNeely, 82 B.R. 628 (Bankr. S.D. Ga. 1987)(applying Section 525(b) to service purchaser/independent contractor relationship). None of these cases are binding though, so the question is an open one.
There are some other considerations if you are applying for a new job and concerned over this particular potential ramification of filing for bankruptcy. First, the ambiguity noted above may be enough to stop any employer from taking the chance of violating the law. Typically employers, and especially their counsel, like to take the safe road. Second, the percentage of employers that truly take action based on a credit report, even if they do check it, might be less than you think (I personally have never heard of someone not getting a job due to a prior bankruptcy). Third, an employer may prefer that a person had filed for bankruptcy and eliminated their debt, as opposed to continuing on with a significant debt load. They could be concerned about those with a greater incentive to steal. Who do you think is more of a risk to employ, a person who is probably debt free or someone struggling to carry a significant debt load? Finally, the pros and cons of a decision to file bankruptcy should be carefully weighed with competent counsel. There is wisdom in a multitude of counselors.
The answer is No. It is plainly stated in the bankruptcy code that:
11 U.S.C. 525 . . .
(b)No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt— (1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
This may beg the question what a prospective employer can do when confronted with an applicant who has filed bankruptcy. Some commentators take the position that the answer whether discrimination on this basis is allowed is no. However, almost all of the cases that have interpreted this provision have ruled that it only applies to the debtor's current employer. In re Hardy, 209 B.R. 371, 374-376 (Bankr. E.D. Va. 1997); In re Merriweather, 185 B.R. 235 (Bankr.S.D.TX 1995); In re Briggs, 143 B.R. 438 (Bankr.E.D.MI 1992). But see In re McNeely, 82 B.R. 628 (Bankr. S.D. Ga. 1987)(applying Section 525(b) to service purchaser/independent contractor relationship). None of these cases are binding though, so the question is an open one.
There are some other considerations if you are applying for a new job and concerned over this particular potential ramification of filing for bankruptcy. First, the ambiguity noted above may be enough to stop any employer from taking the chance of violating the law. Typically employers, and especially their counsel, like to take the safe road. Second, the percentage of employers that truly take action based on a credit report, even if they do check it, might be less than you think (I personally have never heard of someone not getting a job due to a prior bankruptcy). Third, an employer may prefer that a person had filed for bankruptcy and eliminated their debt, as opposed to continuing on with a significant debt load. They could be concerned about those with a greater incentive to steal. Who do you think is more of a risk to employ, a person who is probably debt free or someone struggling to carry a significant debt load? Finally, the pros and cons of a decision to file bankruptcy should be carefully weighed with competent counsel. There is wisdom in a multitude of counselors.
Attorney-Client privilege and emails sent from work.
Wednesday, 9 December 2009
In today’s electronic age you may be using email for very confidential communications regularly. But if you want to rely on the attorney-client privilege to ensure your opponent or others can not compel the disclosure of the communications between you and your lawyer, you better not use your companies’ email system. The attorney-client privilege generally applies to all confidential communications between a client and his attorney undertaken for the purpose of obtaining legal advice. The privilege can be waived. It will be considered waived if the communications occur with others present. This generally means that a message through your employer’s email system, because the employer has access to the messages, is not subject to the privilege. This can also be the case when simply using an employer's computer to send emails from a private account (e.g. msn or yahoo). The email communication is typically considered made with a third party present. So, before firing off an email to your lawyer from work, think twice about whether you want the message to remain confidential. I bet the lawyer will!
In today’s electronic age you may be using email for very confidential communications regularly. But if you want to rely on the attorney-client privilege to ensure your opponent or others can not compel the disclosure of the communications between you and your lawyer, you better not use your companies’ email system. The attorney-client privilege generally applies to all confidential communications between a client and his attorney undertaken for the purpose of obtaining legal advice. The privilege can be waived. It will be considered waived if the communications occur with others present. This generally means that a message through your employer’s email system, because the employer has access to the messages, is not subject to the privilege. This can also be the case when simply using an employer's computer to send emails from a private account (e.g. msn or yahoo). The email communication is typically considered made with a third party present. So, before firing off an email to your lawyer from work, think twice about whether you want the message to remain confidential. I bet the lawyer will!
Thursday, January 21, 2010
I was sued for negligence and my homeowners insurance company has denied my claim saying the damage was caused by an intentional act, what can I do?
Friday, 1 January 2010
It is common for homeowners insurance policies to have exclusions for damage caused by an act “which is expected or intended by one or more ‘insureds’” (intentional act). Insurance companies may say this exclusion applies to all people covered under the policy, even when more than one person covered under the policy is being sued, and even when some of them are being sued solely for negligence. A claim denial may lead to dismay, especially after you have been sued and you need to present a defense, rather quickly.
However, there may be hope. It may be found in the Severability of Insurance clause (hopefully) contained in your policy. This clause usually reads something like “[t]his insurance applies separately to each ‘insured.’” What this has been interpreted to mean in Massachusetts is that each person covered under the policy must be considered separately. Worcester Mut. Ins. Co. v. Marnell, 398 Mass. 240 (1986); see also Lumberman’s Mut. Cas. Co. v. Hanover Ins. Co., 38 Mass. App. Ct. 53 (1995). In other words, the policy must be construed as if each person insured under the policy had their own independent policy. So, if one person is being sued for negligence, then the damages claimed in the underlying suit must be considered to be allegedly caused by that person’s negligence for insurance coverage purposes. That usually means there really is coverage under the policy for those accused of negligence in the underlying suit.
However, it is not advisable to take on an insurance company alone and interpretation of insurance policies can be tricky business. So, give a lawyer a call to see if there indeed may be coverage when your homeowners insurance company denies your claim.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
It is common for homeowners insurance policies to have exclusions for damage caused by an act “which is expected or intended by one or more ‘insureds’” (intentional act). Insurance companies may say this exclusion applies to all people covered under the policy, even when more than one person covered under the policy is being sued, and even when some of them are being sued solely for negligence. A claim denial may lead to dismay, especially after you have been sued and you need to present a defense, rather quickly.
However, there may be hope. It may be found in the Severability of Insurance clause (hopefully) contained in your policy. This clause usually reads something like “[t]his insurance applies separately to each ‘insured.’” What this has been interpreted to mean in Massachusetts is that each person covered under the policy must be considered separately. Worcester Mut. Ins. Co. v. Marnell, 398 Mass. 240 (1986); see also Lumberman’s Mut. Cas. Co. v. Hanover Ins. Co., 38 Mass. App. Ct. 53 (1995). In other words, the policy must be construed as if each person insured under the policy had their own independent policy. So, if one person is being sued for negligence, then the damages claimed in the underlying suit must be considered to be allegedly caused by that person’s negligence for insurance coverage purposes. That usually means there really is coverage under the policy for those accused of negligence in the underlying suit.
However, it is not advisable to take on an insurance company alone and interpretation of insurance policies can be tricky business. So, give a lawyer a call to see if there indeed may be coverage when your homeowners insurance company denies your claim.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Can I keep one of my credit card accounts even if I file for bankruptcy?
4 January 2010
It depends on whether the account has a balance when you file your bankruptcy petition, and, if there is no balance, how a creditor may react to the bankruptcy filing. If your account has a balance, the answer is no. The reason is that the chapter 7 bankruptcy petition, which is signed under the penalty of perjury, requires that you list all your debts. So, the account must be listed on the petition, and if the bankruptcy is successful, it will be discharged. What if there is nothing owed on the credit card account? In other words, there is a zero balance. In that case, the account is not technically a debt, so it is not required to be listed on the bankruptcy petition.
So there is nothing in the law that prohibits you from keeping such an account through and after the bankruptcy. (There are a number of practical and other legal issues that would need to be covered. In other words, this type of intent/activity really screams for a bankruptcy lawyer’s consultation.) But the credit card companies will typically learn of the bankruptcy by other means, like your credit report, and are likely to cancel the account, which they have the right to do. So, there is a chance, but a small one.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
It depends on whether the account has a balance when you file your bankruptcy petition, and, if there is no balance, how a creditor may react to the bankruptcy filing. If your account has a balance, the answer is no. The reason is that the chapter 7 bankruptcy petition, which is signed under the penalty of perjury, requires that you list all your debts. So, the account must be listed on the petition, and if the bankruptcy is successful, it will be discharged. What if there is nothing owed on the credit card account? In other words, there is a zero balance. In that case, the account is not technically a debt, so it is not required to be listed on the bankruptcy petition.
So there is nothing in the law that prohibits you from keeping such an account through and after the bankruptcy. (There are a number of practical and other legal issues that would need to be covered. In other words, this type of intent/activity really screams for a bankruptcy lawyer’s consultation.) But the credit card companies will typically learn of the bankruptcy by other means, like your credit report, and are likely to cancel the account, which they have the right to do. So, there is a chance, but a small one.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Someone spread derogatory information about me to others, what can I do?
10 January 2010
You might have grounds to sue them for defamation. Defamation is somewhat of a catch all word and specifically means slander and/or libel. Slander is by spoken word, libel is by a writing. Generally, the elements for slander are: 1) a publication (making an oral statement); 2) to at least one third party (not to only the victim himself); 3) that is derogatory; 4) that causes special (economic) damages. (There are additional elements and concerns if the victim is a public official or the statements are considered a matter of public concern.). Although technically it is not an element of this tort in Massachusetts, in all reality the statement made has to be false as well. This is because, generally, if a potential defendant can show the statement is true he is likely to defeat the suit. (Additional concerns may apply to this.)
The statement is considered defamatory if it: "hold[s] the plaintiff up to contempt, hatred, scorn, or ridicule or tend[s] to impair his standing in the community, at least to his discredit in the minds of a considerable and respectable class in the community." Tartaglia v. Townsend, 19 Mass. App. Ct. 693, 696 (1985).
You may be thinking why you don’t see more slander lawsuits, seeing as these elements must be satisfied very often. Maybe you have been a victim more than once. The reason lies with the damages. As stated, a victim must plead in his case economic damages. This means actual “hard” economic damages that can be demonstrated. So, having people stay away from you or not like you really isn’t enough. It may be if you can show people made decisions based on the statements that caused you damages, like losing or not being hired for a job, it may be enough. But in most instances, a victim is unable to allege economic damages.
However, certain types of derogatory statements are considered slander per se. This should be thought of as slander by law. Essentially society has recognized that some statements are so hurtful or damaging to the reputation that a victim should not need to have realized actual (economic) damages to bring forth a claim. Rather, the fact finder (judge or jury) will decide what to award, which includes emotional damages and harm to the victim’s reputation.
Generally, there are 4 types of statements that are considered slander per se. They are statements: 1) in writing (libel); 2) that the victim committed a crime; 3) that the victim has certain diseases; 4) that prejudice the victim’s business or occupation, including that a person lacks the characteristics to perform their lawful business or occupation (and possibly a fifth ---that a women (possibly a man as well) is unchaste. An example of the 4th exception was decided in Ravnikar vs. Bogojavlensky, 438 Mass. 627 (2003). In that case the Massachusetts Supreme Judicial Court decided that it was defamatory to say a doctor was dying of cancer because, they reasoned, it would prejudice the doctor’s practice and occupation.
We have all heard the saying sticks and stones may break my bones but names will never hurt me. But then we grew up, we realized that wasn’t true. Names often include implied derogatory statements that really hurt, and cause damage. If you think you have been the victim of slander, slander per se, or libel, it may be time to call an attorney if you seek to bring a claim.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
You might have grounds to sue them for defamation. Defamation is somewhat of a catch all word and specifically means slander and/or libel. Slander is by spoken word, libel is by a writing. Generally, the elements for slander are: 1) a publication (making an oral statement); 2) to at least one third party (not to only the victim himself); 3) that is derogatory; 4) that causes special (economic) damages. (There are additional elements and concerns if the victim is a public official or the statements are considered a matter of public concern.). Although technically it is not an element of this tort in Massachusetts, in all reality the statement made has to be false as well. This is because, generally, if a potential defendant can show the statement is true he is likely to defeat the suit. (Additional concerns may apply to this.)
The statement is considered defamatory if it: "hold[s] the plaintiff up to contempt, hatred, scorn, or ridicule or tend[s] to impair his standing in the community, at least to his discredit in the minds of a considerable and respectable class in the community." Tartaglia v. Townsend, 19 Mass. App. Ct. 693, 696 (1985).
You may be thinking why you don’t see more slander lawsuits, seeing as these elements must be satisfied very often. Maybe you have been a victim more than once. The reason lies with the damages. As stated, a victim must plead in his case economic damages. This means actual “hard” economic damages that can be demonstrated. So, having people stay away from you or not like you really isn’t enough. It may be if you can show people made decisions based on the statements that caused you damages, like losing or not being hired for a job, it may be enough. But in most instances, a victim is unable to allege economic damages.
However, certain types of derogatory statements are considered slander per se. This should be thought of as slander by law. Essentially society has recognized that some statements are so hurtful or damaging to the reputation that a victim should not need to have realized actual (economic) damages to bring forth a claim. Rather, the fact finder (judge or jury) will decide what to award, which includes emotional damages and harm to the victim’s reputation.
Generally, there are 4 types of statements that are considered slander per se. They are statements: 1) in writing (libel); 2) that the victim committed a crime; 3) that the victim has certain diseases; 4) that prejudice the victim’s business or occupation, including that a person lacks the characteristics to perform their lawful business or occupation (and possibly a fifth ---that a women (possibly a man as well) is unchaste. An example of the 4th exception was decided in Ravnikar vs. Bogojavlensky, 438 Mass. 627 (2003). In that case the Massachusetts Supreme Judicial Court decided that it was defamatory to say a doctor was dying of cancer because, they reasoned, it would prejudice the doctor’s practice and occupation.
We have all heard the saying sticks and stones may break my bones but names will never hurt me. But then we grew up, we realized that wasn’t true. Names often include implied derogatory statements that really hurt, and cause damage. If you think you have been the victim of slander, slander per se, or libel, it may be time to call an attorney if you seek to bring a claim.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
What is the Co-debtor (or Co-signer) stay?
13 January 2010
Often debts (loans) have more than one person obligated to repay the creditor (on the hook). These can be loans where the debt is jointly owed by two joint account holders. There are also debts where one person is the primary account holder and receives the money, and another voluntarily becomes obligated despite not receiving any of the money. In these situations the secondary account holder (or co-signer) has agreed to be liable to the creditor in order to allow the primary account holder to get the loan. The most well known situation is a parent who co-signs for an adult child.
The “co-debtor stay” (or “co-signer stay”) arises when one of the debtors files for bankruptcy under chapter 13. It stops the creditor from any collection activity towards the co-debtor and continues until the bankruptcy is either closed or converted. It was created so that a debtor does not feel indirect pressure from a creditor through their efforts to collect from the co-debtor, who is usually a friend or relative.
However, the co-debtor stay does not apply to all situations. For one, the co-debtor must be an individual, and not a business entity like a corporation. Also, it only applies to “consumer debt” as defined under the bankruptcy code and interpreted by the courts. There may also be some variation from jurisdiction to jurisdiction on how the co-debtor stay is believed to apply. The co-debtor stay is a powerful tool for the consumer, but if you want to rely on the co-debtor stay, it would be wise to consult an experienced bankruptcy attorney.
Under chapter 7 bankruptcy, this type of protection of the co-debtor is not available. In fact, when one debtor files for bankruptcy under chapter 7, it may even make the creditor more aggressively pursue the co-debtor. This is one benefit to filing a chapter 13. However, there are a multitude of reasons to consider when deciding what chapter of bankruptcy to file under. It pays to seek counsel to help make that decision.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Often debts (loans) have more than one person obligated to repay the creditor (on the hook). These can be loans where the debt is jointly owed by two joint account holders. There are also debts where one person is the primary account holder and receives the money, and another voluntarily becomes obligated despite not receiving any of the money. In these situations the secondary account holder (or co-signer) has agreed to be liable to the creditor in order to allow the primary account holder to get the loan. The most well known situation is a parent who co-signs for an adult child.
The “co-debtor stay” (or “co-signer stay”) arises when one of the debtors files for bankruptcy under chapter 13. It stops the creditor from any collection activity towards the co-debtor and continues until the bankruptcy is either closed or converted. It was created so that a debtor does not feel indirect pressure from a creditor through their efforts to collect from the co-debtor, who is usually a friend or relative.
However, the co-debtor stay does not apply to all situations. For one, the co-debtor must be an individual, and not a business entity like a corporation. Also, it only applies to “consumer debt” as defined under the bankruptcy code and interpreted by the courts. There may also be some variation from jurisdiction to jurisdiction on how the co-debtor stay is believed to apply. The co-debtor stay is a powerful tool for the consumer, but if you want to rely on the co-debtor stay, it would be wise to consult an experienced bankruptcy attorney.
Under chapter 7 bankruptcy, this type of protection of the co-debtor is not available. In fact, when one debtor files for bankruptcy under chapter 7, it may even make the creditor more aggressively pursue the co-debtor. This is one benefit to filing a chapter 13. However, there are a multitude of reasons to consider when deciding what chapter of bankruptcy to file under. It pays to seek counsel to help make that decision.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Can I tithe during bankruptcy?
14 January 2010
Yes. Under either chapter 7 or chapter 13 a debtor is allowed to regularly contribute up to 15 percent of their gross income to a charitable organization. For example, if a debtor had a gross income of $40,000 a year, they would be allowed to contribute $6,000.00 a year to a charitable organization.
This right has some history to it. At one point in 2006, there was some doubt. In the decision In re Diagostino, No. 06-10384, 2006 WL 2578172 (Bankr. N.D. N.Y. Aug, 28, 2006) a New York bankruptcy court found that above median chapter 13 debtors were not allowed by the recent changes in the bankruptcy code made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to contribute anything to a charitable organization. It didn’t help matters that the debtors’ bankruptcy petition stated they had not previously contributed anything to a charitable organization in the year prior to their bankruptcy filing. But they sought to pay $100.00 a month during the life of their chapter 13 plan.
This decision made waves and Congress acted swiftly. Shortly after the decision, Senators Hatch and Grassley, along with Congressman Sessions, made public statements that the Diagostino decision incorrectly interpreted current bankruptcy law. They sought to eliminate any doubt. Congress eventually passed the Religious Liberty and Charitable Donation Clarification Act of 2006, which made it clear that a tithe or continuous gift to a charitable organization is allowed in bankruptcy. So, if someone wants to tithe before or during bankruptcy, they are allowed to and will still qualify under either chapter 7 or 13.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Yes. Under either chapter 7 or chapter 13 a debtor is allowed to regularly contribute up to 15 percent of their gross income to a charitable organization. For example, if a debtor had a gross income of $40,000 a year, they would be allowed to contribute $6,000.00 a year to a charitable organization.
This right has some history to it. At one point in 2006, there was some doubt. In the decision In re Diagostino, No. 06-10384, 2006 WL 2578172 (Bankr. N.D. N.Y. Aug, 28, 2006) a New York bankruptcy court found that above median chapter 13 debtors were not allowed by the recent changes in the bankruptcy code made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to contribute anything to a charitable organization. It didn’t help matters that the debtors’ bankruptcy petition stated they had not previously contributed anything to a charitable organization in the year prior to their bankruptcy filing. But they sought to pay $100.00 a month during the life of their chapter 13 plan.
This decision made waves and Congress acted swiftly. Shortly after the decision, Senators Hatch and Grassley, along with Congressman Sessions, made public statements that the Diagostino decision incorrectly interpreted current bankruptcy law. They sought to eliminate any doubt. Congress eventually passed the Religious Liberty and Charitable Donation Clarification Act of 2006, which made it clear that a tithe or continuous gift to a charitable organization is allowed in bankruptcy. So, if someone wants to tithe before or during bankruptcy, they are allowed to and will still qualify under either chapter 7 or 13.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
A debt collector is calling my cell phone using an auto-dialer, what can I do?
16 January 2010
You might have grounds to sue them! It depends on whether you gave the original creditor or the debt collector “prior express consent” to call you on your cell phone. You may want to ask yourself, did you write the cell phone number on your original credit application? (Did you have the cell phone number when you applied for the account?) If the answer is yes, then you may not have a claim, but often debt collectors do research and gather information about you, including your cell phone number, prior to initiating their calls. So, the fact they have your cell phone number may not mean that you gave it to them voluntarily. If they are calling you using an auto dialer without your prior express consent, it is generally illegal.
What is an auto-dialer call? It is a call that is computer generated, that, upon answering, the automated voice engages you until a real human being is available. It may ask you to wait “for an important message.” These are the kind of calls many people simply hang up on once they realize a real person is not on the other line.
The law providing this protection is not found in the Fair Debt Collection Practices Act (FDCPA) (15 USC 1692 et seq.), the Act containing most debt collection law that applies to debt collectors. But interestingly enough under a law that was passed in 1991 aimed towards the telemarketing industry titled the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227). The penalties are either the actual monetary loss caused by the violation or $500, whichever is greater, per call. (In all likelihood this will be the $500.00.) A court may also award up to three times this initial penalty (again probably $1,500.00 maximum) in its discretion, if it finds that the defendant acted willfully or knowingly.
If you think you have a claim and are considering taking action, you should contact an attorney that practices consumer protection law.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
You might have grounds to sue them! It depends on whether you gave the original creditor or the debt collector “prior express consent” to call you on your cell phone. You may want to ask yourself, did you write the cell phone number on your original credit application? (Did you have the cell phone number when you applied for the account?) If the answer is yes, then you may not have a claim, but often debt collectors do research and gather information about you, including your cell phone number, prior to initiating their calls. So, the fact they have your cell phone number may not mean that you gave it to them voluntarily. If they are calling you using an auto dialer without your prior express consent, it is generally illegal.
What is an auto-dialer call? It is a call that is computer generated, that, upon answering, the automated voice engages you until a real human being is available. It may ask you to wait “for an important message.” These are the kind of calls many people simply hang up on once they realize a real person is not on the other line.
The law providing this protection is not found in the Fair Debt Collection Practices Act (FDCPA) (15 USC 1692 et seq.), the Act containing most debt collection law that applies to debt collectors. But interestingly enough under a law that was passed in 1991 aimed towards the telemarketing industry titled the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227). The penalties are either the actual monetary loss caused by the violation or $500, whichever is greater, per call. (In all likelihood this will be the $500.00.) A court may also award up to three times this initial penalty (again probably $1,500.00 maximum) in its discretion, if it finds that the defendant acted willfully or knowingly.
If you think you have a claim and are considering taking action, you should contact an attorney that practices consumer protection law.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Do I have to include all my debts in my bankruptcy?
18 January 2010
Yes. The bankruptcy petition requires that you list all your debts and that you make all statements under the penalty of perjury. There is no way around listing all your debts, but there is a plan you can have to make that special creditor whole despite your bankruptcy, read on.
It is so common for consumers to think that they can pick and choose which debts to include in their bankruptcy and which they do not. People often say “I’m not going bankrupt on that debt” or “I’m not including that debt in my bankruptcy.” But that isn’t acceptable. People often have at least one debt which they really want to pay despite needing to file bankruptcy. Usually this debt is owed to a family member or sometimes to an employer. The person feels terrible about “going bankrupt on” that particular debt because they feel an affinity towards the person or entity that gave them the loan. Sometimes a person preparing to file for bankruptcy doesn’t have the money and figures they will get a loan from a family member or friend in order to pay their attorney. One must think about this and what they are doing, filing bankruptcy. This means they will seek to obtain a discharge of their personal responsibility on their debts. So claiming you intend to pay a loan back that you plan to use to file bankruptcy is saying you intend to jump into a pool to dry off.
If you can’t live with yourself if a particular special creditor is not made whole, what you can do is this. After the bankruptcy case is closed, you may voluntarily give the creditor the amount of the previous (now discharged) loan as a gift out of the kindness of your heart. So, if you really want to ensure that a particular creditor is made whole, you can do it, but just after the bankruptcy is over and in the form of a gift.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
Yes. The bankruptcy petition requires that you list all your debts and that you make all statements under the penalty of perjury. There is no way around listing all your debts, but there is a plan you can have to make that special creditor whole despite your bankruptcy, read on.
It is so common for consumers to think that they can pick and choose which debts to include in their bankruptcy and which they do not. People often say “I’m not going bankrupt on that debt” or “I’m not including that debt in my bankruptcy.” But that isn’t acceptable. People often have at least one debt which they really want to pay despite needing to file bankruptcy. Usually this debt is owed to a family member or sometimes to an employer. The person feels terrible about “going bankrupt on” that particular debt because they feel an affinity towards the person or entity that gave them the loan. Sometimes a person preparing to file for bankruptcy doesn’t have the money and figures they will get a loan from a family member or friend in order to pay their attorney. One must think about this and what they are doing, filing bankruptcy. This means they will seek to obtain a discharge of their personal responsibility on their debts. So claiming you intend to pay a loan back that you plan to use to file bankruptcy is saying you intend to jump into a pool to dry off.
If you can’t live with yourself if a particular special creditor is not made whole, what you can do is this. After the bankruptcy case is closed, you may voluntarily give the creditor the amount of the previous (now discharged) loan as a gift out of the kindness of your heart. So, if you really want to ensure that a particular creditor is made whole, you can do it, but just after the bankruptcy is over and in the form of a gift.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguignonlaw.com
The criminal trespass statute in Massachusetts; how you can address trespassing on your property.
21 January 2010
There may be someone that you don’t ever want to enter your property again. Or there may be someone you don’t want to enter your property at all, even once. In Massachusetts, there is a way to make it a criminal act if a particular person enters your property.
Generally, the public is deemed to have an implied invitation to enter your property. They may walk in areas that would be regarded as usual places to approach the house located on a property. It is perfectly legal for a person to walk up to your front door on the walkway, or even the lawn, and knock on your door to ask you a question, take a survey, or for any lawful reason. (But, nowadays, some towns may have some limited restrictions on widespread door-to-door solicitation or the like.) There are a few ways in Massachusetts to make this activity a criminal act, or a criminal trespass. One is to post conspicuously placed No Trespass signs on your property. This may be effective, but is probably not the type of message you would like to project to the community at large. Most people don’t mind the occasional door knocker, but seek to bar a select individual, or maybe a few, from even stepping foot on their property, let alone knock on their door. The other way is to impose the Massachusetts criminal trespass statute.
The criminal trespass statute in Massachusetts can be found in Mass. Gen. Laws ch. 266 § 120. Basically, to employ this statute, a resident, with “lawful control” of the premises, needs to notify the person or persons they wish to prohibit from entering. Oral notice appears to be allowed. But it is probably safer to provide notice in writing, and in a fashion to be able to prove someday that the notice was given. Once the notice is given, this law applies. The police can arrest the prohibited person without the issuance of a warrant. The penalties upon conviction are: 1) up to $100.00; 2) up to 30 days in jail; or 3) both.
This law also covers the situation when someone is asked to leave the property, and the person refuses. For this there is no prior act you can take to strengthen your rights. But it is good to know in advance to employ later if a situation arises.
If you are the landlord, you may employ this provision as well. However, a tenant is deemed to have a limited easement in common areas, and can convey superior rights to the no trespass notice to their invited guests. Commonwealth v. Richardson, 313 Mass. 632, 697 (1943); Commonwealth v. Nelson, 74 Mass. App. Ct. 629 (2009).
However, this is a brief blog written only for general information. There are exceptions to the law, and some legal complexities that are not covered here. (For example, the differences and application of civil trespass concepts). So, in the event you wish to employ the Massachusetts criminal trespass statute, or have had it employed against you and want to learn more, we encourage you to contact an attorney.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguigononlaw.com
There may be someone that you don’t ever want to enter your property again. Or there may be someone you don’t want to enter your property at all, even once. In Massachusetts, there is a way to make it a criminal act if a particular person enters your property.
Generally, the public is deemed to have an implied invitation to enter your property. They may walk in areas that would be regarded as usual places to approach the house located on a property. It is perfectly legal for a person to walk up to your front door on the walkway, or even the lawn, and knock on your door to ask you a question, take a survey, or for any lawful reason. (But, nowadays, some towns may have some limited restrictions on widespread door-to-door solicitation or the like.) There are a few ways in Massachusetts to make this activity a criminal act, or a criminal trespass. One is to post conspicuously placed No Trespass signs on your property. This may be effective, but is probably not the type of message you would like to project to the community at large. Most people don’t mind the occasional door knocker, but seek to bar a select individual, or maybe a few, from even stepping foot on their property, let alone knock on their door. The other way is to impose the Massachusetts criminal trespass statute.
The criminal trespass statute in Massachusetts can be found in Mass. Gen. Laws ch. 266 § 120. Basically, to employ this statute, a resident, with “lawful control” of the premises, needs to notify the person or persons they wish to prohibit from entering. Oral notice appears to be allowed. But it is probably safer to provide notice in writing, and in a fashion to be able to prove someday that the notice was given. Once the notice is given, this law applies. The police can arrest the prohibited person without the issuance of a warrant. The penalties upon conviction are: 1) up to $100.00; 2) up to 30 days in jail; or 3) both.
This law also covers the situation when someone is asked to leave the property, and the person refuses. For this there is no prior act you can take to strengthen your rights. But it is good to know in advance to employ later if a situation arises.
If you are the landlord, you may employ this provision as well. However, a tenant is deemed to have a limited easement in common areas, and can convey superior rights to the no trespass notice to their invited guests. Commonwealth v. Richardson, 313 Mass. 632, 697 (1943); Commonwealth v. Nelson, 74 Mass. App. Ct. 629 (2009).
However, this is a brief blog written only for general information. There are exceptions to the law, and some legal complexities that are not covered here. (For example, the differences and application of civil trespass concepts). So, in the event you wish to employ the Massachusetts criminal trespass statute, or have had it employed against you and want to learn more, we encourage you to contact an attorney.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguignon@bourguignonlaw.com
www.bourguigononlaw.com
Wednesday, January 20, 2010
Is it legal for a debt collector to leave a phone message to collect a debt?
18 January 2010
Maybe not, it depends on the circumstances. In most instances, when a debt collector leaves a message for a consumer to collect a debt they are breaking the law. This is why. The Fair Debt Collection Practices Act (FDCPA) requires a debt collector to disclose in their initial communication with the consumer that the debt collector is attempting to collect a debt and any information obtained will be used for that purpose. Additionally, all subsequent communications with the consumer must disclose that the communication is from a debt collector. This requirement is commonly referred to as the “mini-Miranda” disclosure. The FDCPA also prohibits disclosure that a debt is owed to a third party. To avoid disclosing to a third party, debt collectors routinely omitted the mini-Miranda from phone messages. However, things changed.
In April 2006 the United States District Court for the Southern District of New York decided that a phone message left for a consumer was a “communication” under the Fair Debt Collection Practices Act. Foti v. NCO Financial Systems, Inc., 424 F. Supp.2d 643 (S.D. N.Y. 2006). This meant that debt collectors are required to provide the mini-Miranda in phone messages or be in violation of the law. Of course, if debt collectors indeed do provide the mini-Miranda, they run the risk of violating the third party disclosure law if a third party happens to listen to the message. In subsequent legal conflicts, debt collectors argued that Foti must have been decided incorrectly because the law, as Foti would have it, would have them choose between violating one law or another, which is illogical. This didn’t seem to work. Subsequently most courts exhibited little sympathy and stated that debt collectors had no guarantee they were entitled to leave messages at all.
Debt collectors then tried to leave messages like this:
This is a message for George Berginon. If you are not Mr. Berginon, please hang up or disconnect. If you are George Berginon, please continue to listen to this message. There will now be a pause in this message.
(pause)
By continuing to listen to this message, you acknowledge you are George Berginon. Mr. Berginon, you should not listen to this message so that other people can hear it as it contains personal and private information. There will now be a pause in this message to allow you to listen to this message in private.
(pause)
This is John Smith from ABC Collection Agency. This is an attempt to collect a debt and any information obtained will be used for that purpose. Please contact me about an important business matter at [phone #].
This hasn’t been well received by the courts either.
The debt collectors will continue to call and leave messages because it is the only way they can make money. And if they continue to, they will in all likelihood be breaking law. If you think you may have incurred damages from a violation of the FDCPA stemming from a phone messages or any other possible violation, you should contact a lawyer.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguigonon@bourguignonlaw.com
www.bourguignonlaw.com
Maybe not, it depends on the circumstances. In most instances, when a debt collector leaves a message for a consumer to collect a debt they are breaking the law. This is why. The Fair Debt Collection Practices Act (FDCPA) requires a debt collector to disclose in their initial communication with the consumer that the debt collector is attempting to collect a debt and any information obtained will be used for that purpose. Additionally, all subsequent communications with the consumer must disclose that the communication is from a debt collector. This requirement is commonly referred to as the “mini-Miranda” disclosure. The FDCPA also prohibits disclosure that a debt is owed to a third party. To avoid disclosing to a third party, debt collectors routinely omitted the mini-Miranda from phone messages. However, things changed.
In April 2006 the United States District Court for the Southern District of New York decided that a phone message left for a consumer was a “communication” under the Fair Debt Collection Practices Act. Foti v. NCO Financial Systems, Inc., 424 F. Supp.2d 643 (S.D. N.Y. 2006). This meant that debt collectors are required to provide the mini-Miranda in phone messages or be in violation of the law. Of course, if debt collectors indeed do provide the mini-Miranda, they run the risk of violating the third party disclosure law if a third party happens to listen to the message. In subsequent legal conflicts, debt collectors argued that Foti must have been decided incorrectly because the law, as Foti would have it, would have them choose between violating one law or another, which is illogical. This didn’t seem to work. Subsequently most courts exhibited little sympathy and stated that debt collectors had no guarantee they were entitled to leave messages at all.
Debt collectors then tried to leave messages like this:
This is a message for George Berginon. If you are not Mr. Berginon, please hang up or disconnect. If you are George Berginon, please continue to listen to this message. There will now be a pause in this message.
(pause)
By continuing to listen to this message, you acknowledge you are George Berginon. Mr. Berginon, you should not listen to this message so that other people can hear it as it contains personal and private information. There will now be a pause in this message to allow you to listen to this message in private.
(pause)
This is John Smith from ABC Collection Agency. This is an attempt to collect a debt and any information obtained will be used for that purpose. Please contact me about an important business matter at [phone #].
This hasn’t been well received by the courts either.
The debt collectors will continue to call and leave messages because it is the only way they can make money. And if they continue to, they will in all likelihood be breaking law. If you think you may have incurred damages from a violation of the FDCPA stemming from a phone messages or any other possible violation, you should contact a lawyer.
Contact: George E. Bourguignon, Jr.
(413) 746-8008
gbourguigonon@bourguignonlaw.com
www.bourguignonlaw.com
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